Ep. 263 – Turning 65 in Retirement – What To Do for Medicare

 

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In this Episode of the Secure Your Retirement Podcast, Radon, Murs, and Shawn discuss Medicare planning for people nearing the age of 65. Shawn explains the timelines and eligibility criteria for the Initial Enrollment Period (IEP), Special Enrollment Period (SEP), and General Enrollment Period (GEP).

Listen in to learn the importance of understanding enrollment periods to avoid late penalties. You will also learn about Shawn’s seamless approach to guiding clients through the complexities of Medicare planning.

In this episode, find out:

• Initial Enrollment Period (IEP) – the seven months before, during, and after you turn 65.
• Special Enrollment Period (SEP) – working beyond age 65 and coming off an employer group plan.
• General Enrollment Period (GEP) – three months each year to enroll in Medicare parts A and B.
• Common scenarios – still working with employer coverage, retirees with retiree health plans, and Social Security beneficiaries.
• The enrollment process – where to go, the required documents, and the potential penalties for late enrollment.
• Shawn shares his seamless approach to guiding clients through Medicare planning.

Tweetable Quotes:

• “Depending on when either your initial or special enrollment period ended, when you come around and enroll into Medicare during the general enrollment, you may have a late enrollment penalty; it all depends on your situation.”– Shawn Southard
• “There are some things in Medicare once they’re done, they can’t be undone, so a mistake that you make can be a lifetime mistake, and late enrollment penalties are monthly lifetime mistakes.”– Shawn Southard

Connect with Shawn:

• Email: shawn@POMwealth.net

Resources:

If you are in or nearing retirement and you want to gain clarity on what questions you should be asking, learn what the biggest retirement myths are, and identify what you can do to achieve peace of mind for your retirement, get started today by requesting our complimentary video course, Four Steps to Secure Your Retirement!

To access the course, simply visit POMWealth.net/podcast.

Here’s the full transcript:

Radon Stancil:

Welcome to Secure Your Retirement podcast. We are excited today, because we’ve brought back in our very own Shawn Southard that works with us here at Peace of Mind, and he really focuses on Medicare planning, and this is a topic that obviously people are very concerned about, and it becomes a big concern usually for folks when they’re building up and getting close to turning 65, because that’s when you come on to Medicare.

Before we get into this though, thank you very much for coming on, Shawn, and helping us think through some of these complex topics around Medicare.

Shawn Southard:

Absolutely. Thanks for having me on.

Radon Stancil:

So there’s a key point at which somebody is going to … most people are going to get on to the Medicare program, and that is when they turn 65, and there’s some things that we have to think about as we lead up to that.

That’s a very key thing. A lot of stress around that period, usually when people are within a few months, because saying, “Oh, my goodness, look at all these plans that are out there. What do I do? Which one should I do?” All those kinds of things.

And what we would just really want to talk about today is this idea of the turning 65. So I know that whenever we have this period of time, that it sparks what we would call an enrollment period, and there’s a few different ones that we need to look at, but let’s just go through these step-by-step, Shawn, so that people can understand.

So the first thing we’ll talk about around this idea of enrollment, is the initial enrollment period. Sometimes people use the IEP acronym. Could you walk us through what that is, and help us lead up to this idea of turning 65 and Medicare?

Shawn Southard:

Sure. The initial enrollment period … Medicare loves acronyms of course … so IEP, initial enrollment period, that is a timeframe of seven months, or seven month window. It’s the three months before the person turns 65, the month they turn 65, and the three months after they turn 65, so it’s a total of seven months.

And this is a very common time where people, when they’re turning 65, this is the enrollment period that they’re going to enter into Medicare, and going to apply for their benefits, their Part A, which is the hospital coverage, and Part B, which is their medical coverage.

Murs Tariq:

Okay, very good. So that would be the most common, right? I’m approaching 65. I’ve heard of this thing called Medicare. Regardless of when you’re approaching 65, people start to think of what do I need to do, and all these … but there’s other enrollment periods, too. I know there’s a Special Enrollment Period. Can you walk us through that one, and how someone would fall into that category?

Shawn Southard:

Absolutely. So Special Enrollment Period, SEP … and this one’s becoming even more and more common these days, because people are working beyond the age of 65. Many, many, many moons ago, people would retire prior to 65, so the IEP held sway, but now the SEP is becoming even more and more popular. So people that are turning 65, still working, when they eventually retire and come off group coverage at work … group health insurance coverage … they’re going to qualify for a Special Enrollment Period. Their IEP, most likely, will have gone by already. Some people work 66, 67, 68, even. So they’re going to be enrolling in what’s called a special election period.

