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Healthcare in Retirement

Tuesday, July 11, 2017 2:39 PM

I'm Ready to Retire…Now What?

If you're ready to retire, first and foremost, congratulations!

There are probably a lot of questions going through your mind, but there's no need to worry! You've come to the right place. At Medicare.org, we have simplified the process of reviewing and comparing your Medicare insurance options, and can help answer your questions, including the most relevant one: What are the health care benefits available in retirement?

As you approach retirement, consider all your options, including any retiree programs offered through your employer's group insurance, as well as government programs, such as Medicaid and Medicare. Depending on your age, and if you have enrolled in Medicare already, you may have some decisions to make about how you'd like to receive your Medicare benefits. Depending on your age, income, and needs, you may be eligible for Medicaid or VA benefits as well.

Let's get you started with some basic information about health insurance in retirement. Read on to learn more.

What is a Qualified Medicare Beneficiary (QMB) Program?

The QMB program is a state program that helps covers the cost of Medicare premiums, deductibles and coinsurance that Medicare beneficiaries usually pay. You may be eligible for the QMB program if you are entitled to Medicare Part A coverage, and have limited income and resources. If you are eligible, your state's Medicaid program may pay for your Medicare Part B premium, Part A and Part B deductibles, and coinsurance.

Eligibility Requirements for QMB

Although the rules may vary from state to state, in general, you must meet the following requirements in order to be eligible for the QMB program:

  • You must be entitled to Medicare Part A.
  • Your income must be at or below the national poverty level (income limits generally change annually).
  • Excluding certain exempt property, you may not have resources that exceed a certain value (resource limits generally change annually). Some things, such as your home, one car, and certain other personal items, usually do not count as resources.

What Does the QMB Program Cover?

The QMB program covers the cost of Medicare premiums, deductibles and coinsurance that Medicare beneficiaries usually pay. It means that your state covers these Medicare costs for you, and you have to pay only for anything that Medicare normally does not cover. QMB does not supplement your Medicare coverage but instead ensures that you will not be precluded from coverage because you cannot afford to pay the costs associated with Medicare.

Keep in mind that some states require you to pay a small co-payment when you see a doctor.

Related programs: The Specified Low-Income Medicare Beneficiary and the Qualifying Individual Program

The Specified Low-Income Medicare Beneficiary Program

If your income is too high to qualify for QMB but is not more than 20 percent above the federal income poverty level, you may receive Specified Low-Income Medicare Beneficiary (SLMB) coverage, which pays for your Medicare Part B monthly premium only. You will, however, pay for Medicare deductibles, coinsurance, and any care not covered by Medicare. The eligibility requirements are the same as those under the QMB program except that your income cannot exceed the national poverty level by more than 20 percent.

The Qualifying Individual Program

If your income is too high for help under SLMB, you may qualify under the Qualifying Individual (QI) program. If your income is more than 20 percent but no more than 35 percent above the national poverty level, your state may pay your Medicare Part B premium.

The QI program must be applied for each year because assistance is provided from a limited pool of funds on a first-come, first-served basis. Individuals who received the benefit in the last month of the previous year will be given priority.

Another program called the Qualified Disabled and Working Individual Program pays the Medicare Part A premiums only for disabled individuals in work incentive programs.

How Do I Apply for the Programs?

If you have Medicare Part A and think you qualify for assistance, you must apply for Medicaid through a state, county, or local medical assistance office. If you aren't receiving Medicare Part A, but you believe you qualify, contact the Social Security Administration.

QMB income & resource limits in 2017:

Individual monthly income limit*

$1,025

Married couple monthly income limit*

$1,374

Individual resource limit

$7,390

Married couple resource limit

$11,090

Program helps pay for:

  • Part A premiums
  • Part B premiums
  • Deductibles, coinsurance, and copayments

There is a lot of information out there about Medicare, but you don’t have to navigate it alone. Medicare.org is designed to help guide you through the process. If you can’t find what you’re looking for, speak with a licensed insurance expert today on how you can compare plans and find the coverage that meets your specific needs. Call us at (888) 815-3313 — TTY 711 to speak with a licensed sales agent.

to speak with a licensed sales agent with any questions you may have.

Medicare & Retirement

If you are 65 years of age or older, but you did not sign up for Medicare Part A and/or Part B when you were first eligible because you were covered under a group health plan based on your current employment, you will be eligible for a Special Enrollment Period. If you or your spouse (or family member if you are disabled) is working and you are covered by a group health plan based through the employer or union based on that current work, you can sign up for Medicare without paying a late enrollment penalty. When your employment ends, or the group health plan insurance based on that employment ends, you will have an 8-month Special Enrollment Period that begins the following month.

