There are currently an estimated 70 billion baby boomers who are nearing retirement. Planning for retirement is crucial to living a comfortable and healthy life. An annual estimate by Fidelity shows the average couple retiring at age 65 will need $280,000 to cover health-related costs. Fortunately, Medicare can help, but there is a set of guidelines and regulations regarding enrollment.
Do retirees have to pay for Medicare?
There are two parts to Original Medicare – Part A and B. If you have worked and paid Medicare taxes for at least 40 quarters (about 10 years), you can have premium-free Part A. If you did not work the 40 quarter minimum, then you will have to pay the Part A premium. For 2019, the Part A premium is $422 for 30+ quarters or $232 for 30-39 quarters.
The standard Part B premium for 2019 is $135.50, but you may pay more or less based on your own set of circumstances. An estimated 3.5% of beneficiaries will have a lower premium due to the Social Security “hold harmless” provision which prevents premiums from exceeding Social Security benefits. Plus, if you make more than $85,000 a year, your monthly Part B premium will be adjusted based on your income. The income-based 2019 Part B premiums are as follows:
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Do you automatically get Medicare when you turn 65?
If you currently receive Social Security benefits, you will be automatically enrolled in Medicare Parts A and B the month you turn 65. However, if you do not receive Social Security benefits, you will need to enroll yourself. Medicare enrollment begins three months before your 65th birthday and will end three months after. This is called your initial enrollment period. It’s important to act right away because delaying your enrollment can result in a 10% Part B premium increase for every year you’re eligible but don’t enroll. If you don’t select prescription drug coverage and later enroll, you may have a penalty of 1% the national base Medicare Part D monthly premium for each month you were not enrolled.
Early Retirement and Medicare
Should you keep working or retire early? Your decision may be influenced by your age, health, budget, Medicare eligibility, social security benefits, and employer coverage.
Employer Retiree Coverage
Some employers offer retiree coverage after you leave the company. However, retiree coverage and Medicare are not the same. Retiree coverage is health coverage that is provided to former employees of a company. This typically pays second to Medicare, which means you still need to enroll in Medicare to be fully covered. However, retiree coverage can help with health-related expenses if you retire before 65.
Can you get Medicare at age 62?
It’s important to understand the differences between Social Security and Medicare. You can start to receive Social Security retirement benefits at the age of 62. This amount is typically reduced until you reach the age of 65. The average person does not qualify for Medicare until age 65, but there are exceptions.
You are automatically enrolled in Medicare once you have received Social Security benefits for two consecutive years. This means if you started receiving benefits at age 62, you will qualify for Medicare at age 64. Plus, you may qualify for Medicare before 65 if you have Lou Gehrig’s Disease (ALS) or End-Stage Renal Disease.
Importance of Planning
It’s never too early to start planning for retirement and Medicare. Our licensed agents can help explain your coverage options and answer all of your questions. Plus, they can provide bias-free assistance with a wide range of plan options because they are licensed with all major carriers in your state. Start planning now! Call us at 833-438-3676 or fill out this form to arrange a no-cost, no-obligation appointment.