Consolidated 2016 Medicare Part B Increase thread

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Consolidated 2016 Medicare Part B Increase thread

Post by tadamsmar » Mon Oct 12, 2015 7:33 am

[Several threads on this topic have been merged here. Since nothing has been decided at this point (10/28/15 2am), it's all technically off-topic. But it's obviously of great interest and it's going to save a lot of moderator effort if we keep one thread open. Still, all the rules except speculating on legislative action apply here: any partisan political posts, personal attacks or other violations will result in a warning and the removal of the post. - admin alex]

There is a old consolidation thread on this increase entitled "Budgeting For 2016 Medicare Part B Increase":

viewtopic.php?f=2&t=170153

But that title does not reflect the fact that there are avoidance strategies for Bogleheads to consider.

Also that consolidation thread is a bit dated, when it was started the increase would more speculative than it is now because a zero SS COLA was not such a sure thing as it is now. (The taboo topic of Congressional action to stop the increase still makes it somewhat speculative, BTW.)

So I think some impacted Bogleheads may be overlooking the fact that they have some relatively urgent decisions to make concerning cost savings.

Here's one link of many:
Steffen says that seniors shouldn't panic. But some may want to act this month to avoid a steep increase in Medicare premiums.
Read More At Investor's Business Daily: http://news.investors.com/investing/100 ... z3oM9XbbEl

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Re: How to Avoid the 2016 Medicare Part B Increase

Post by tadamsmar » Mon Oct 12, 2015 7:45 am

The link in the OP does not include all the avoidance strategies, another is proposed here:

http://www.kiplinger.com/article/insura ... o22ZIuh.99

It appears that anyone over 66 with below 85k single/170k MAGI who is delaying SS has an avoidance strategy to consider.

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Re: How to Avoid the 2016 Medicare Part B Increase

Post by Fat-Tailed Contagion » Mon Oct 12, 2015 7:48 am

Thanks tad!

I began drawing SS benefits September 2015.

I realize I made a mistake and am going to either suspend or suspend and repay the benefits and begin taking at age 70 in ~2.6 years.

How would you suggest I go about this ...

Should I wait to suspend and repay ? If so, how long should I wait ?

Thank you!
Last edited by Fat-Tailed Contagion on Mon Oct 12, 2015 8:04 am, edited 1 time in total.
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Re: How to Avoid the 2016 Medicare Part B Increase

Post by tadamsmar » Mon Oct 12, 2015 7:56 am

If you are over 66 and meet the MAGI requirements then the Kiplinger's link seems to imply that you might want to keep getting SS till the end of 2016.

But I don't know if I fully understand it or even I believe it. I was hoping to see some more discussion from the good analytical minds here.

It appears that the avoidance strategies only save about $50 per month and probably only for 1 year. Plus it could end up costing you if you live for a period beyond the breakeven point for delaying SS. I am not sure how long that period is.

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Re: How to Avoid the 2016 Medicare Part B Increase

Post by Fat-Tailed Contagion » Mon Oct 12, 2015 8:03 am

tadamsmar wrote:If you are over 66 and meet the MAGI requirements then the Kiplinger's link seems to imply that you might want to keep getting SS till the end of 2016.

But I don't know if I fully understand it or even I believe it. I was hoping to see some more discussion from the good analytical minds here.

It appears that the avoidance strategies only save about $50 per month and probably only for 1 year. Plus it could end up costing you if you live for a period beyond the breakeven point for delaying SS. I am not sure how long that period is.
I am age 67.4 years.

Did you mean "till the end of 2015" as the test takes place in November and December of 2015 ?

I definitely want to suspend (and repay benefits received) to get the 8% annual increase.

I am trying to find out if I wait until January of 2016 to do this, would I still be "held harmless" and not experience an increase in Part B premiums ?

Or does it even matter in my case ?

Thanks all!
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Re: How to Avoid the 2016 Medicare Part B Increase

Post by tadamsmar » Mon Oct 12, 2015 8:07 am

In my case, I am turning 65 in November. I just signed up for Medicare Part B but not SS. I have no avoidance strategy since I am not at FRA.

So, next year, I will be paying ~150/month for Part B and my wife will be paying only ~100/month just because of qwirks in the law.

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Re: How to Avoid the 2016 Medicare Part B Increase

Post by tadamsmar » Mon Oct 12, 2015 8:11 am

Fat-Tailed Contagion wrote:
tadamsmar wrote:If you are over 66 and meet the MAGI requirements then the Kiplinger's link seems to imply that you might want to keep getting SS till the end of 2016.

But I don't know if I fully understand it or even I believe it. I was hoping to see some more discussion from the good analytical minds here.

It appears that the avoidance strategies only save about $50 per month and probably only for 1 year. Plus it could end up costing you if you live for a period beyond the breakeven point for delaying SS. I am not sure how long that period is.
I am age 67.4 years.

Did you mean "till the end of 2015" as the test takes place in November and December of 2015 ?

I definitely want to suspend (and repay benefits received) to get the 8% annual increase.

I am trying to find out if I wait until January of 2016 to do this, would I still be "held harmless" and not experience an increase in Part B premiums ?

Or does it even matter in my case ?

Thanks all!
I meant till the end of 2016 since I think you have to draw SS during every month to avoid the increased Part B monthly premium.

You do lose the "annual" (actually monthly I think) increase in SS for the period that you draw, that's why the savings are speculative, you could lose it all and more (in the form of smaller SS payments) if you live long enough.

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Re: How to Avoid the 2016 Medicare Part B Increase

Post by VictoriaF » Mon Oct 12, 2015 8:18 am

tadamsmar,

I sympathize with your situation and have a question and a suggestion.

Question: How soon Medicare penalties are imposed after the initial eligibility? In other words, can you delay Medicare by 1 year until you can sign for both Social Security and Medicare, without a Medicare penalty?

Suggestion: One does not have to sign for Medicare Part B if one is covered by an employer insurance. You may be able to find an easy part-time job with insurance that would tie you up for a year until you pass the current hurdle.