There’s many special election periods. There’s probably over two dozen types of situations that people can face that would qualify them for an SEP, but the most common one is working beyond 65, and coming off an employer group plan.

Murs Tariq:

And just to follow up on that, because you said the IEP, the initial is a seven-month window, three months before, the month of you turning 65, and then the three months after. Is there a window for the SEP, the special enrollment, or is it once you retire, you better do this right away, otherwise you may miss it.

Shawn Southard:

Right. Great. That’s great. Great follow up.

Yes, there is a window, that when you retire and you come off a group plan, you have eight months to be able to enroll in Medicare, before there’s any penalties, or any late enrollment penalties.

Radon Stancil:

All right, excellent. All right, we got one more enrollment period that we’re going to talk about, and that’s a General Enrollment Period, and I’ll let everybody guess what the acronym is. Yeah, we’ll go with GEP.

Shawn Southard:

Absolutely, no tricks there. GEP, that’s right. So the GEP, I always say I’ve been on this before and I always use this, people go to Cancun in their mind, some nice place, and they’re not really paying attention to what’s going on. So if people fall into this category, and go to Cancun in their mind, and they miss their initial enrollment period, which has happened to some folks. There’s some folks who retire and they’re not aware of a special … people just don’t know sometimes. They don’t work with a professional, and they don’t really know what’s happening, and they miss all these enrollment periods, initial enrollment period, special election period.

They can get into Medicare during the General Enrollment Period, which is three months. It’s Jan 1 of every year to March 31, and you can enroll in Parts A and Part B. and luckily Medicare has it. Before, the start date wasn’t until July 1st, but now it’s the month after you apply. So if you apply in January for your Parts A and B of Medicare, your coverage will start February 1st, instead of having to wait until July 1, which used to be the case.

So you can still get into Medicare during the General Enrollment Period. However, depending upon when your initial enrollment period ended, or when your special election period ended, when you do come around and enroll into Medicare during the GEP, general enrollment, you may have a late enrollment penalty. It all depends on your situation.

Murs Tariq:

Okay, very good. So let’s walk through some common scenarios that you may experience, because we can talk all day about enrollment periods, but at the end of the day people are like, “How can I relate to this type of scenario?”

And so let’s go with this one. I’m still working, and I’m covered under my employer’s health plan already, and I’m turning 65. What should I be thinking about? What should I be doing as far as these different enrollment periods. I’m still working, I’m covered? Help me, Shawn.

Shawn Southard:

Sure. So this is a very common scenario. People are still working. They’re approaching their 65th birthday. They’re planning on working another year, two years maybe, or even longer, and they have health insurance through work. This is the key, and people, I hope when they’re listening to this will jot this down on a piece of paper in a little notepad.

The employer plan has to have 20 or more people enrolled into the plan. Not 20 people working at the company, but 20 people actually enrolled into the health plan at work. If that’s the case, Medicare allows an exception, and you do not have to enroll into Medicare Parts A or B, as long as you’re covered under employer plan of 20 or more enrollees.

So you don’t have to do anything about Medicare until you’re ready to retire. If you have a spouse who may be nested under your health plan at work of 20 or more enrollees, they too, do not have to enroll in Medicare when they turn 65. So that’s really important to know.

Now, if you work for an employer, and the plan has 19 or less enrollees into the health plan, then you will need to enroll in Medicare when you turn 65.

Radon Stancil:

Okay. So now let’s go to this, another scenario.

We’ll say somebody’s retired, but they have health coverage as a retiree. Can you kind of give us that scenario, what that might be and how that looks?

Shawn Southard:

Sure. So many, many employers, especially the larger employers, if you retire early before 65, they allow you to keep the coverage going. The State of North Carolina does this for the state employees and the teachers in North Carolina. They can keep that Blue Cross, Blue Shield plan going until they turned 65.

But at that time, that retiree coverage, even though it was the same coverage you had when you were working, it’s going to be secondary to Medicare when you turn 65. So you definitely are going to need to enroll in Parts A and Part B of Medicare, and many of those retiree plans are going to tell you that you need to enroll in A and B, even if you want to keep it as supplemental coverage, you’ll have to be in Medicare A and B at 65.

