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Navigating the Complex and Ever-Evolving Medicare Maze to Optimize Choices & Minimize Costs
by James Lange, CPA/Attorney, Diane Markel, CPA, and Elaine Floyd, CFP
This information is particularly critical if you will turn age 65 within six months or if you have turned 65 and you haven’t taken the necessary steps to enroll in Medicare.
Medicare has some complex and confusing rules. Not following the rules can lead to punitive penalties—extra costs and possibly fewer choices–that last a lifetime. Do we have your attention? Unfortunately, being uninformed or unaware of the requirements does not grant you any leniency.
A CPA in our office, Diane Markel, did a deep dive into the issue of signing up for Medicare and was astounded to find that most people were making the wrong decisions and it was costing families a lot of money. To make matters worse, a wrong decision is perhaps something you will have to live with for the rest of your life! I asked Diane if someone in our office should develop a level of expertise in this area, as we did for Social Security when we realized how that would benefit our clients. She said absolutely not—leave that to specialists in the field—but we can offer recommendations and find wonderful sources of information to share. So, we have.
We have subscribed to horsesmouth.com, an educational resource for financial professionals. They allow me to distribute articles they have prepared. Below is a compilation of thoughts and observations from Diane and me as well as some direct excerpts from the horsesmouth.com article written by Elaine Floyd, CFP. Elaine is a smart and meticulous researcher. She has written several books and was a guest on my radio show talking about Roth IRA conversions and Social Security. When she turned 65 and confronted the Medicare enrollment process, she was amazed by the complexity and assigned herself the task of educating financial professionals through her distribution channel, horsesmouth.com.
We are providing a link to Elaine’s full article. We strongly encourage you to read it and share it with friends and family who would also benefit from the information.
Being an informed and proactive consumer is absolutely in your best interest. Everyone’s goal should be to understand ALL your Medicare financial and insurance options and enroll at the CORRECT TIME—this is essential to avoid the penalties mentioned above.
The information in this newsletter is vital for those approaching the Medicare milestone. And, while many of our readers will have already navigated the Medicare maze, everyone should reevaluate annually. If you have original Medicare, you should at least review the drug plans. If you have Medicare Advantage you should review your entire plan annually, perhaps with the help of an advisor. The 2019 Medicare Open Enrollment period to change existing plans runs from October 15 – December 7. It is also referred to as the Annual Election Period (AEP).
Let us remind you, if you sign up during your initial period or, if you are eligible, during a special enrollment period, you CANNOT be denied coverage REGARDLESS of your health status. The special enrollment period applies to individuals who turn age 65 but are still covered by a group plan (20 or more employees). People in this category can sign up later. But to avoid a lapse in coverage and potential penalties, you will want to sign up before your group coverage ends. These crucial and limited time periods allow you to choose among ALL Medicare options. After these windows have closed, changing a Medicare plan would most likely require medical underwriting, your choices may be limited, and costs could increase. Here is some advice direct from the horsesmouth.com:
- Whether you are retired or still working, Medicare will likely become part of your life after you turn 65. In the United States today, most health plans pay secondary to Medicare. So, if you are currently covered by a retiree health plan, an individual policy, or a small employer group plan (an employer group plan that covers fewer than 20 employees), you must enroll in Medicare when you turn 65.
- If you don’t, your insurance claims may not be paid. And if you do not enroll in Medicare on time, you will be subject to late-enrollment penalties for the rest of your life. Generally, the only people who are exempt from enrolling in Medicare at 65 are workers and spouses who are covered by an employer group plan that covers 20 or more employees and their time will come later.
- When you turn 65, Medicare becomes the primary payer. Under Medicare, any private insurance you may have is secondary and will not pay until Medicare has paid its share, except if you have employer group coverage that covers 20 or more employees. To fully understand and implement your options, around age 64, it is recommended that you determine if you will be able to maintain your current insurance coverage after you turn 65 AND if yes, how does that coverage work with Medicare? If you are still working, or if you are retired and covered by a retiree plan, your employer or benefits administrator may be able to answer these questions.
- The initial enrollment period starts three months before you turn 65 and extends for 7 months. Medicare is automatic only if you are receiving Social Security when you turn 65; therefore, you would need to be proactive and sign up for Medicare Part A and B three months before your 65th birthday, so that Medicare coverage can start on the first day of the month you turn 65. If you want Part D, the prescription drug plan, you would then enroll through a private insurer or through Medicare.
- If you enroll in “Original Medicare,” you will also purchase supplemental insurance, known as “Medigap” to cover out-of-pocket expenses that Medicare does not cover. If you enroll in “Medicare Advantage Plans,” also known as Part C, these plans are offered by private insurers. They contract with Medicare and receive a per capita reimbursement from Medicare.