Victoria
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Re: How to Avoid the 2016 Medicare Part B Increase

Post by pshonore » Mon Oct 12, 2015 8:20 am

Fat-Tailed Contagion wrote:
tadamsmar wrote:If you are over 66 and meet the MAGI requirements then the Kiplinger's link seems to imply that you might want to keep getting SS till the end of 2016.

But I don't know if I fully understand it or even I believe it. I was hoping to see some more discussion from the good analytical minds here.

It appears that the avoidance strategies only save about $50 per month and probably only for 1 year. Plus it could end up costing you if you live for a period beyond the breakeven point for delaying SS. I am not sure how long that period is.
I am age 67.4 years.

Did you mean "till the end of 2015" as the test takes place in November and December of 2015 ?

I definitely want to suspend (and repay benefits received) to get the 8% annual increase.

I am trying to find out if I wait until January of 2016 to do this, would I still be "held harmless" and not experience an increase in Part B premiums ?

Or does it even matter in my case ?

Thanks all!
You don't have to "repay" benefits to get the 8% yearly increase if you suspend at or after FRA. In fact if you have been collecting for more than 12 months, "repaying" is not an option. I doubt anyone here knows what happens if you lose eligibility for the "hold harmless provision" mid-year. My guess is eligibility is determined annually (did you receive an SS payment in December for the November benefit) but since SS will be billing you, only they can give you the answer.

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Re: How to Avoid the 2016 Medicare Part B Increase

Post by Fat-Tailed Contagion » Mon Oct 12, 2015 8:22 am

tadamsmar wrote:
Fat-Tailed Contagion wrote:
tadamsmar wrote:If you are over 66 and meet the MAGI requirements then the Kiplinger's link seems to imply that you might want to keep getting SS till the end of 2016.

But I don't know if I fully understand it or even I believe it. I was hoping to see some more discussion from the good analytical minds here.

It appears that the avoidance strategies only save about $50 per month and probably only for 1 year. Plus it could end up costing you if you live for a period beyond the breakeven point for delaying SS. I am not sure how long that period is.
I am age 67.4 years.

Did you mean "till the end of 2015" as the test takes place in November and December of 2015 ?

I definitely want to suspend (and repay benefits received) to get the 8% annual increase.

I am trying to find out if I wait until January of 2016 to do this, would I still be "held harmless" and not experience an increase in Part B premiums ?

Or does it even matter in my case ?

Thanks all!
I meant till the end of 2016 since I think you have to draw SS during every month to avoid the increased Part B monthly premium.

You do lose the "annual" (actually monthly I think) increase in SS for the period that you draw, that's why the savings are speculative, you could lose it all and more (in the form of smaller SS payments) if you live long enough.
Hi tad,

I don't understand your response.

Can you please elaborate ?
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Re: How to Avoid the 2016 Medicare Part B Increase

Post by tadamsmar » Mon Oct 12, 2015 9:00 am

You could be right that once your 2016 Part B premium is reported to you in late 2015 that it will stay the same for all of 2016 even if you suspend SS for or during 2016. I am not sure.

The annual increase of 8% (of the base) is doled out as 12 2/3% monthly increases I think.

For every month you take SS you forgo 2/3% on the future benefit. If you live long enough then you can lose money even with the Part B savings. But if you can suspend for 2016 as still avoid the Part B premium increase then it's a better bet.
Last edited by tadamsmar on Mon Oct 12, 2015 9:27 am, edited 1 time in total.

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Re: How to Avoid the 2016 Medicare Part B Increase

Post by tadamsmar » Mon Oct 12, 2015 9:20 am

VictoriaF wrote:tadamsmar,

I sympathize with your situation and have a question and a suggestion.

Question: How soon Medicare penalties are imposed after the initial eligibility? In other words, can you delay Medicare by 1 year until you can sign for both Social Security and Medicare, without a Medicare penalty?

Suggestion: One does not have to sign for Medicare Part B if one is covered by an employer insurance. You may be able to find an easy part-time job with insurance that would tie you up for a year until you pass the current hurdle.

Victoria
Looks like you have to delay a full 12 months to get the penalty. Unfortunately, I have already signed up. I did not see that consolidation thread early enough!

I am covered by my retired wife's FEHB. I am still working and I guess I could switch to my employer and then switch back.

Those are good things to consider.

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Re: How to Avoid the 2016 Medicare Part B Increase

Post by montanagirl » Mon Oct 12, 2015 10:24 am

I am having Part B withheld from SS now but it's a spousal benefit using my husband's SSN. I wonder what would happen if I switched to my own old age benefit in 2016? Is that a "new" Medicare account? I also had my own Medicare account for 11 months prior to getting spousal.

I'd call SSA but wonder if I would get a knowledgeable answer even there. :|

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Re: How to Avoid the 2016 Medicare Part B Increase

Post by ObliviousInvestor » Mon Oct 12, 2015 10:36 am

The following information comes via email from a Boglehead who knows more about Medicare than I do.

CFR 1395r(f) is where we can find the official description of the hold harmless provision.
For any calendar year after 1988, if an individual is entitled to monthly benefits under section 402 or 423 of this title or to a monthly annuity under section 3(a), 4(a), or 4(f) of the Railroad Retirement Act of 1974 [45 U.S.C. 231b(a), 231c(a), (f)] for November and December of the preceding year, if the monthly premium of the individual under this section for December and for January is deducted from those benefits under section 1395s(a)(1) of this title or section 1395s(b)(1) of this title, and if the amount of the individual’s premium is not adjusted for such January under subsection (i) of this section, the monthly premium otherwise determined under this section for an individual for that year shall not be increased, pursuant to this subsection, to the extent that such increase would reduce the amount of benefits payable to that individual for that December below the amount of benefits payable to that individual for that November (after the deduction of the premium under this section). For purposes of this subsection, retroactive adjustments or payments and deductions on account of work shall not be taken into account in determining the monthly benefits to which an individual is entitled under section 402 or 423 of this title or under the Railroad Retirement Act of 1974 [45 U.S.C. 231 et seq.].
If we break that down, it looks like there are three requirements:

1) The individual is entitled to benefits for November and December of the preceding year. (Note: In Social Security jargon, entitled means you have actually filed for benefits, not simply that you are eligible for them.)

