Tax Tip of the Week | No. 372 | What You Need to Know About Medicare - Part 1

Tax Tip of the Week | September 14, 2016 | No. 372 | What You Need to Know About Medicare - Part 1

We keep getting more and more questions about Medicare from people who are planning for retirement.  This two part series will hopefully give you a start in knowing what to do—and what NOT to do. The following is some seminar material put together by the Tax Speaker, a publication we receive.Review of Medicare Enrollment Periods:If you are already getting Social Security retirement, disability benefits or railroad retirement checks, you will be contacted a few months before you become eligible for Medicare and given the information you need. You will be enrolled in Medicare Parts A and B automatically. However, because you must pay a premium for Part B coverage, you have the option of turning it down.An individual that does not sign up for Social Security at age 65 will not be informed by any Federal agency of the Medicare enrollment rules, so they must proactively enroll themselves. At age 65 Medicare becomes the primary payer even for individuals covered under private plans. The only conventional insurance that remains primary is an employer group plan of 20 or more employees.Alert: Individuals that have bought insurance through the Marketplace need to be aware that at age 65 the Marketplace plan becomes secondary to Medicare. If they do not sign up for Medicare at age 65 they do not have primary health insurance coverage which means they are essentially without insurance. Enroll in Medicare at age 65! Because of the three month enrollment window in Medicare before age 65, the individual needs to decide and act on Medicare at age 64½.Because of the late enrollment penalty for Part B, nearly everyone should enroll in Part A during their initial enrollment period so that they have a record of timely enrollment, and so that the decision to delay in enrolling in Part B is proven to be due to coverage through an employer plan. The only reason to delay in enrolling in Part A would be because the participant is covered by a high-deductible HSA-qualified conventional insurance plan and they still wish to deposit to the savings account feature.The initial enrollment period (IEP) is used for when an individual turns 65 to sign up for Medicare Part A, Parts B and D if desired, or Part C-Advantage programs if desired. It begins 3 full months before the month in which the individual turns age 65 and ends 3 full months after the month of the individual’s 65th birthday. Once signed up there is no need to sign up again-it is a permanent thing, not an annual election.Part 2 will be presented next week.You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.Rick Prewitt – the guy behind TTW...until next week.