I will be turning 65 in the not too distant future. I plan to continue working but I work for a tiny company and I won't be able to get insurance through it because of that. Because I will still be working is that going to drive up my monthly medicare cost? And what about the savings making interest? Does all this count to increase the medicare premiums? What if I invest in bonds and get tax free interest, does that also increase premiums? And how do you pay the premiums if I plan to not get social security until I am 70? Thanks
Answers
Part of "how to avoid paying more" is avoiding paying penalties. Even if you don't take prescriptions now, you should consider joining a Medicare drug plan. If you decide not to join a Medicare drug plan when you're first eligible, and you don't have other creditable prescription drug coverage (for example from an employer or union) that's expected to pay, on average at least as much as Medicare's standard prescription drug coverage, or if you don't get extra Help, then you will likely pay a late enrollment penalty if you join a plan later. Generally you will pay the penalty for as long as you have Medicare prescription drug coverage. The cost of the late enrollment penalty depends on how long you went without Part D or creditable prescription drug coverage. Also, it may increase each year.
In 20 words or less: make sure you have creditable prescription drug coverage even if you don't take any medications currently.
Frankly, I found the Medicare Website loaded with vagueness, details spread out all over, link to link to link, things made to seem a lot more complicated than they needed to be. This was one of the points that was almost impossible to find.
There is no pre-existing consideration for part D drug plans.
Me1004's comment above applies to Medigap policies. The way the comments are aligned may be creating confusion.
- ask how the policy is rated
An attained-age rated Medigap plan means your rate is based on your current age and will continue to increase as you get older. For example if you enroll in a Medigap policy at 65 with a rate of $120, your premium may increase to $132 when you turn 69, and $165 at 72. Also, the premium may increase due to inflation and other factors.
An issue-age rated Medigap plan means the rate is based on the age you are first issued coverage. So if at 65 your plan’s premium is $120, it may stay at $120 at 72. But if you were to enroll at 72 your plan’s premium might start at $165, and would not be increased by your age. Premiums may go up due to inflation, but it will never go up because of your age.
A community rated Medigap plan everyone enrolled in the plan will be charged the same rate. So if you enroll in a plan at 65 or 72 you would be charged the same rate. Premiums can go up, however age will not be a factor in an increased Medigap premium.
- has the premium changed in the last 3 years and if so by how much. and how often has it changed
- how long is the wait for pre-existing conditions (this is not a factor if you are buying the policy during your enrollment period, as has been discussed elsewhere).
There are 2 main choices for how you get your Medicare coverage. One is what you describe,
the original Medicare (includes parts A and B) + supplement (AKA "Medigap" because it fills gaps in Original Medicare coverage) + drug plan. This is the option you discuss.
The other option is a Medicare Advantage Plan (sometimes know as Part C), which includes Part A (Hospital insurance) and Part B (medical insurance). Some Medicare Advantage plans offer prescription drug coverage, others don't.
You have some options to pay your premium if not taken out of Social Security. You can mail in a check, you can mail in a credit card payment (no charge for using the credit card, so if you have a cash-back card, that could actually lower you net cost), or you can set it up to be taken automatically from a bank account.
Don't forget, you must start Medicare within your 7-month initial signup period, or you will suffer a monthly penalty for the rest of your life.
Also, want to note that Social Security uses the most recent tax return provided by the IRS to determine IRMAA. For someone turning 65 in 2019, the tax return filed in 2018 for tax year 2017 is the one used.
To clarify my original post, "the $85K IRMAA figure if for a single individual or a married couple filing jointly with MAGI of up to $170k."
If you have a senior agency in your area it helps to get an appointment and bring your information even a list of your prescriptions and they can give you a lot of information. Many changes are being made in Medicare Advantage plans, so if possible get all the information from the experts before making a decision.Also check to see if your plan is community rated or age related for premiums and check on the Medicare.gov to see how the plan is rated. I believe it quite difficult
to find plans that are community rated anymore in some areas.
The best time to buy a Medigap policy is during your Medigap open enrollment period, which is the 6-month period beginning on the first day of the month in which you are 65 or olfer AND enrolled in part B. During this time you cannot be turned down for the policy (ie: pre-existing conditions are not a consideration).
https://www.nytimes.com/2018/10/26/health/medicare-part-b.html?action=click&module=Discovery&pgtype=Homepage
The income thing is quite confusing. I would think that many people have to pay higher amount when the first start medicare if they were working at least until they got medicare because it would be based on income from a couple of years before when they were still working and that would probably hold true for the following year as well. I am currently planning to keep working after I turn 65 so I may be paying a high rate. Medigap premiums are independent of income, is that right?
https://boomerbenefits.com/category/medicare-supplements-medigap/
IRMAA - when it applies - impacts the premiums for parts B (medical insurance) and D (prescription drug coverage). It does not impact the Medigap premiums.
If your income has gone down due to any of several situations, including that you (or your spouse) have stopped working or have reduced hours, and the change makes a difference in the income level considered for the IRMAA adjustment, contact Social Security to explain that you have new information and may need a new decision about your income-related monthly adjustment amount. Reference for this is the https://www.ssa.gov/pubs/EN-05-10536.pdf which has already been cited in prior comments.