2) The monthly premium for December and January is deducted from those benefits (i.e., the premium for December is deducted from the November benefit which is paid in December).

3) The individual's premium for January is not adjusted based on subsection (i) of this section (i.e., IRMAA).
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The Medicare Increase - would it apply?

Post by friar1610 » Mon Oct 12, 2015 12:36 pm

I understand that much of the discussion about the 52% increase in Medicare Part B premiums for some beneficiaries is still speculative. That said, I wonder if anyone has any thoughts on the following:

- Our (mine and my wife's) Medicare premiums increased in 2015 based, according to the letter I got from SS, on our 2013 income tax return. In 2013, due to an abnormal set of circumstances, our income slightly exceeded the limit to remain in the lowest premium category and triggered a $42/mo premium adjustment above the standard $104.90/mo premium for each of us.

- In 2014, our income dropped back to its normal level, well below the $170K limit that triggers the income-related adjustment. Presumably, the letter from SS informing us of our 2016 payments will be based on our 2014 tax return and should have us back to the standard Medicare premium.

From that I infer that we will not get hit by the 52% increase. (None of the other conditions that trigger the increase apply to us.)

Does this make sense to those who understand this "gotcha" better than I do?

Thank you.
Friar1610

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Re: The Medicare Increase - would it apply?

Post by Christine_NM » Mon Oct 12, 2015 12:48 pm

Yes, I think that is what will happen. In 2012 I cashed some inherited savings bonds and it pushed me into a higher Medicare premium bracket in 2014. This year I am back to the regular premium based on my 2013 income.
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Re: The Medicare Increase - would it apply?

Post by clydewolf » Mon Oct 12, 2015 1:09 pm

friar1610 wrote:I understand that much of the discussion about the 52% increase in Medicare Part B premiums for some beneficiaries is still speculative. That said, I wonder if anyone has any thoughts on the following:

- Our (mine and my wife's) Medicare premiums increased in 2015 based, according to the letter I got from SS, on our 2013 income tax return. In 2013, due to an abnormal set of circumstances, our income slightly exceeded the limit to remain in the lowest premium category and triggered a $42/mo premium adjustment above the standard $104.90/mo premium for each of us.

- In 2014, our income dropped back to its normal level, well below the $170K limit that triggers the income-related adjustment. Presumably, the letter from SS informing us of our 2016 payments will be based on our 2014 tax return and should have us back to the standard Medicare premium.

From that I infer that we will not get hit by the 52% increase. (None of the other conditions that trigger the increase apply to us.)

Does this make sense to those who understand this "gotcha" better than I do?

Thank you.
The Medicare Income Related Monthly Adjusted Amount (IRMAA) is on a per year basis. You pay the higher amount for one year, based on your income from two years earlier. Example: should your 2015 income exceed the threshold, your 2017 Medicare B and D premiums would increase. Some folks may have the higher premiums every year.

Here are the 2013 thresholds and Medicare B and D amounts folks are paying in 2015: https://www.medicare.gov/your-medicare- ... costs.html

If you have extenuating circumstances, you can request the IRMAA be lowered. Here is the form to use: http://www.socialsecurity.gov/forms/ssa-44.pdf

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Re: The Medicare Increase - would it apply?

Post by etarini » Mon Oct 12, 2015 1:11 pm

Key question: are you currently receiving Social Security?

excerpted from article in October AARP Bulletin, regarding whether or not you will have an increase:

1. You pay standard Part B premiums and have them deducted from your Social Security checks - NO
2. You pay higher-income Part B premiums - YES
3. You're enrolled in Part B but pay your premiums directly to Medicare - YES
4. Your Part B premiums are paid by your state - NO
5. You pay permanent penalties because you signed up late for Part B - Yes
6. You are not yet enrolled in Part B but will sign up in 2016 - YES

Eric

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Re: How to Avoid the 2016 Medicare Part B Increase

Post by tadamsmar » Mon Oct 12, 2015 1:18 pm

Does that mean that one is will have to pay the increase just because he/she is not deducting the premium from their SS benefit in the last 2 months of 2015? That's a weird rule.

Everyone impacted needs to make sure they are using an SS deduction to pay the premium. This, at least, is an easy fix where it applies, but you need to do it soon. This seems to be what the Kiplinger's link implies:

viewtopic.php?f=2&t=175532&p=2653396#p2653001

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Re: How to Avoid the 2016 Medicare Part B Increase

Post by samta09 » Mon Oct 12, 2015 1:30 pm

My dad signed up to collect social security since he turned full retirement age. My mother just signed up and will be collecting her first payment in November 2015. She also just reached full retirement age as well in October 2015. They are currently both working full time and using their health insurance plan. They also signed up for Part A when they filed for social security. They did not signed up for Part B. My understanding is that if they plan to retire in January 2016, their premiums would increase from $105 to $150, unless they signed up for Part B now and have it effective December 2015. Am I assuming this correctly?

Also, if they plan to work for a few months in 2016, I don't see how they can avoid the increase since they'll still using their employer insurance until retired sometime in 2016. Please correct me if I'm missing anything.

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Re: How to Avoid the 2016 Medicare Part B Increase

Post by tadamsmar » Mon Oct 12, 2015 2:12 pm

samta09 wrote:My dad signed up to collect social security since he turned full retirement age. My mother just signed up and will be collecting her first payment in November 2015. She also just reached full retirement age as well in October 2015. They are currently both working full time and using their health insurance plan. They also signed up for Part A when they filed for social security. They did not signed up for Part B. My understanding is that if they plan to retire in January 2016, their premiums would increase from $105 to $150, unless they signed up for Part B now and have it effective December 2015. Am I assuming this correctly?