Murs Tariq:

Okay, I got one more for you.

What if I’m still working and I’m approaching 65, but I’m already receiving my Social Security retirement benefits, my monthly check every month, and I’m still working. What do I need to be thinking about there?

Shawn Southard:

Sure. What you need to be thinking about here is, if you’ve been receiving your Social Security retirement benefits or your railroad retirement benefits for at least four months, four to six months, and the money’s coming in every month, you’re going to automatically be enrolled in Medicare Parts A and B as you approach your 65th birthday.

So if you’re still working, and you want to continue working past 65, as we said earlier, you would want to send this coverage back to Medicare as soon as you get your Medicare card in the mail sent to you. And the biggest reason why is … and well, I know we’ll talk about this probably on another podcast … with the Medigap plans, the med supplement plans, there’s an open enrollment period for these plans, where you don’t have to do any medical underwriting for the first six months when you get into Medicare, but if you get automatically enrolled, you’re not paying attention, and you let that coverage start just even for one day, and you get it back to Medicare, your six-month window has started already. So two, three years down the road when you actually do retire, and you want to get into a Medigap plan, that will have expired for you, and now you’re going to have to go to medical underwriting. So you got to be very careful if you are receiving these retirement benefits from Social Security or the Railroad Retirement Board.

Radon Stancil:

All right, so now we’ve gone through maybe these concepts here and ideas, and so maybe we say, “Okay, I understand my situation. I’m at a point, one of the enrollment periods, or I’m in a scenario where I now need and understand I qualify and should be enrolling in Medicare.” The big question is, “Hey Shawn, how do I enroll in Medicare?”

Shawn Southard:

Right, exactly. How do you do this? Absolutely.

So there’s a couple of ways you can do it The easiest way … well, an easy way to do it, is to go through your Social Security administration portal, and I encourage everyone on the podcast today, if you haven’t created your Social Security administration account electronic portal, please do that. It’s My, M-Y-S-S-A dot G.O.V. Myssa.gov, and you’ll go in and you’ll create your own access to your social security information.

And you probably have noticed that people on the podcast, that those statements you used to get on a regular basis from Social Security, that shows all your wages and everything that you’ve earned, and when your full retirement age is and what your benefit amounts going to be, they’re not sending those out any more. You actually have to fill out a form, ironically, to get it sent to you, because they want you to go in and create this account so you can see this information electronically.

So Social Security handles the retirement benefits, as well as the administration of Medicare. So create that account, go in there, and when you’re ready to enroll, just you can do it right from there. Enroll in Medicare Parts A and B, right in that portal. That’s a good way to do it.

Another way is you can go down to any Social Security Administration office in person and enroll. There’s an office actually, they’ve created a big space now over on Pool Road in Raleigh, and there’s one over in Durham as well. You can go in person, and they’ll help you, and they can also do telephonic appointments as well.

Murs Tariq:

Okay, very good. Well, I would agree with you, if you create the portal, it’s a little bit smoother. You don’t have to create the appointment, wait, and have that fear of maybe missing your windows. So the online portal I think would be the ideal for most people.

So we get that part figured out, but what documents do I need? What forms do I have to have ready to go, to make sure this all goes smoothly?

Shawn Southard:

Well, there are some things that you should have readily available, just to reference them to, especially doing it online. You’re going to need to know your social security number. You may have that memorized, but if you don’t, obviously your social security card will help let you know what that is. Your W2s, you’re going to need to know that because … and we’ll talk about this I’m sure on another podcast … but Medicare premiums, Part B premiums as well as Part D premiums for the drug plans, those are based upon income, and the more you make, the more you will pay for these premiums. So you’re going to need to know where you fall when you file taxes two years prior. So that’s good information to have handy and have with you.

And of course, proof of citizenship, US citizenship. Birth certificate would suffice. A US passport, or any certificates of nationalization would be helpful to have.

And then of course, if you are doing a special election period, you work beyond 65, there is a CMS, the Centers for Medicare and Medicaid Services form that you would need to fill out, showing you were covered under employer plan. And I can get people all those forms and get everything that they need when the time comes.

Radon Stancil:

So, over 20 years ago, I helped people with Medicare, and then I got away from that as I continued to work with people really around the retirement planning. And something that I didn’t know until you started with us, and started helping clients and me listening to you, is that if a person misses these enrollment period, and then they decide to enroll later outside of that, that there could be penalties for this. Could you walk us through how the penalties work, because I think that will just set the theme, that we don’t want to mess up here and get ourselves into that situation.