- Since it is projected that health care costs for today’s retirees (excluding long-term care) can easily exceed $250,000, it is important to make informed and sometimes irreversible Medicare decisions by age 65, while monitoring changes and options in the future.
To read the entire article, please go to www.paytaxeslater.com/medicare
Where To Find Help Negotiating The Medicare Maze
We cannot stress enough the importance of beginning to explore the enrollment process at age 64. It can also be helpful to seek professional guidance. We are fortunate to have Diane Markel in our office and she is quite knowledgeable about Medicare, but she would be the first to tell you she is not an authority on specific plans or policies. Three of our employees, Donna, Diane, and Alice, recently investigated Medicare options and greatly benefitted from the services of The Health Insurance Store, LLC provided by Bonnie Bloom. One office is located in Forest Hills, PA and their number is 412-349-8818. Aaron Zolbrod, the owner of The Health Insurance Store, LLC, has two other locations in Pennsylvania (Connellsville and Erie). Their website is www.getyourbestplan.com.
I had lunch with Bonnie and Aaron and was struck by their commitment to serving the needs of their clients. In addition, they do not help with other types of insurance, for example, home or auto—their focus is on healthcare. Aaron also shares a lot of high-quality educational information—something I am committed to as well.
We also can recommend Carol D’Alessandro, an insurance broker who handles our employee medical plans. She can be reached at 412-344-2500.
Please note: We have no affiliation with either of these businesses and offer these recommendations solely based on personal experience.
As always, if we can be of help, please contact us at 412-521-2732.
2019 Year-End Tax Planning
by James Lange, CPA/Attorney
Please visit https://paytaxeslater.com/2019yearendtaxplanning/ for Glenn Venturino’s excellent comprehensive 2019 year-end tax planning letter. If you would like a hard copy, please call us and we will mail one promptly. In the meantime, I want to highlight a few essential year-end items.
Roth IRA Conversions: If you want to make a Roth IRA conversion for 2019, you must do it before year-end. Many of you should. This is especially true with the looming “death of the stretch IRA.” You should have received my book, Retirement Plan Owner’s Guide to Beating the New Death Tax. To learn more about Roth IRA conversions in light of this pending law, please read Chapter 5 starting on p. 36.
Required Minimum Distributions: Please note that distributions must be made before the year-end. Be sure you have taken the required distributions from all your retirement accounts. Also, if you are taking required minimum distributions, please be sure that you make your charitable contributions through a QCD (qualified charitable distribution) before year-end.
Open Enrollment: Many companies have open enrollment for employee benefits in November and December. If you have access to a Health Savings Account, subject to exceptions, contribute the maximum. Same with Roth 401(k)s and Roth 403(b)s. Review other benefit options as well.
We’re Hiring!
Learn more at www.paytaxeslater.com/lange-cpa
One of the best things about having a great business with happy clients is that we continue to grow. We know from our past experiences that recommendations for potential employees from our clients are extremely valuable. If you know of someone who you feel would be a qualified candidate, please share. Thank you for your help!
Exciting Job Opportunity for an Ambitious CPA
Ambitious and experienced full-time CPA is needed for a thriving Squirrel Hill CPA/Law/RIA firm. Candidates need strong 1040 preparation skills and must be willing to learn how we “run the numbers” to provide our clients with optimal financial/retirement masterplans. See www.paytaxeslater.com/lange-cpa for details. Resume to shirl@paytaxeslater.com.
Sudoko
Blueberry-Nut Smoothie
Serves: 1
Prep. Time: 5 minutes
½ cup frozen blueberries
2 raw Brazil nuts
4 raw walnuts
4 ounces non-GMO silken tofu
1 cup unsweetened almond milk
½ teaspoon fresh lemon juice
¼ teaspoon ground cinnamon
pinch of sea salt
1 or 2 ice cubes
Combine all of the ingredients in a blender and blend on high until smooth, 1 to 2 minutes. If the smoothie is too thick, add a little water and blend again until it reaches the desired consistency. Drink immediately.
Lange Employee Spotlight ― John Montoya, Esq.
John Montoya and his wife, Lindsay, recently celebrated the birth of their first child, Rose Arya Montoya. They welcomed Rose to the world on October 22nd, and they are in love with their little bundle of joy. Along with their two dogs, Molly (top photo) and Maisy (lower photo), their household is gracefully and patiently adapting to life with a newborn.
John is an estate planning and administration attorney with Lange Legal Group, LLC. Since joining the firm two years ago, he has assisted many families through the process of grieving the loss of a loved one by handling estate administration. John has also worked with our clients to prepare flexible estate plans. John is thankful for the opportunity to have a meaningful impact on the lives of our legal clients.
