ON THE MONEY: Take action when you reach 65

September 16, 2018

In reality, your 65th birthday signals nothing other than the passage of another year, since more and more middle-aged Americans are choosing to retire earlier than age 65, and a few, like me, are choosing to continue to work until we are carted away from our offices in hearses. In my case, I hope it is a good-looking hearse.

With the last round of changes in the OASDI program, the attainment of age 65 no longer triggers the commencement of maximum Social Security benefit payments, since for those of us born in 1943 and after, the normal retirement age for full benefits is now age 66+. Naturally, one may elect to commence Social Security benefit payments at an earlier age than 66, but the dollar amount of the monthly payments will be less than those available at age 66. Moreover, if you wait until you reach age 66 to commence monthly income from Social Security, there is no earnings test that you must satisfy to continue to qualify for your maximum payments.

Having said all that, attaining age 65 still requires close attention from every individual, along with careful choices. The reason for this careful scrutiny is the fact that Medicare does kick in at age 65, unlike Social Security retirement benefits. There is an excellent book written by Philip Moeller titled “Get What’s Yours for Medicare: Maximize Your Coverage, Minimize Your Costs” that is available on Amazon.com.

Part A of Medicare covers hospital-related expenses, while Part B helps cover medically-necessary services like doctors’ services, outpatient care and other medical services that Part A doesn’t cover. Part B also covers some preventive services. Medicare now also provides prescription drug coverage through Part D, which you must sign up for, and costs vary. If you don’t sign up when you are eligible, you will pay more if you enroll in a subsequent year.

Here is the skinny: about three months prior to your 65th birthday, you will receive Medicare information from the Social Security Administration. Don’t put it in the “to-do later pile,” since you may miss important deadlines. If you miss the deadline for signing up for Part B, you will have to wait until the following year, and you will be penalized by having to pay more for the same coverage. No penalties will be levied if you delayed purchasing Part B due to you or your spouse continuing to work, provided that you or your spouse had coverage at work. If you are currently receiving Social Security benefits, you are automatically enrolled in Part B, but you may decline coverage.

Most persons who have paid into Medicare for a number of years don’t have to pay for Part A coverage; others must pay part or the entire required premium, which can be as much at $422 per month. The cost for Part B coverage for most of us (single taxpayers with an AGI of $85,000 or less and married filing jointly with less than $170,000 AGI) is $134 per month in 2018, and this cost is a bargain. But don’t think that Medicare will cover all of your health care expenses – it won’t. So it may pay to purchase other coverage on your own. Be sure and check with your former employer(s) to see if they provide any post-65 health coverage, and how it interfaces with Medicare benefits.

If you are still working, you can sign up for Medicare at 65 and get a small part of Medicare – the free benefits that cover some hospital care – even if you don’t need the full Medicare package while working. In such a case, your employer-provided coverage would be primary and Medicare would be secondary.

Original Medicare, Part A and B, pays for many of your health-care services and supplies, but it doesn’t pay for everything. That’s why you may want to consider purchasing a Medicare Supplement plan. Unlike Original Medicare, a Medicare Supplement plan is offered through private insurance companies and these plans help pay some of the hospital and medical costs that Original Medicare doesn’t cover, such as copayments, coinsurance, and yearly deductibles.

It is always a good idea to make an appointment with the local Social Security office in Aiken to review your options. If you have questions, don’t leave without getting answers that you understand.

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