Also, if they plan to work for a few months in 2016, I don't see how they can avoid the increase since they'll still using their employer insurance until retired sometime in 2016. Please correct me if I'm missing anything.
The Kiplinger article says it a little differently, but if they sign up for Part B now and have the premium withheld from their SS then that should avoid the increase if they meet the MAGI limits, according to this:
--If you sign up for Social Security before October 31 and have your Medicare premiums withheld from your checks, you will pay the lower premium, says Timothy Steffen, director of financial planning for R.W. Baird & Co., a wealth-management firm. Your Medicare premiums would be withheld from your November payment, which is received in December, and you’d be eligible for the hold-harmless provision, he says.
Read more at http://www.kiplinger.com/article/insura ... ZuiAfme.99

I think you are right about signing up during 2016.

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Re: How to Avoid the 2016 Medicare Part B Increase

Post by samta09 » Mon Oct 12, 2015 2:54 pm

Tad, if their Part B premium is withheld from their SS checks, that means their SS checks will be reduced by the $105 premium, starting in December. Doing so they will have two type of insurance, one from SS and the other from their employer. However, they continue to use their employer insurance as primary. Am I interpreting this correctly?

Also, if they plan to retire between Jan-Mar 2016, then applying for Part B now makes sense, assuming the premiums are $105 if retire between Jan-Mar and $150 if retire April and later. Otherwise, they should wait to apply for Part B if they plan to retire in April forward. Is this a correct assumption?

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Re: How to Avoid the 2016 Medicare Part B Increase

Post by Fat-Tailed Contagion » Mon Oct 12, 2015 3:07 pm

ObliviousInvestor wrote:The following information comes via email from a Boglehead who knows more about Medicare than I do.

CFR 1395r(f) is where we can find the official description of the hold harmless provision.
For any calendar year after 1988, if an individual is entitled to monthly benefits under section 402 or 423 of this title or to a monthly annuity under section 3(a), 4(a), or 4(f) of the Railroad Retirement Act of 1974 [45 U.S.C. 231b(a), 231c(a), (f)] for November and December of the preceding year, if the monthly premium of the individual under this section for December and for January is deducted from those benefits under section 1395s(a)(1) of this title or section 1395s(b)(1) of this title, and if the amount of the individual’s premium is not adjusted for such January under subsection (i) of this section, the monthly premium otherwise determined under this section for an individual for that year shall not be increased, pursuant to this subsection, to the extent that such increase would reduce the amount of benefits payable to that individual for that December below the amount of benefits payable to that individual for that November (after the deduction of the premium under this section). For purposes of this subsection, retroactive adjustments or payments and deductions on account of work shall not be taken into account in determining the monthly benefits to which an individual is entitled under section 402 or 423 of this title or under the Railroad Retirement Act of 1974 [45 U.S.C. 231 et seq.].
If we break that down, it looks like there are three requirements:

1) The individual is entitled to benefits for November and December of the preceding year. (Note: In Social Security jargon, entitled means you have actually filed for benefits, not simply that you are eligible for them.)

2) The monthly premium for December and January is deducted from those benefits (i.e., the premium for December is deducted from the November benefit which is paid in December).

3) The individual's premium for January is not adjusted based on subsection (i) of this section (i.e., IRMAA).
Thank obvi,

Can you explain what this means in layman's terms?

I'm having trouble discerning what actually qualifies for "hold harmless" provision.
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Re: How to Avoid the 2016 Medicare Part B Increase

Post by etarini » Mon Oct 12, 2015 3:37 pm

Fat-Tailed Contagion wrote:Can you explain what this means in layman's terms?
I'm having trouble discerning what actually qualifies for "hold harmless" provision.
There are a couple of these SS/Medicare threads extant...here's what I wrote in one of them:

excerpted from article in October AARP Bulletin, regarding whether or not you will have an increase:
1. You pay standard Part B premiums and have them deducted from your Social Security checks - NO
2. You pay higher-income Part B premiums - YES
3. You're enrolled in Part B but pay your premiums directly to Medicare - YES
4. Your Part B premiums are paid by your state - NO
5. You pay permanent penalties because you signed up late for Part B - Yes
6. You are not yet enrolled in Part B but will sign up in 2016 - YES
Basically, you have to be in the lowest Medicare tier (no IRMAA surcharge) and you must be having your Medicare premium deducted from your Social Security benefit.

Eric

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Re: The Medicare Increase - would it apply?

Post by ObliviousInvestor » Mon Oct 12, 2015 4:41 pm

My understanding is that a person's Medicare premiums will go up unless they specifically qualify for the "hold harmless" provision.

The following information comes via email from a Boglehead who knows more about Medicare than I do. [Note: I wrote this same thing in the other current thread on the matter.]

CFR 1395r(f) is where we can find the official description of the hold harmless provision.
For any calendar year after 1988, if an individual is entitled to monthly benefits under section 402 or 423 of this title or to a monthly annuity under section 3(a), 4(a), or 4(f) of the Railroad Retirement Act of 1974 [45 U.S.C. 231b(a), 231c(a), (f)] for November and December of the preceding year, if the monthly premium of the individual under this section for December and for January is deducted from those benefits under section 1395s(a)(1) of this title or section 1395s(b)(1) of this title, and if the amount of the individual’s premium is not adjusted for such January under subsection (i) of this section, the monthly premium otherwise determined under this section for an individual for that year shall not be increased, pursuant to this subsection, to the extent that such increase would reduce the amount of benefits payable to that individual for that December below the amount of benefits payable to that individual for that November (after the deduction of the premium under this section). For purposes of this subsection, retroactive adjustments or payments and deductions on account of work shall not be taken into account in determining the monthly benefits to which an individual is entitled under section 402 or 423 of this title or under the Railroad Retirement Act of 1974 [45 U.S.C. 231 et seq.].
If we break that down, it looks like there are three requirements to be held harmless:

1) The individual is entitled to benefits for November and December of the preceding year. (Note: In Social Security jargon, entitled means you have actually filed for benefits, not simply that you are eligible for them.)

2) The monthly premium for December and January is deducted from those benefits (i.e., the premium for December is deducted from the November benefit which is paid in December).

3) The individual's premium for January is not adjusted based on subsection (i) of this section (i.e., IRMAA).
Mike Piper, author/blogger

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Re: The Medicare Increase - would it apply?

