Medicare, HSA

Question 1

COBRA

Answer 1

Consolidated Omnibus Budget Reconciliation Act of 1986
-provides up to 18 months of employer coverage
-60 days to enroll, coverage retroactive to 1st of the month after you retire
-you can use HSA funds to pay for COBRA premiums

Question 2

MEDICARE

Answer 2

• coverage at 65
• paid for by payroll tax 2.9% of all earnings, split between employer and employee - 1.45% each
• additional 0.9% on income above 200k for Single and 250k for MFJ
• tax on Investment Income 3.8% Medicare tax on the lesser of total net investment income that exceeds 200k for Single or 250k MFJ, or if wages alone are higher, the lesser of net investment income or MAGI that exceeds threshold

Question 3

MEDICARE 2

Answer 3

Sign up one of two ways:
- Original Medicare (classic, traditional) - enroll in Part A (Hospital, it’s free if you qualify for SS) and Part B (Medical, $164/mo, means-tested). More popular. A and B will cover about 80% of expenses.
Optional buy - Medicare Supplemental Medigap Plan for remaining 20% - currently in MA about $220/mo for top of the line plan
Buy Part D (drug plan) - $20-$40/mo
TOTAL: Approx $400/mo cost for medical coverage

Question 4

MEDICARE 3

Answer 4

Medicare Advantage Plan Part C - all in one package, optional
- replacement to Part A and B and Supplement Plans
- you still have to pay Part B premium $164/mo
- fills gaps
- drug coverage

Question 5

Part A

Answer 5

Inpatient hospital care
Skilled nursing facility care
Lab tests
Surgery
Hospice
Home health (for rehab only, not ongoing)

• 40 quarters of covered employment for you or your spouse
  GAPS IN PART A
• $1,600 deductible for each benefit period
• Coinsurance per benefit period for hospitalization:
  day 1-60: no coinsurance
  Day 61-90: $400 coinsurance per day (2023)
  Day 91 and beyond: $800 coinsurance per day (2023)
  After 90-day hospitalization in one benefit period, each additional day counts toward your lifetime reserve of 60 days of hospitalization covered by Part A
  For days beyond your lifetime reserve: you pay all costs

Question 6

Non covered employment
- people who don’t pay into SS
- did your spouse pay into the system? 40 credits?
- doesn’t work outside of US

Question 7

Part B

Answer 7

Covers:
-Physician services
-Ambulance services
-Durable medical equipment
-Mental health
-Most outpatient hospital or clinic services
- 2023: $164.90/mo, means-tested. IRMAA - income-related monthly adjustment amount. Cost will be more for people with higher income. -Assessment of income uses 2-yr look back.
-Watch taxable income in retirement to mitigate IRMAA.
-In 2023, single taxpayer who made even one dollar more than 97k in 2021 will pay $230.80/mo for Part B premium vs $164.90/mo. MFJ income above 194k

Question 8

MEDIGAP PLAN COVERAGE

Answer 8

-Covers 20% not covered by Part A and B.
- there are many Medigap plans. Each state determines which plan can be sold in that state. Usually 2 plans - lower bare-bone and a high-end expensive .
Federal gov’t determines what must be covered by each Medigap plan, state determines which plan is sold in that MA.

Question 9

Part D - prescription drugs

Answer 9

• Premium is different for each plan
• part D is subject to IRMAA!
  Over 97k income Single filer will pay additional $12.20/mo in premium. MFJ over 194k.

Question 10

IRMAA - income-related monthly adjustment amount

Answer 10

Surcharge on Part A, B and D if your 2021 MAGI exceeds 97k (single) or 194k (MFJ)
IRMAA triggers:
-Sizable Roth conversion
-liquidating substantial cap gains
-RE sale or business sale
Lump sum retirement distribution
Life Changing Events that can reduce/ eliminate IRMAA surcharge: marriage; divorce; annulment; death of spouse; reduction in work hours or termination/retirement; loss of income-producing property; loss of some types of pension income

Question 11

PART C - Medicare Advantage Plans

Answer 11

• replace A, B and D. And sometimes vision, hearing, wellness programs and dental which are not covered by original Medicare.
• approved by Medicare but run by private companies
• with Part C , you still have to pay Part B premium of $164.90 even though you don’t have that coverage!
• cost of Part C is $164.90/mo plus premium set by insurance company
• ask provider ahead of time if they accept your Medicare Advantage Plan.

Question 12

MEDICARE ENROLLMENT

Answer 12

Initial enrollment period for A, B, C, D is 7 months - 3 months prior to age 65, the month you turn 65, and 3 months after age 65
- if client is still working at 65, they don’t have to sign up for Medicare. Instead they get a special 8mo enrollment period following end of employment or loss of group health coverage.
- you are automatically enrolled in Part A when you are receiving SS. If you are eligible for Part A, you can sign up anytime and coverage will go retroactive 6mo from when you sign up. If you have to buy Part A, you can sign up during 3mo after you turn 65 or during general enrollment period.