I TURNED AGE 64 over the Labor Day weekend. One of my goals for my 65th orbit of the sun is to really dig into Medicare.
Luckily, I have a few friends and relatives who have blazed the trail before me. I’ve also studied Medicare as part of some financial planning courses I took a few years ago. Still, one topic I’ve never researched in detail is Medicare’s income-related monthly adjustment amount, otherwise known as IRMAA.
AND SO IT BEGINS again—trying to figure out the mess that is Medicare.
A 132-page book from the Department of Health & Human Services arrived in the mail recently. “Medicare & You 2022” is four pages longer than the 2021 edition I received earlier this year, when I was turning age 65. I could barely bring myself to pore through the pages of that one, as I endeavored to understand the myriad choices facing me as I hit that magic milestone.
A NEIGHBOR WAS recently telling me about the increasing amount of care he and his wife have to provide to his 90-year-old mother-in-law, and the challenges and expenses he expects in the near future.
I was able to offer some advice—because this is an area where my wife and I have significant experience. Together, we took care of her parents and mine, both medically and financially. If this is something you’re experiencing, or may soon,
I WENT TO SEE MY primary care physician about a medical problem. I actually felt pretty good and wasn’t in any pain. I was fairly confident there wasn’t anything seriously wrong with me, so—when the doctor greeted me and asked how I was doing—I said, “I’m doing well.”
When he responded, “No, you’re not,” I knew this wasn’t going to go well.
I gave him my explanation of what might be causing my physical condition.
IT’S BEEN CALLED the stealth IRA. We’re talking here about health savings accounts, which offer a triple tax play. First, contributions are tax-deductible. Second, the accounts grow tax-deferred. Third, if the money is used to pay permitted medical expenses, there’s no tax on the sum withdrawn.
That might sound similar to an employer-sponsored flexible spending account for health care costs, but those are more restrictive. If much or all of the money isn’t spent by the end of the year,
IN NOVEMBER 2019, my 92-year-old widowed mother took an uncontrolled trip down a flight of wooden stairs in her home and got a helicopter ride to the regional trauma center.
Before her fall, we had a tenuous but semi-functional system of care in place. But the chaotic aftermath plunged us into unknown territory and claimed incalculable amounts of time, money and other resources from her caregivers. We spent months struggling with a new, impossibly complex set of rules and referees.
MY HUSBAND AND I are planners. We can tell you where we’ll be living 15 years from now, the trip we plan to take in 2022 and how much we’ll likely pay in taxes this year.
What we didn’t plan for: Paying more for Medicare—a lot more.
If you’re covered by Medicare, you’ll likely know that this year you pay $148.50 in monthly premiums for Medicare Part B, plus a premium for the Part D prescription drug benefit,
ONE OF MY SONS has to choose health insurance for the year ahead—and his employer provided a 95-page pamphlet. Let’s face it: If you need that amount of information to make a choice, something is wrong.
The pamphlet describes three medical options, plus dental options and vision coverage. Two options get you an employer health savings account contribution—or it is a health reimbursement account? There are three levels of deductibles and coinsurance and, of course,
REACHING AGE 65 is a financial relief for many folks—because they’re finally eligible for Medicare. But then disappointment often sets in.
Why? Medicare might cover just 80% of medical expenses, leaving the patient to handle the other 20%. How will you cover that 20%? The usual solution is to buy a Medigap policy. But there are so many choices that it can be overwhelming.
My goal today: Help you narrow that choice a little—by comparing two Medigap plans,
DESPITE THE NEGATIVE press, long-term-care insurance can be a smart buy. In fact, policies can be affordable for those as old as age 79. But as with any financial product, it’s important to understand what you’re buying—and make sure it fits with your goals.
In my last article, I discussed how much money you might earmark for long-term-care (LTC) costs. Need insurance to hit your goal? Today, the two main products are “traditional policies” and “hybrid life and long-term-care policies.”
Both types of policy offer similar LTC benefits.
AS BABY BOOMERS and Generation X march toward retirement, they face a daunting issue: What steps should they take, given the risk they’ll require long-term care?
Long-term care—defined as needing help with activities of daily living such as bathing, dressing and eating—is something that almost 70% of retirees will require at some point, according to LongTermCare.gov. Problem is, Medicare only provides limited coverage.
Yes, Medicaid does cover long-term care. But it was designed as a last resort for low-income folks.
MEET IRMAA. You won’t like her. IRMAA is short for income-related monthly adjustment amount. It’s a premium surcharge levied on those covered by Medicare Part B and Part D—and who have income above certain thresholds.
In 2020, the standard premium for Part B, which covers outpatient care, is $144.60 a month. That’s what you pay if you file taxes as a single individual and your modified adjusted gross income is $87,000 or less, or if you’re married filing jointly with annual income of $174,000 and below.
I’M A BIG FAN of health savings accounts, or HSAs. They’re becoming more popular as a way to pay for medical costs—and, in the right circumstances, they can also be a valuable addition to your retirement plan.
What’s so great about HSAs? If used properly, they’re triple tax-favored. You get a tax deduction when you deposit funds. The growth thereafter is tax-deferred. And if you use distributions to pay for qualified medical expenses, withdrawals are tax-free.
MEDICAL EXPENSES are a big worry for retirees—leading many to purchase supplemental insurance. But you need to think carefully about which Medigap policy you buy.
What does this insurance get you? Medicare Part B, which covers doctor’s visits and other outpatient care, typically only pays 80% of the expenses that retirees incur. To plug this and other coverage gaps, many folks buy a Medigap insurance plan. Want to keep your current doctors and not be restricted to the network of medical professionals offered in a Medicare Advantage plan,
I’M JUST A FEW YEARS from age 65—and being eligible for Medicare. One of my concerns: making a mistake that could trigger penalties.
If you file for Social Security before age 65, you’ll be automatically enrolled in Medicare Part A and B. What if you’re still working at 65? Ask your human resources department for advice. Your coverage at work will dictate whether you should file for Medicare.
If you aren’t covered by an employer’s health insurance plan and you aren’t yet collecting Social Security benefits,