Post by friar1610 » Mon Oct 12, 2015 5:20 pm

I'm the OP. Thank you all for the responses. To clarify, my wife and I are both receiving SS and we have the Medicare premiums deducted from our SS payments. With our 2014 MAGI having dropped back below the $170K threshold, I believe I am safe.

Thanks again.
Friar1610

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Re: How to Avoid the 2016 Medicare Part B Increase

Post by Fat-Tailed Contagion » Mon Oct 12, 2015 8:01 pm

etarini wrote:
Fat-Tailed Contagion wrote:Can you explain what this means in layman's terms?
I'm having trouble discerning what actually qualifies for "hold harmless" provision.
There are a couple of these SS/Medicare threads extant...here's what I wrote in one of them:

excerpted from article in October AARP Bulletin, regarding whether or not you will have an increase:
1. You pay standard Part B premiums and have them deducted from your Social Security checks - NO
2. You pay higher-income Part B premiums - YES
3. You're enrolled in Part B but pay your premiums directly to Medicare - YES
4. Your Part B premiums are paid by your state - NO
5. You pay permanent penalties because you signed up late for Part B - Yes
6. You are not yet enrolled in Part B but will sign up in 2016 - YES
Basically, you have to be in the lowest Medicare tier (no IRMAA surcharge) and you must be having your Medicare premium deducted from your Social Security benefit.

Eric
Thanks Eric,

I currently pay standard part B premiums and have them deducted from my SS check.

I just began receiving SS benefits in Sept. 2015 at age 67.3.

I plan to suspend and repay benefits in January 2016 and then take benefits again at age 70.

Will I be subject to the part B increase?

Thank you,

-FTC
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Re: The Medicare Increase - would it apply?

Post by ObliviousInvestor » Tue Oct 13, 2015 6:25 pm

friar1610 wrote:I'm the OP. Thank you all for the responses. To clarify, my wife and I are both receiving SS and we have the Medicare premiums deducted from our SS payments. With our 2014 MAGI having dropped back below the $170K threshold, I believe I am safe.

Thanks again.
My understanding is that you qualify for the hold harmless provision, in that case. As a result, your premium will not be allowed to increase by an amount such that your net benefit check would go down. In other words, with no COLA for 2016 and your gross benefit therefore staying the same, my understanding is that your premium will stay the same (at $146.90) as well.

Edited to add: This is as opposed to going all the way up to the new $159 premium, which is what would happen if you weren't held harmless.
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Re: The Medicare Increase - would it apply?

Post by rockylou » Tue Oct 13, 2015 7:27 pm

My husband suspended his social security until age 70, he is going to be 67 next month. He is paying Medicare quarterly. We are in the 15% tax bracket. How much will his Medicare go up? Can or should he resume his social security?

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Re: The Medicare Increase - would it apply?

Post by ObliviousInvestor » Tue Oct 13, 2015 7:45 pm

rockylou wrote:My husband suspended his social security until age 70, he is going to be 67 next month. He is paying Medicare quarterly. We are in the 15% tax bracket. How much will his Medicare go up? Can or should he resume his social security?
My understanding is that if his current monthly Medicare premium is $104.90, it would go up to $159.30 (assuming you are not subject to IRMAA -- which you probably aren't if you're in the 15% tax bracket).

He could resume his Social Security in order to avoid to qualify for "hold harmless," but, at least in my view, that would (in most cases) be a shortsighted thing to do. I would generally not base Social Security decisions (which will affect your income for the rest of your life) on this Medicare hullaballoo. It should be a factor in the decision, but most likely a minor one unless we're talking about a very small benefit in the first place.
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Re: The Medicare Increase - would it apply?

Post by rockylou » Tue Oct 13, 2015 8:10 pm

Thanks, is the higher premium for 2016 only? If there is a COLA increase next year, will he continue paying a higher rate?

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Re: The Medicare Increase - would it apply?

Post by ObliviousInvestor » Tue Oct 13, 2015 10:13 pm

rockylou wrote:Thanks, is the higher premium for 2016 only? If there is a COLA increase next year, will he continue paying a higher rate?
The short answer is, we don't know what 2017 will look like, because it depends both on Medicare costs (talking here about the actual expenditures of the program, not the premium that a given person pays) and on Social Security COLA (or lack thereof).

If there is a COLA for 2017, it could indeed have the effect of spreading premiums back out in the more normal manner, because people currently qualifying for hold harmless would be able to have their premiums increase by (up to) the dollar amount of the COLA.
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Re: The Medicare Increase - would it apply?

Post by TheGreyingDuke » Wed Oct 14, 2015 9:48 am

ObliviousInvestor wrote:
rockylou wrote:My husband suspended his social security until age 70, he is going to be 67 next month. He is paying Medicare quarterly. We are in the 15% tax bracket. How much will his Medicare go up? Can or should he resume his social security?
My understanding is that if his current monthly Medicare premium is $104.90, it would go up to $159.30 (assuming you are not subject to IRMAA -- which you probably aren't if you're in the 15% tax bracket).

He could resume his Social Security in order to avoid to qualify for "hold harmless," but, at least in my view, that would (in most cases) be a shortsighted thing to do. I would generally not base Social Security decisions (which will affect your income for the rest of your life) on this Medicare hullaballoo. It should be a factor in the decision, but most likely a minor one unless we're talking about a very small benefit in the first place.
Sorry if I am a bit thick-headed about this (and perhaps the answers are not there to be had.)

I am in the 30%, don't collect SS (I am 67 and waiting for 70.) I agree with the comment of not letting the premium tick up decide SS strategies, but I am trying to figure out the numbers.

If I get raised to $159.30 for next year is that increase built in to future premiums? If the answer is NO, then the decision to absorb the one year increase is the correct one.

But if it is, then the calculation becomes quite different, i.e. $55 a month times however many months I live. Say I live another 20 years (87 years old) the total increase would be $13,200.

If I take social security for two months and then suspend I lose the .67% monthly increase times 2 months for a 1.33% permanent reduction in SS. If my at 70 annual benefit is $26400 reducing that by 1.67% costs me $441 a year. If a live to 87 I lose a total of $7500 in benefits less the taxes I will pay on SS (85% will be taxable, I will be in the 25% bracket). This reduction in taxes reduces the impact of the "take it two months and suspend strategy" by $94 a year, times 17 years or $1598.

