When to enroll in Medicare?

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kd2008
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When to enroll in Medicare?

Post by kd2008 » Wed Apr 05, 2017 3:40 pm

I am helping out a same-sex married couple with 20 yr age difference on medicare enrollment. I would like forum's help on this. Thanks!

Guy A is 62 and Guy B is 42. Both in good health.

Currently, Guy A has health insurance through his own employer and Guy B through is own employer - Different employers, different health insurance companies. Both are HDHP + HSA with individual coverage. Employer for each one is a megacorp.

Guy A intends to retire at 65 and start social security at age 70.

Upon retirement, Guy A will switch to health insurance under Guy B as spouse.

Addition of a spouse, results in $1200/yr increase in employee contribution of health insurance. Employer of Guy B will add $600 additional to the HSA.

Fed tax 25%, State tax 5% and FICA 7.65%. So post-tax additional cost will be $1200*(1-0.25-0.05-0.0765) = about $750

Less the $600 received in HSA, the net cost becomes $150.

As such this is a great deal. Or seems so far.

Guy A can delay enrolling in Medicare as long as he is covered on Guy B's employer health insurance.

Given this, would it be prudent skip medicare for Guy A till Guy B retires?

Say Guy B retires at age 67, then Guy A will be 87. There is a small chance that Guy A is not in best health - may be nursing care etc. Would there be problem in signing up Guy A this late?

Lexi
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Re: When to enroll in Medicare?

Post by Lexi » Wed Apr 05, 2017 3:56 pm

Check the rules on timing carefully. I think Guy A has to be on Spouse's insurance before he becomes eligible for Medicare. Then he should be able to ride it as long as spouse has qualifying employee insurance covering both. Retiree insurance or COBRA does not avoid the penalty.

kd2008
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Re: When to enroll in Medicare?

Post by kd2008 » Wed Apr 05, 2017 4:16 pm

Lexi wrote:Check the rules on timing carefully. I think Guy A has to be on Spouse's insurance before he becomes eligible for Medicare. Then he should be able to ride it as long as spouse has qualifying employee insurance covering both. Retiree insurance or COBRA does not avoid the penalty.
Important point. I will certainly advise Guy A to be on Guy B's insurance before Guy A turns 65.

So you see no issues for riding it for 22 years if it comes to that, right?

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dm200
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Re: When to enroll in Medicare?

Post by dm200 » Wed Apr 05, 2017 5:02 pm

kd2008 wrote:I am helping out a same-sex married couple with 20 yr age difference on medicare enrollment. I would like forum's help on this. Thanks!
Guy A is 62 and Guy B is 42. Both in good health.
Currently, Guy A has health insurance through his own employer and Guy B through is own employer - Different employers, different health insurance companies. Both are HDHP + HSA with individual coverage. Employer for each one is a megacorp.
Guy A intends to retire at 65 and start social security at age 70.
Upon retirement, Guy A will switch to health insurance under Guy B as spouse.
Addition of a spouse, results in $1200/yr increase in employee contribution of health insurance. Employer of Guy B will add $600 additional to the HSA.
Fed tax 25%, State tax 5% and FICA 7.65%. So post-tax additional cost will be $1200*(1-0.25-0.05-0.0765) = about $750
Less the $600 received in HSA, the net cost becomes $150.
As such this is a great deal. Or seems so far.
Guy A can delay enrolling in Medicare as long as he is covered on Guy B's employer health insurance.
Given this, would it be prudent skip medicare for Guy A till Guy B retires?
Say Guy B retires at age 67, then Guy A will be 87. There is a small chance that Guy A is not in best health - may be nursing care etc. Would there be problem in signing up Guy A this late?
I think (depending on the Guy B employer) that Guy A might (not sure, but check) be required to enroll in Medicare Parts A and Part B.

Who knows what the rules will be years down the road.

Lexi
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Re: When to enroll in Medicare?

Post by Lexi » Wed Apr 05, 2017 6:43 pm

If you do not enroll during your initial enrollment period you pay a penalty after you do enroll that lasts as long as you are on Medicare EXCEPT if you are covered continuously by qualifying insurance from your or your spouse's current employment. When that ceases you have a special enrollment period when you can enroll without penalty.

Can this last for 22 years? Yes, if nothing changes in the law or rules or Guy B's employment. Realistically, it won't last that long but it is legit as long as the conditions last. Be careful when changes occur.

Zott
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Re: When to enroll in Medicare?

Post by Zott » Wed Apr 05, 2017 9:59 pm

I believe that enrollment in Medicare is automatic when Social Security benefits start (or age 65 if earlier). The beneficiary would no longer be able to participate in an HSA plan if enrolled in Medicare.