Shawn Southard:

Yes, absolutely. Thanks, Radon. There are some things in Medicare that, once they’re done, they can’t be undone, as they say. So a mistake that you make can be a lifetime mistake, and these late enrollment penalties are just that. They are mistakes, but they are monthly lifetime mistakes, and it’s very bad to find yourself in one of those situations.

So the Part B late enrollment period for your medical coverage in Medicare, how that works is, for every 12 months that goes by that you are supposed to be enrolled in Medicare when you were first eligible to do so, it’s 10% added on to your Part B premium, and that’s monthly for the rest of your life. So if you get a 10% late enrollment penalty and you live for another 22 years beyond that point, you are going to pay that extra 10% every single month for 22 years. And unfortunately, the government will never send you a thank you note for all that extra money that you’ve given them.

The Part D late enrollment penalty, which is the drug plans, the Medicare drug plans, the late enrollment penalty is 1% per month for every month you were supposed to be enrolled in one, in which you were not. So I just was referred to someone the other day, they turned 65, enrolled in Medicare, were not taking any prescription medications, said, “There’s no way I’m going to enroll in one of these drug plans, because I don’t need to do that, and they have premiums.”

So for five years, he was not enrolled in a drug plan, Part D plan. Finally, had to take prescription medications, needed to get in one, and now he’s going to have a 60% Part D late enrollment penalty that’s added on monthly for as long as he has the drug plan, which will most likely be the rest of his life.

So those are how those penalties work, and they can really add up. So we definitely want to make sure that doesn’t happen to you.

Murs Tariq:

Yeah. So one thing you could do as a listener is, you could go and just do all this research yourself, and figure out Medicare, become the guru on Medicare yourself, and make all those decisions yourself. Or you could say, “I don’t really want to do all this, and I’d rather much just tap into someone else’s knowledge, and someone else’s experience and expertise,” and that kind of ties us back to the name of our company, Peace of Mind Wealth Management, and we’re all about securing someone’s retirement, and making it nice and smooth. That’s a big reason as to why we brought Shawn on the team, to be that Medicare guru for our clients, as well as anyone that’s listening, that has questions around it.

So Shawn, obviously by being contacted, you would make things so much simpler and smoother for them, but give us just a quick little one or two minutes on what your initial process looks like, when you’re meeting someone for the first time.

Shawn Southard:

Yeah, my process is … as my grandpa always said, that acronym kiss, we’re going on acronyms, again. Keep it simple, Shawn. Keep it simple, Shawn.

And so that’s what I aim to do every time I meet with people, is to take … because this is a very complex topic and subject, and people are very anxiety-ridden over it, and have a lot of panic points with it. So I try to just remain calm and keep things simple as possible. I meet them where they are, and just say, “Okay, well, if you’re still working,” I just take them through, “Okay, how much longer are you intending on working? Give me that timeline,” and then we break it down from there. And I have a nice little flow chart that I’ve created a number of years ago that I think … I’m a visual learner, so I think it really helps people to visualize the foundation of Medicare, and what different pathways they can take. So we’ll go over that, so they understand what their options are.

And I have all kinds of great software and tools here that we can take a look at, that’s going to help break down different Medigap plans that they may be looking at, and price structures, and advantage plans. If that’s what they’re interested in, we can break those down and look at that, and then also help them with their premiums, what they’re going to pay. And we go over IRMA. I know we talked about on other podcasts, the income-related monthly adjustment amount. The more you make, the more you pay. We go through that and just say, “Hey, I’m here as a resource. Anything that you need,” just keep it as simple as possible, I’m here to follow-up and be with you. I can get on phone calls with human resource departments when they need to talk to their plan administrators at work, or for their retiree coverage, whatever’s needed, I’m here to be able to do that for people to make this as seamless as possible for them.

Radon Stancil:

Sounds great. Well, if you do want to talk to Shawn, you can give him a call here at the office, which is nine, one, nine, seven, eight, seven, eight, eight, six, six. Or you can email him, which is Shawn, spelled S-H-A-W-N at P-O-M Wealth dot net. Either one of those, and he would be glad to hop on a call with you, walk you through this, even if you just got some questions.

So thank you very much, Shawn. We appreciate you coming on with us today.