In our previous two parts, we learned about two situations — early retirement and retiring with the spouse covering the major medical insurance. In this final part, we will discuss high monthly small employer premiums and single coverage as we turn 65.
Scenario 3: Wife is turning 65. She has a small business and covers the insurance cost for herself and her spouse. Unfortunately, small employer insurance premiums are significant so as the employee was preparing to turn 65, she aggressively looked at cheaper, even better coverage under Traditional/Original Medicare or Part C/Medicare Advantage. The monthly employer-sponsored commercial insurance premiums were $1300 a month with a $3500 deductible/high deductible plan for each spouse. Even after exploring a health savings account option (which we will learn more about in an upcoming article), deductibles grew, out of pocket grew and premiums remained high.
The retiring spouse made the “easy” decision to move from the commercial insurance plan to Medicare. (Part A/inpatient hospital and limited skilled nursing stays usually have no monthly premium. Part B/doctors, outpatient hospital and DME have an average of $135 monthly premium. Part D/prescription drugs have an average of $80 monthly premium. If assistance with out of pocket expenses when services are used, a Medicare supplemental insurance can be purchased for approximately $180 a month. Even if all the Medicare services were purchased for the retiring spouse, it was less expensive than the monthly commercial insurance premium.) The Medicare Advantage option has differing amounts due based on the insurance plan that is being offered. Another option to explore when making a decision to move from commercial insurance.
Now what to do about the remaining spouse if the employer-sponsored commercial coverage is canceled for the employee? Think Healthcare Exchange/Marketplace. Under the Affordable Care Act, this option was created in 2010 that allowed for individual coverage through local insurance companies who elected to participate in the state exchange. The spouse can go to the exchange and input the ‘fairly’ simple information and begin looking for a plan. Hint: If the income has been reduced, there could also be help with premium subsidies. The spouse will be on an individual commercial insurance plan thru the exchange while the retiring spouse will move to Medicare.
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Scenario 4: Employee is covered as an individual plan with employer-sponsored commercial insurance. Premiums are higher as he works for a small employer. As he turns 65, a decision can be made: Stay with the individual plan under the small employer or look to move to Medicare. In Part 2, we addressed the work paper that should be created to compare premiums, deductibles, co-payments and drug coverage when making final decisions. But now the employee has a choice — stay with a commercial plan or move to Medicare (either traditional or Medicare Advantage.)
There are more of “working age” — defined as working past 65 — today than since Medicare was created in 1965. Explore the multiple options- remembering the Medicare Secondary Payer/MSP rules as well as the benefits added through the Affordable Care Act/exchanges/marketplace. Have fun!
Homework assignment: Go to Medicare.gov and read: Working Aged that has more great information regarding this interesting topic.