The $7500 loss in SS benefits, less the$1598 in avoided taxes, makes the 17 year after tax cost in SS benefits $5900.

IF the Medicare increase is permanent the $13,200 increase in premiums is worse, for me, than taking SS for the last two months of this year and then suspending.

Do I have this right?? Is the premium increase built in to future premiums?
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Re: The Medicare Increase - would it apply?

Post by friar1610 » Wed Oct 14, 2015 10:28 am

ObliviousInvestor wrote:
friar1610 wrote:I'm the OP. Thank you all for the responses. To clarify, my wife and I are both receiving SS and we have the Medicare premiums deducted from our SS payments. With our 2014 MAGI having dropped back below the $170K threshold, I believe I am safe.

Thanks again.
My understanding is that you qualify for the hold harmless provision, in that case. As a result, your premium will not be allowed to increase by an amount such that your net benefit check would go down. In other words, with no COLA for 2016 and your gross benefit therefore staying the same, my understanding is that your premium will stay the same (at $146.90) as well.

Edited to add: This is as opposed to going all the way up to the new $159 premium, which is what would happen if you weren't held harmless.
Thank you. I may be missing something, but would appreciate your take.

Under normal circumstances (absent the situation that is the subject of this thread) our premiums for CY 2016 would have dropped to back to the standard $104.90/ea since our 2014 MAGI had dropped back under the $170K threshold which generates the income-related adjustment. (I understand that under normal circumstances, had there been an inflation adjustment to SS, there would have been a corresponding increase to the standard Medicare premium.) So why do you say that under the current situation, the hold harmless provision would keep me at my 2015 premium level of $146.90 - rather than $104.90 - since that premium was based on a 2013 MAGI >$170K which is no longer applicable?

Thank you; appreciate your taking the time to help us all try to understand this.
Friar1610

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Re: The Medicare Increase - would it apply?

Post by ObliviousInvestor » Wed Oct 14, 2015 10:41 am

TheGreyingDuke wrote:If I get raised to $159.30 for next year is that increase built in to future premiums?
My level of knowledge regarding Medicare is well below my knowledge level of Social Security, so I would encourage you to read the Code section for yourself. Here is the link again:
https://www.law.cornell.edu/uscode/text/42/1395r

Subsection (a) deals with how the premium is set in the first place. As far as I can tell, it's simply a function of the program's costs, and does not reference the prior year's premium at all.

Subsection (b) deals with the penalty for late enrollment, so I don't think we're concerned about that here.

Subsection (c) is about rounding -- again not a concern here.

Subsection (d) provides a definition for a term used in subsection (b) -- again dealing with the penalty for late enrollment.

Subsection (e) deals with another aspect of the late enrollment penalty.

Subsection (f) is where we get to the hold harmless rules. I do not see anything here about premiums not being able to go down. I only see a limitation on how much they can go up.

Subsection (g) deals with whether drug costs and home health services are included in the costs used to calculate premiums. (I think?)

Subsection (h) deals with "people residing in a CCA [comparative cost adjustment] area under section 1395w–29." Section 1395w-29 itself, however, has apparently been repealed. So I'm guessing we don't need to worry about it.

Subsection (i) is about IRMAA (i.e., people with incomes above certain levels having their premiums subsidized less than people with lower incomes), which is not our concern here.

...and that's it. So, I'm not seeing anything that says that if your premium gets bumped up to a certain level in one year, it can't go down in the next year. But again, I'd encourage you to read it for yourself. I may be missing something or misunderstanding something.
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Re: The Medicare Increase - would it apply?

Post by ObliviousInvestor » Wed Oct 14, 2015 10:47 am

friar1610 wrote:Under normal circumstances (absent the situation that is the subject of this thread) our premiums for CY 2016 would have dropped to back to the standard $104.90/ea since our 2014 MAGI had dropped back under the $170K threshold which generates the income-related adjustment. (I understand that under normal circumstances, had there been an inflation adjustment to SS, there would have been a corresponding increase to the standard Medicare premium.) So why do you say that under the current situation, the hold harmless provision would keep me at my 2015 premium level of $146.90 - rather than $104.90 - since that premium was based on a 2013 MAGI >$170K which is no longer applicable?
Well, if you did not qualify for the hold harmless provision, your premium would go up to $159.30.

The hold harmless provision doesn't say that your premium can't go up, nor does it say that it must go down. All it does is limit the increase in premiums so that your monthly net (i.e., after-premium) Social Security benefit does not go down. In other words, assuming no increase in Social Security benefits from this year to next year, it limits your premium to what it is this year ($146.90).

Edited to add: Said yet another way, $159.30 next year is the new standard amount. People may qualify for an exception to this standard amount. But that exception doesn't necessarily mean they'll have the (non-IRMAA) $104.90 premium from 2015.
Last edited by ObliviousInvestor on Wed Oct 14, 2015 11:01 am, edited 1 time in total.
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Re: The Medicare Increase - would it apply?

Post by pshonore » Wed Oct 14, 2015 10:52 am

I think also depends on if there is a COLA in 2017 (we won't know that until October 2016). But even a 0.5% COLA then would only increase the average benefit by less than $10/month which would not make much of a dent in the increased Medicare premium.

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Re: The Medicare Increase - would it apply?

Post by friar1610 » Wed Oct 14, 2015 1:06 pm

ObliviousInvestor wrote:
friar1610 wrote:Under normal circumstances (absent the situation that is the subject of this thread) our premiums for CY 2016 would have dropped to back to the standard $104.90/ea since our 2014 MAGI had dropped back under the $170K threshold which generates the income-related adjustment. (I understand that under normal circumstances, had there been an inflation adjustment to SS, there would have been a corresponding increase to the standard Medicare premium.) So why do you say that under the current situation, the hold harmless provision would keep me at my 2015 premium level of $146.90 - rather than $104.90 - since that premium was based on a 2013 MAGI >$170K which is no longer applicable?
Well, if you did not qualify for the hold harmless provision, your premium would go up to $159.30.