Please keep in mind that COBRA and retiree health plans are NOT considered coverage based on current employment. You will not be eligible for a Special Enrollment Period when that coverage ends. To avoid paying a higher premium due to a late enrollment penalty, you should sign up for Medicare when you are first eligible.

How does COBRA fit in with your retirement health care plans? If you already have COBRA coverage when you enroll in Medicare, your COBRA will probably end. If you become eligible for COBRA coverage after you're already enrolled in Medicare, you must be allowed to take the COBRA coverage. It will always be secondary to Medicare (unless you have End-Stage Renal Disease - ESRD).

If you expect to receive retiree benefits, you may wonder how that coverage will coordinate with Medicare. When you have other insurance (like employer group health coverage), there are rules that decide whether Medicare or your other insurance pays first. The insurance that pays first is called the “primary payer.” The one that pays second is called the “secondary payer.” If you have retiree benefits from your former employer, Medicare will act as the primary payer.

If you are retiring this year, now is the time to evaluate your options. Contact your benefits administrator at your current employment or union, and take your time to make the right choice for your needs and lifestyle. Your retirement should be an exciting time in your life, and having the health care coverage that will work best for you can make all the difference in your financial future and well-being.

If you haven't learned about Medicare yet, now is the time to do some research. Medicare consists of Part A (hospital insurance), Part B (medical insurance), Part C (which allows private insurance companies to offer Medicare benefits), and Part D (which helps cover the costs of prescription drugs). If you are enrolling in Medicare for the first time, you can choose to get your benefits through Original Medicare or through a Medicare Advantage plan.

Medicare Benefits Under 65

Individuals with certain disabilities may be eligible to enroll in Medicare before age 65. If you have been receiving (or have been entitled to receive) Social Security disability benefits for at least 24 months (not necessarily consecutively), you may be eligible to enroll in Medicare. To enroll, you must be entitled to benefits in one of the following categories:

  • A disabled individual of any age receiving worker's disability benefits
  • A disabled widow or widower age 50 or older
  • A disabled beneficiary who is older than age 18 and receives benefits based on a disability that occurred before age 22

In addition, Medicare may be available at any age if you are disabled as a result of chronic kidney failure requiring dialysis or a kidney transplant.

Qualified Medicare Beneficiary Program

If you have limited means, you may be eligible for the Qualified Medicare Beneficiary (QMB) program. Here, your state's Medicaid program may pay for your Medicare Part B premium, Part A and Part B deductibles, and coinsurance requirements. Eligibility rules may vary from state to state, but in general, you must meet the following three criteria:

  • You must be entitled to Medicare Part A
  • Your income must be at or below the national poverty level
  • The value of your assets must be below a certain level

There are also other related programs that have somewhat less restrictive eligibility requirements.

Medigap

What is Medigap?

Medigap is supplemental insurance specifically designed to cover some of the gaps in Original Medicare coverage. Medigap is provided by private health insurance companies, but is strictly regulated by the federal government.

There are 10 standard Medigap policies available. (Plans E, H, I, and J are no longer available for sale, however, if you already have one of these plans you can keep that plan). All plans may not be offered in your state, yet all are standardized and certified by the U.S. Department of Health and Human Services so that each plan provides exactly the same kind of coverage no matter what state you live in (except for Massachusetts, Minnesota, and Wisconsin, which have their own standardized plans). Every Medigap policy offers certain basic core benefits, such as coverage of certain Medicare Part A and B coinsurance and co-payments. Other plans offer additional benefits, such as coverage of Medicare Part A and B deductibles, and charges that result when a provider bills more than the Medicare-approved amount for a service.

Medicaid

What is Medicaid?

Medicaid is a joint federal and state program that helps cover medical costs for some individuals with limited income and resources. Medicaid also offers benefits not normally covered by Medicare, like nursing home care and personal care services. Each state administers its own Medicaid programs based on broad federal guidelines and regulations. Within these guidelines, each state performs the following: (1) determines its own eligibility requirements; (2) prescribes the amount, duration, and types of services; (3) chooses the rate of reimbursement for services; and (4) oversees its own program.

How do I apply for Medicaid benefits?