Spirit Rider
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Re: When to enroll in Medicare?

Post by Spirit Rider » Thu Apr 06, 2017 12:54 am

Zott wrote:I believe that enrollment in Medicare is automatic when Social Security benefits start (or age 65 if earlier). The beneficiary would no longer be able to participate in an HSA plan if enrolled in Medicare.
Incorrect. This is a common misconception.
  • If you apply for and start receiving SS benefits before age 65, Medicare enrollment is automatic and mandatory at age 65.
  • When you apply for and receive SS benefits on or after age 65, Medicare enrollment is automatic and mandatory at that time.
  • If you do not apply for and receive SS benefits, Medicare enrollment is neither automatic nor mandatory at any age
  • Stated another way, you may voluntarily enroll in Medicare on or after age 65, while delaying SS.
The OPs plan will fully work as long as he continues to work for an employer with >= 20 employees.

As long as Guy A is covered by an employer plan while working or covered under a spouse's plan while that spouse is working. At they end of that employment/coverage:
  • He will have an eight month Medicare Part B/D special enrollment period that begins the month after employment or insurance coverage ends and there will be no Medicare Part B/D penalties assessed.
    He will also get a six month Medigap open enrollment that begins the month after enrolling part B.
Guy A will also be able to continue making an HSA $1,000 catch-up contribution to his own HSA while being covered as a spouse of Guy B. He would loose this ability by enrolling in Medicare, but that would not prevent Guy B from continuing to cover him on a Family HDHP and having a family HSA contribution limit.

I bring this up, because Guy A is going to be on his spouse's high deductible plan for many years. In later years, Guy A may have need for expensive in-patient care and/or expensive prescriptions. In this case it might be cost effective for Guy A to enroll in Medicare Part A and Part D, but not Part B.

For example, The have a very high deductible plan and Guy A has several thousands dollars in prescription cost. Let me tell you, not that hard these days. Ordinarily, they would have to pay those out of pocket until the deductible is reached. However, if they had Guy A enroll in Medicare Part A and Part D, Medicare is secondary, but if you have a very high deductible, Medicare Part D would pay for the prescriptions. Yes, Guy A would have to give up the ability of making his HSA catch-up contributions, but the trade off would be worth it.

kd2008
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Re: When to enroll in Medicare?

Post by kd2008 » Thu Apr 06, 2017 2:18 am

Spirit Rider wrote:
  • When you apply for and receive SS benefits on or after age 65, Medicare enrollment is automatic and mandatory at that time.
  • If you do not apply for and receive SS benefits, Medicare enrollment is neither automatic nor mandatory at any age
Guy A will also be able to continue making an HSA $1,000 catch-up contribution to his own HSA while being covered as a spouse of Guy B. He would loose this ability by enrolling in Medicare, but that would not prevent Guy B from continuing to cover him on a Family HDHP and having a family HSA contribution limit.

I bring this up, because Guy A is going to be on his spouse's high deductible plan for many years. In later years, Guy A may have need for expensive in-patient care and/or expensive prescriptions. In this case it might be cost effective for Guy A to enroll in Medicare Part A and Part D, but not Part B.

For example, The have a very high deductible plan and Guy A has several thousands dollars in prescription cost. Let me tell you, not that hard these days. Ordinarily, they would have to pay those out of pocket until the deductible is reached. However, if they had Guy A enroll in Medicare Part A and Part D, Medicare is secondary, but if you have a very high deductible, Medicare Part D would pay for the prescriptions. Yes, Guy A would have to give up the ability of making his HSA catch-up contributions, but the trade off would be worth it.
Spirit rider thank you for your very lucid explanation.

Guy A intends to receive social security benefit at age 70. So he will be enrolled in Medicare Part A automatically at that time. Since Social Security gives 6 months retroactive enrollment, he should decline this and receive maxed SS benefit. Also Guy A should decline automatic part B enrollment.

Further more, catch up HSA contribution of $1000 stops upon turning 70 as Medicare Part A is now enrolled.

So catch up HSA continues till age 70.

Next, about part D. You suggestion makes sense. Guy A will continued to be covered under spouses employer group health insurance beyond age 70. Guy A can enroll in part D anytime after enrollment in part A or does it need to be at the same time as part A?

Many thanks once again.

NYnative
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Re: When to enroll in Medicare?

Post by NYnative » Thu Apr 06, 2017 2:20 am

Medicare enrollment isn't mandatory regardless of whether or not you have SS. Medicare is a strictly voluntary program. You can decline it, drop out of it, or join it. Penalties may apply if you join later than when you are first eligible or drop out and then rejoin. But it isn't mandatory for anyone at any time, at any age.