The hold harmless provision doesn't say that your premium can't go up, nor does it say that it must go down. All it does is limit the increase in premiums so that your monthly net (i.e., after-premium) Social Security benefit does not go down. In other words, assuming no increase in Social Security benefits from this year to next year, it limits your premium to what it is this year ($146.90).

Edited to add: Said yet another way, $159.30 next year is the new standard amount. People may qualify for an exception to this standard amount. But that exception doesn't necessarily mean they'll have the (non-IRMAA) $104.90 premium from 2015.
Thanks. Even though I don't really like the answer, at least I believe I now understand it.
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Re: How to Avoid the 2016 Medicare Part B Increase

Post by tadamsmar » Wed Oct 14, 2015 1:48 pm

VictoriaF wrote:tadamsmar,

I sympathize with your situation and have a question and a suggestion.

Question: How soon Medicare penalties are imposed after the initial eligibility? In other words, can you delay Medicare by 1 year until you can sign for both Social Security and Medicare, without a Medicare penalty?

Suggestion: One does not have to sign for Medicare Part B if one is covered by an employer insurance. You may be able to find an easy part-time job with insurance that would tie you up for a year until you pass the current hurdle.

Victoria
Victoria,

Based on your suggestion, I am planning to do this:

1. Sign up for my employer's health insurance in the open enrollment period that ends around Nov 9.
2. Reverse my decision to get Medicare Part B starting on Nov 1, or dis-enroll. I have a email into SS to ask about the procedure, not sure if I can stop it before it starts or will have to reverse it after it starts.
3. Have my wife sign up for self only FEHB in the FEHB enrollment period. From the info I have from other forums, she can take me off and then put my back on later.

I have not taken any action yet, but I am going to implement it soon unless I find a snag in this plan.

I plan to retire in November of 2016.

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Re: The Medicare Increase - would it apply?

Post by TheGreyingDuke » Wed Oct 14, 2015 3:17 pm

Thanks Oblivious Investor for reiterating what should have been obvious to me from your earlier post
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Re: The Medicare Increase - would it apply?

Post by tadamsmar » Wed Oct 14, 2015 3:24 pm

friar1610 wrote:I'm the OP. Thank you all for the responses. To clarify, my wife and I are both receiving SS and we have the Medicare premiums deducted from our SS payments. With our 2014 MAGI having dropped back below the $170K threshold, I believe I am safe.

Thanks again.
We had to contact SS and get them to roll back the premium. They don't always do it automatically. Maybe you can wait till you get the notice on next year's premium and contest it if needed.

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Re: The Medicare Increase - would it apply?

Post by TheGreyingDuke » Wed Oct 14, 2015 9:53 pm

There is an article that provides somemore detail on this https://www.kitces.com/blog/understandi ... ficiaries/

One additional piece of information indicates that if you are affected by this premium increase next year, once the COLA on Social Security rises again, some of that increase will be clawed back as those who had been held harmless in previous years, begin to be assessed the full cost of the benefit (up to the COLA increase.)
The fact that the Social Security COLA was 0.0% again in 2011 meant the process repeated itself once more the following year; those who had been on Social Security (and Medicare) since 2009 saw their premiums remain at $96.40 thanks to Hold Harmless, anyone who had just joined the program in 2010 saw their Part B premiums locked in at $110.50 under Hold Harmless, and all of the necessary premium increase for the Medicare program was allocated to the roughly-remaining-25% of enrollees, who saw their Medicare premiums rise another 4.4% to $115.40. And of course, anyone who was new to Medicare in 2011 simply entered in at this new $115.40 Part B premium rate!

Notably, though, these effective ‘surcharges’ – where increased Part B premium obligations were allocated to just the subset of those subject to the Hold Harmless provision – were mitigated once Social Security benefits actually began to increase again, as they did once the 2012 Social Security COLA was announced (at 3.6%). At that point, Social Security benefits increased (in dollar terms) enough for those who were previously subject to the Hold Harmless provision to finally participate in their share of the Medicare Part B premium increases of the prior years. And of course, once the premium increases could finally be “shared” amongst more people, the relative increase per person was far less, and as a result the overall standard rate on Medicare Part B actually declined in 2012 to $99.90 (an increase of about 3.6% for those who had previously been subject to Hold Harmless, but a decrease for those who had enrolled in 2010 or 2011 or those who had anticipated enrolling in 2012!).
In other words, the increase for those NOT held harmless will not extend forever, at least once SS payments begin to increase (in nominal dollars.)
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Re: The Medicare Increase - would it apply?

Post by tadamsmar » Thu Oct 15, 2015 6:56 am

It's not really "clawed back" in the sense that everyone ends up having paid the same. The folks who had higher premiums during the zero COLA years don't get compensating lower premiums in the later positive COLA years.

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Re: The Medicare Increase - would it apply?

Post by TheGreyingDuke » Thu Oct 15, 2015 8:29 am

tadamsmar wrote:It's not really "clawed back" in the sense that everyone ends up having paid the same. The folks who had higher premiums during the zero COLA years don't get compensating lower premiums in the later positive COLA years.
But it is my interpretation that, over time with the usual COLA increases, the premiums will converge, unless I am seeing this all wrong.
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Re: The Medicare Increase - would it apply?

Post by classicjazzfan » Thu Oct 15, 2015 8:34 pm

I've been following the discussions on this forum and elsewhere about who will be "held harmless" with regard to the pending increase in Medicare Part B premiums, but I've not seen (or I missed) a clear statement of how this provision relates to my wife's situation. An August 2015 news article (http://www.investmentnews.com/article/2 ... care-costs) says that "as long as a retiree receives Social Security benefits for November (paid in December 2015) and December (paid in January 2016) and have their Medicare Part B premiums deducted from those benefits, the hold-harmless provision will apply." The article restates it this way: "to avoid [a] major hike in Medicare Part B premiums next year, they need to apply for Social Security benefits by October so they can begin collecting them by November and have their Medicare Part B premiums deducted from those benefits." Does this mean that to be "held harmless," a person must receive Social Security benefits for November and December of 2015 and must also be enrolled in Medicare for BOTH months? My wife will be receiving Social Security benefits for November and December (due to disability) but she won't begin Medicare until December 1. In short, would not being in Medicare for November disqualify her for the "held harmless" protection? Thank you.