To apply for Medicaid, you must use a written application on a form prescribed by your state and signed under penalties of perjury. Give the application to your state Medicaid office. Typically, you will need to provide proof of age, marital status, residence, and citizenship, along with your Social Security number, verification of receipt of government benefits, and verification of your income and assets. A responsible individual can complete the application on the behalf of an incompetent or incapacitated individual.

How do I find out if I'm eligible?

To qualify for Medicaid, you must meet two basic eligibility requirements. First, you must be considered categorically needy because of blindness, disability, old age, or by virtue of being the parent of a minor child. Next, you must be financially needy, which is determined by income and asset limitation tests. States have much discretion in determining which groups their Medicaid programs will cover, but as participants in Medicaid, they must provide coverage for all residents who are considered categorically needy.

Also, it's important to keep in mind, state and federal rules regarding Medicaid eligibility change frequently, so be sure to check with your local agent.

Why does the state want to know if I've transferred assets?

Because Medicaid eligibility is based on your income and other resources, state Medicaid authorities are interested in knowing whether you have tried to transfer assets out of your name in order to qualify for Medicaid. When you apply for Medicaid, the state has the right to examine your finances and those of your spouse as far back as 60 months from the date you are eligible for medical assistance under the state plan. Only certain transfers are prohibited. Fair market transactions will typically be considered legitimate, but if you transfer assets for less than fair market value around the time you apply for Medicaid, the state will presume that the transfer was made solely to help you qualify for Medicaid.

Proper planning can help you to qualify for Medicaid, shelter "countable" assets, preserve assets (including the family home) for loved ones, and protect the healthy spouse (if any).

Medicaid Qualifying Trusts

To qualify for Medicaid, both your income and the value of your other assets must fall below certain limits (which vary from state to state). A trust helps you to qualify for Medicaid because it can shelter your income and assets, making them unavailable to you. The state Medicaid authorities cannot consider assets that are truly inaccessible to the Medicaid applicant. Therefore, anything that stays in an irrevocable trust will lie outside of your financial picture for Medicaid eligibility purposes. If you are looking for a strategy to shelter your resources, one of the following may be appropriate: (1) an irrevocable income-only trust, (2) an irrevocable trust in which the creator of the trust is not a beneficiary, (3) a Miller trust, or (4) a special needs trust.

Protection of Principal Residence

In certain cases, the state may be entitled to seek reimbursement for Medicaid payments by forcing the sale of your principal residence if you are a Medicaid recipient. Medicaid planning tools have been devised to protect your home, but their effectiveness varies. Therefore, it is important to weigh the costs and benefits of each device carefully. If you are looking for a strategy to preserve your home for loved ones, one of the following four methods may be appropriate: (1) an outright transfer or gift of the home, (2) a transfer subject to life estate, (3) a transfer subject to special power of appointment, or (4) a transfer in trust.

Medicaid and Long-Term Care Insurance

Long-term care (LTC) insurance can be useful as part of your Medicaid planning strategy. Your LTC policy can subsidize your nursing home bills during the Medicaid ineligibility period caused by your transfer of assets to third parties. Thus, it may be possible for you to give your assets away to loved ones, have the security of paid nursing home bills during the ineligibility period, and qualify for Medicaid when the LTC policy runs out.

What Are Medicaid Liens and State Recoveries

Federal law requires states to seek reimbursement from Medicaid recipients for Medicaid payments made on their behalf. Cost-recovery actions against the assets of Medicaid recipients may come in two forms: (1) real or personal property liens and (2) recovery from decedents' estates. A Medicaid lien makes it impossible for you to sell or refinance your house without the state's knowledge and ability to collect what it is owed. As for recovery from decedents' estates, states also can seek reimbursement from your probate estate after you die. States have the option to expand the definition of estate to include all non-probate assets as well.

How Does Divorce Affect My Medicaid?

From a purely financial perspective, divorce can be a practical move and may actually be used as a Medicaid planning tool. When a spouse enters a nursing home and applies for Medicaid, the couple's assets must be pooled together and totaled to determine what portion the healthy spouse may keep. After this Spousal Resource Allowance has been determined, the Medicaid applicant must transfer assets representing the amount of the allowance to the healthy spouse. The remaining assets must be spent on the institutionalized partner's medical care. A divorce court order can supersede the normal Spousal Resource Allowance rules prescribed under state Medicaid regulations. You should consult your legal advisor for further information.