Spirit Rider
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Re: When to enroll in Medicare?

Post by Spirit Rider » Thu Apr 06, 2017 8:33 am

kd2008:
Medicare Part A and Part B enrollment is Automatic when you apply for and receive SS benefits on or after age 65. Medicare Part A enrollment is Mandatory at that time and will be retroactive six months. This will make Guy A ineligible to make his HSA catch-up contributions retroactive six months. There is no way to avoid this. Guy A can and should decline Medicare Part B if covered on Guy B's employer coverage while Guy B is still working. Medicare Part D is always a voluntary enrollment, but relatively inexpensive and probably advantageous in these circumstances. Having spouse Guy A on Medicare does not preclude Guy B from continuing to cover Guy A on a family HDHP, making HSA contributions to the family limit and Guy A's qualified medical expenses are eligible for Guy B to take tax-free distributions immediately or deferred.

NYnative:
Medicare enrollment is automatic and mandatory when receiving SS on or after age 65. You can decline Part B, but there is no ability to decline Part A.

kd2008
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Re: When to enroll in Medicare?

Post by kd2008 » Thu Apr 06, 2017 8:40 am

Thank you for even more details Spiritrider. All is clear now.

NYnative
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Re: When to enroll in Medicare?

Post by NYnative » Thu Apr 06, 2017 1:19 pm

OK, Spirit Rider, now you've gone from Medicare Parts A and B enrollment is mandatory if you are taking SS, to its really only Part A that's mandatory. Which happens to be free, so for most people there is no reason to opt out. You need to be careful when making absolute statements of what can and cannot be done. So far you are at a 50% accuracy level, which makes you superior to most weather forecasters. There have been several lawsuits against the government on Part A enrollment (unnecessary for Part B as you could always opt out at any time). At least one judge (Collyer) has said that Part A is mandatory if you are receiving SS, but not by law, only congressional intent from the 1965 law establishing Medicare. Of course, you actually can opt out of Part A at any time, but then you lose your SS payments and may be required to pay them back to the government in addition to any money that was expended under Part A.

drawpoker
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Re: When to enroll in Medicare?

Post by drawpoker » Thu Apr 06, 2017 2:30 pm

This is the best, most detailed, and clear explanation I have found of the whole subject of when, and just exactly how so as to avoid mistakes, enrolling in Medicare when you plan to work past age 65 and your employer offers a HSA.

https://www.medicareinteractive.org/get ... d-medicare

kd2008
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Re: When to enroll in Medicare?

Post by kd2008 » Thu Apr 06, 2017 2:36 pm

Thank you drawpoker. That is very helpful.
drawpoker wrote:This is the best, most detailed, and clear explanation I have found of the whole subject of when, and just exactly how so as to avoid mistakes, enrolling in Medicare when you plan to work past age 65 and your employer offers a HSA.

https://www.medicareinteractive.org/get ... d-medicare

NYnative
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Re: When to enroll in Medicare?

Post by NYnative » Thu Apr 06, 2017 3:33 pm

Here is what you posted:

"If you apply for and start receiving SS benefits before age 65, Medicare enrollment is automatic and mandatory at age 65.
When you apply for and receive SS benefits on or after age 65, Medicare enrollment is automatic and mandatory at that time."

The words "is mandatory" appears twice. No matter how you parse it, that statement is, at least, partially inaccurate and not explained. We both agree that Part A is mandatory when receiving SS. We also seem to agree that Part B is TOTALLY voluntary. What you are saying in your most current post is NOT what you said in your earlier post to the OP. The OP is now aware that Part B can be taken, delayed, stopped, and restarted at any time after he starts taking SS, or even if he doesn't if he is after 65. That was not what you said. When you started giving a dissertation on what can and not be done with Medicare and SS, you veered way off base from the HSA issue. The simple and only correct answer is that you can't contribute to an HSA once you start Part A. The rest was gratuitous.

kd2008
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Re: When to enroll in Medicare?

Post by kd2008 » Thu Apr 06, 2017 5:19 pm

I appreciate each of one for helping me out. Thank you! Please let us not expend our goodwill towards each other but grow it evermore. Let us go forth more enlightened, educated and appreciative of differing view points on the same subject having come together on this forum to help each other out.

NYnative
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Re: When to enroll in Medicare?

Post by NYnative » Thu Apr 06, 2017 5:31 pm

[Response to removed posts - admin LadyGeek]

Final post on this thread. The word you are looking for is hijacking. That does not include correcting erroneous information which you posted. But I suppose you will post on this again as you hate to be corrected.

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Re: When to enroll in Medicare?

Post by LadyGeek » Thu Apr 06, 2017 6:38 pm

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