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Re: The Medicare Increase - would it apply?

Post by pshonore » Fri Oct 16, 2015 7:59 am

Another point of confusion: AFAIK, I can apply for SS as late as Nov 30, and still get a November benefit but I may not receive it until late December or early January. Would that qualify a person for hold harmless?

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Re: The Medicare Increase - would it apply?

Post by ObliviousInvestor » Fri Oct 16, 2015 1:24 pm

classicjazzfan wrote:I've been following the discussions on this forum and elsewhere about who will be "held harmless" with regard to the pending increase in Medicare Part B premiums, but I've not seen (or I missed) a clear statement of how this provision relates to my wife's situation. An August 2015 news article (http://www.investmentnews.com/article/2 ... care-costs) says that "as long as a retiree receives Social Security benefits for November (paid in December 2015) and December (paid in January 2016) and have their Medicare Part B premiums deducted from those benefits, the hold-harmless provision will apply." The article restates it this way: "to avoid [a] major hike in Medicare Part B premiums next year, they need to apply for Social Security benefits by October so they can begin collecting them by November and have their Medicare Part B premiums deducted from those benefits." Does this mean that to be "held harmless," a person must receive Social Security benefits for November and December of 2015 and must also be enrolled in Medicare for BOTH months? My wife will be receiving Social Security benefits for November and December (due to disability) but she won't begin Medicare until December 1. In short, would not being in Medicare for November disqualify her for the "held harmless" protection? Thank you.
I would suggest rereading the actual law posted above (here) and go by that rather than the article you linked to. There is no requirement that you have to be enrolled in Medicare for November.
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Re: The Medicare Increase - would it apply?

Post by ObliviousInvestor » Fri Oct 16, 2015 1:29 pm

pshonore wrote:Another point of confusion: AFAIK, I can apply for SS as late as Nov 30, and still get a November benefit but I may not receive it until late December or early January. Would that qualify a person for hold harmless?
My understanding is that as long as you get a November benefit and your December premium is taken from it (and you meet the other requirements), you should be held harmless. I don't see anything in the Code section referenced above about the Social Security payment having to be made by a certain date.
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Re: How to Avoid the 2016 Medicare Part B Increase

Post by VictoriaF » Sat Oct 17, 2015 8:33 am

tadamsmar wrote:
VictoriaF wrote:tadamsmar,

I sympathize with your situation and have a question and a suggestion.

Question: How soon Medicare penalties are imposed after the initial eligibility? In other words, can you delay Medicare by 1 year until you can sign for both Social Security and Medicare, without a Medicare penalty?

Suggestion: One does not have to sign for Medicare Part B if one is covered by an employer insurance. You may be able to find an easy part-time job with insurance that would tie you up for a year until you pass the current hurdle.

Victoria
Victoria,

Based on your suggestion, I am planning to do this:

1. Sign up for my employer's health insurance in the open enrollment period that ends around Nov 9.
2. Reverse my decision to get Medicare Part B starting on Nov 1, or dis-enroll. I have a email into SS to ask about the procedure, not sure if I can stop it before it starts or will have to reverse it after it starts.
3. Have my wife sign up for self only FEHB in the FEHB enrollment period. From the info I have from other forums, she can take me off and then put my back on later.

I have not taken any action yet, but I am going to implement it soon unless I find a snag in this plan.

I plan to retire in November of 2016.
tadamsmar,

Your plan looks good, but please double-check (triple-check?) that your wife can put you back on her plan later. I am quite certain it's possible during the following year enrollment. I am more concerned about your wife being able to add you to her plan during the current year. I think the latter would require a change in the family situation such as marriage, new child, and alike.

Good luck,
Victoria
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Re: How to Avoid the 2016 Medicare Part B Increase

Post by mbres60 » Sat Oct 17, 2015 9:18 am

VictoriaF wrote:
tadamsmar wrote:
VictoriaF wrote:tadamsmar,

I sympathize with your situation and have a question and a suggestion.

Question: How soon Medicare penalties are imposed after the initial eligibility? In other words, can you delay Medicare by 1 year until you can sign for both Social Security and Medicare, without a Medicare penalty?

Suggestion: One does not have to sign for Medicare Part B if one is covered by an employer insurance. You may be able to find an easy part-time job with insurance that would tie you up for a year until you pass the current hurdle.

Victoria
Victoria,

Based on your suggestion, I am planning to do this:

1. Sign up for my employer's health insurance in the open enrollment period that ends around Nov 9.
2. Reverse my decision to get Medicare Part B starting on Nov 1, or dis-enroll. I have a email into SS to ask about the procedure, not sure if I can stop it before it starts or will have to reverse it after it starts.
3. Have my wife sign up for self only FEHB in the FEHB enrollment period. From the info I have from other forums, she can take me off and then put my back on later.

I have not taken any action yet, but I am going to implement it soon unless I find a snag in this plan.

I plan to retire in November of 2016.
tadamsmar,

Your plan looks good, but please double-check (triple-check?) that your wife can put you back on her plan later. I am quite certain it's possible during the following year enrollment. I am more concerned about your wife being able to add you to her plan during the current year. I think the latter would require a change in the family situation such as marriage, new child, and alike.

Good luck,
Victoria
Hmmmmm. What happens if your wife passes unexpectedly before you retire? I don't know her age but what happens if things at work change and she decides she can't take it anymore and retires before you do? (That is where there is an issue with her adding you to FEHBP only under certain circumstances). I would stay on her plan and not take the chance.

As an FYI - both my dh and myself are in a similar situation. My dh is a retired Fed. He started Part B last year but because he retired under CSRS his SS will be small. He is healthy so we are waiting to collect SS for him closer to 70. His then will go up because Part B is taken out of his pension annuity. I am about to turn 65 before the end of this year. No way around it for me. I will get the increase. Only way is for us to not take Part B at all. I know many Feds don't but I would hate to turn it down and wish I had it later when I get older and more sickly.

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