Military Benefits

Disability benefits, health-care benefits, and long-term care benefits are available through various military programs sponsored by the Department of Defense and the Department of Veterans Affairs (VA), formerly known as the Veterans Administration. Health care for veterans is typically available at VA hospitals and health-care facilities. In general, active service members, retirees, and veterans other than those who were dishonorably discharged are eligible for military benefits. Survivors of service members and veterans are also generally eligible for some of the same benefits. However, the rules surrounding these benefits can be complex and may change frequently. It is best to check with your military personnel office or local VA office if you have questions about any of these benefits.

Choosing a Continuing Care Retirement Community

Continuing care retirement communities (CCRCs) are retirement facilities that offer housing, meals, activities, and health care to their residents. These communities appeal to people who are currently in good health but who worry that they may need nursing care later on. The CCRC and the resident sign a contract guaranteeing that the CCRC will provide housing and nursing home care throughout the resident's life and that, in return, the resident pays an entrance fee and a monthly fee. In choosing a CCRC, you should consider factors such as the entrance fee and monthly fees, insurance requirements, the financial stability of the CCRC, its facilities and activities, and the quality of medical care provided to residents.

Choosing a Nursing Home

A nursing home is a licensed facility that provides skilled nursing care, intermediate care, and custodial care. Although you may prefer in-home care, you may have to enter a nursing home if you need round-the-clock care, especially if you can't get help from family or an in-home caregiver. When choosing a nursing home, you should consider factors such as the cost of the home, the quality of medical care provided, the appearance and the safety of the facilities, the ratio of staff to residents, and recreational opportunities.

Paying for Nursing Home Care

Nursing home care can be extremely expensive, and paying for this care is a problem that weighs heavily on the minds of older Americans and their families. There are several resources you can use in planning for this expense, including self-insurance, long-term care insurance, Medicare (limited benefits), Medicaid, and military benefits.

Whew! That was a lot of information. If you're ready to get started, let us help walk you through the process. Finding affordable coverage doesn't have to be hard. Contact us at (888) 815-3313 — TTY 711 to speak with a licensed sales agent.

Medicare, Medigap, and Medicaid Breakdown:

 MedicareMedigapMedicaid
What is it? Federal health insurance program for Social Security recipients. Parts A and B comprise the original Medicare program. Medicare Advantage (also referred to as Part C) plans are also available. They provide managed care and fee-for-service options through private insurers. Medicare supplement insurance issued by private companies. Typically, individuals who have Medicare Advantage would not need a Medigap plan. Joint federal-state need-based health insurance program. Eligibility requirements and covered services vary from state to state.
What does it cover? All or some portion of: Part A: Hospital and skilled nursing facilities, home health agency care, hospice care, inpatient psychiatric care, and blood transfusions. Part B: Doctors, outpatient mental health services, therapy, part-time skilled home health care, certain preventative services, and other medical services. Part C: All the benefits offered by the original Medicare plan. Some offer added benefits such as prescription drugs, eye exams, and hearing aids. Part D: Prescription drug coverage (optional). All or some portion of: Medical care not covered by Medicare, deductibles, co-payments, and coinsurance; plans may also cover other services such as eye and dental exams. All or some portion of: A broad range of medical services including inpatient and outpatient hospital care, prescription drugs, nursing home care, and skilled care.
Who is eligible? Generally, persons age 65 or older, and those with certain disabilities or diseases are eligible for Medicare Parts A and B. Anyone eligible for Parts A and B is eligible for Part C and Part D. Individuals who are enrolled in Medicare Parts A and B. Individuals who have limited income and resources and who meet other eligibility requirements.
What is the cost in 2017? Part A: Most participants don't pay for this coverage because of prior Social Security covered employment.? Part B: Monthly premium: $134. (higher premiums may apply based on income); Annual deductible: $183.00. Part C: Varies by insurer, state, and plan. Part D: Varies by insurer, state, and plan. Premiums vary by company, region, and plan. There are generally 10 available plans, each offering different levels of coverage. Not all plans are available in every state. No premium. Deductibles vary from state to state.
What does it take to enroll? If you are receiving Social Security or Railroad Retirement benefits (or are applying for benefits) at or prior to age 65, you will be automatically enrolled in Part A and Part B. Contact the Social Security Administration to enroll if: You will not receive Social Security or Railroad Retirement benefits at age 65 You want to enroll in Medicare Part C You want to apply for benefits prior to age 65 due to a covered medical condition Purchase a policy from an insurance company. You can find information on Medigap policies offered in your area by visiting the Medicare website or calling. Application procedures vary from state to state. For information, contact the agency responsible for administering Medicaid in your state.

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Last Revised 11/15/2017