Leaving Employer Insurance For Medicare

Get Prepared for Part B

It is time to think about leaving your employer insurance for Medicare and to Apply for Medicare Part B.  The purpose of this article is to help you prepare for Medicare, in advance, Losing Sutter Medicare: Returning from Medicare Advantage to Traditional Medicareand to avoid missing important deadlines, which could lead to missed opportunities or even extra costs.  Bookmark this story or share it with a friend.

CHECKLIST: Leaving Employer Insurance and Transitioning to Medicare From Employer Health Insurance

  1. First, if you are currently working and receiving employer-sponsored health insurance, do not sign up for Medicare Part B solely because you turned 65.  Read our related article to “Understand what you are getting into.“  While there are some exceptions, if you work for a large employer (20 or more employees), you don’t need to do this yet.
  2. Second, those employer plan disclosures e.g. Annual Notice of Creditable Coverage for prescriptions? Don’t throw them away if you are Age 65 or older.  This could cost you extra money.  My advice is to start a Medicare Preparedness File, and save this article as part of your checklist.
  3. Third, have a discussion with your primary care physician:  Ask if they currently accept new patients, especially those on traditional Medicare.  Be bold, and ask if they plan to retire in the near future.  It’s better to find out sooner than later if you need to research a new primary care physician.
  4. Fourth, find an independent agent who focuses on Medicare health plans…and I mean lots of plans e.g FAQs on various Plan Gs.  You are going to need their ongoing, independent advice, as plans (and Medicare) do change over time.  Plus, you need help initially, to discuss a transition plan for leaving employer insurance for Medicare Part A and/or Part B and possibly coordinating temporary COBRA coverage for you and/or a spouse .  Finally, get independent feedback on all the medigap plans and different “flavors of G.”  We put together a good introduction to this topic.  Read:  The Buzz About Plan G and Plan G Extra.

“Our insurance agency is local, and fiercely independent, and contracted with 37 different insurance companies.”

It Is Foolish Not To Use A Local, Independent Agent

Californians do not receive a premium discount when you bypass an agent to go directly to

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the insurer; you only lose your “independence.”  Once you understand this, it is in your best interest to find an experienced, independent agent  to help your transition from employer-sponsored plans to the Medicare world (It’s better than waiting on hold for two hours with Social Security).

A more detailed article on these issues and important timelines and deadlines can be found on our website, derendingerins.com.

Related Links

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“We do not offer every plan available in your area.  Any information we provide is limited to those plans we do offer in your area.  Please contact Medicare.gov or 1-800-MEDICARE to get information on all your options.”

Before You Reach Medicare

Understand What You Are Signing Up For- Medicare (Before You Do It)

Do not apply for Medicare in the next 3 to 6 years if you are not familiar with the hazards highlighted in this article. What you do (or don’t do) today matters in the future, when you sign up for Medicare.  I feel compelled to share real life experiences to help those in the early planning stages of “life after 65.” This includes people age 61, 62, and persons working and deferring Medicare until age 68, 70 and later. Before you reach Medicare, you should understand what you are signing up for.   This article is dedicated to the many, sad phone callers like this one:

“…I signed up for Medicare 2 months ago, and then applied for Medicare Supplement (medigap) insurance, as well as my Part D prescription drug plan.  I don’t understand why I just received an invoice for $1,482.00 from the Department of Health & Human Services…is this a monthly bill?  Is this my new supplemental insurance?”

The Problem

Individuals go to the Social Security Administration (SSA) to sign up for Medicare Part A & B.  Do you understanding everything you are signing up for?  Before You Reach MedicareLong before you reach Medicare, talk to your CERTIFIED FINANCIAL PLANNER™, as well as a local, independent agent.

“Best Advice:  Talk to your financial advisor and an independent agent when you turn 62.”

Whereas Medicare Part A is free for most people, Part B is not.  Medicare Part B enrollees pay a monthly premium representing about 25% of the Part B estimated program costs.  For 2022, this so-called, Standard premium is $170.10 per month.  The government subsidizes the rest, but…

The Cost is Greater Than You Think

In truth, many individuals residing in the Santa Clara Valley pay more, because the Standard Part B premium is adjusted higher for income:  this increased amount is called “IRMAA.”   My

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observation during the last 12 months:  there is a real problem with SSA failing to educate applicants. Early education and understanding gives you a fair chance to delay Medicare, where possible, to reduce the IRMAA.  No offense intended for the good folks at SSA, but based on the sheer number of phone calls I receive… I think the organization can do better.

Introduction to IRMAA

Best Advice:  Talk to an independent agent and your financial advisor when you turn 62.  If you are working past age 65, initiate contact at least three years before you apply to Medicare or leave your current employer health plan.

IRMAA is the Acronym for Income-Related Monthly Adjustment Amount; there are two versions associated with Medicare:

  1. IRMAA-B for Medicare Part B
  2. IRMAA-D for Medicare Part D

The short introduction is, your cost to participate in Medicare Part B and Part D is higher if your income exceeds a certain threshold.  For 2022, you trigger the first IRMAA threshold at $91,000 (filing Single).  For greater detail, schedule a phone call or read Part 2 of this article.  The balance of this page will keep it simple.

Good-To-Know (Before You Reach Medicare)

Here is a “good-to-know” aspect of IRMAA:  the IRMAA calculation is based on IRS information provided to the Social Security Administration (SSA) from two or three years earlier.  You trigger an IRMAA when your income exceeds certain thresholds.  “Income” is based on your MAGI (line 11 of your 1040 Federal Income tax return), plus adjustments.  Fortunately, the IRMAA is not permanent and SSA recalculates your amount each year.  You may appeal the IRMAA in certain situations.

“The potential for an IRMAA should factor into the timing of receiving capital gains and your retirement date.”

The potential for an IRMAA should factor into the timing of taking capital gains.  Other factors include your retirement date, and ultimately your application for Medicare.  You have greater control of these factors the three or four years prior to retirement, so talk to an independent agent early in the process; definitely include your tax and financial advisors in the discussion.

Before You Reach Medicare

An independent agent can discuss mitigation strategies and options.  Perhaps you could work a few months longer than scheduled, while carefully avoiding late enrollment penalties (Part B and Part D).  Good agents are highly sought after, so start a conversation early, and build that business relationship before you need it.

408-252-7300

Would you like me to be your independent agent?  Call me at 408-252-7300 to discuss if we are a good fit.

Editor’s Note:  Marc Derendinger is an independent agent serving Santa Clara County residents for more than 30 years.  He helped the City of San Jose establish its first-ever group voluntary long-term care plan in 2001, served as an advisor to the State of California DHCS California Partnership for Long-term Care, and currently serves as insurance broker for the San Jose Police Officers’ Association.  Marc offers free assistance to new Medicare beneficiaries residing in California, at (408) 252-7300.

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Schedule a Consult:  (408) 252-7300

Sutter PAMF “Advantage” Options for 2024

Big news for Medicare beneficiaries who love Sutter Health’s Palo Alto Medical Foundation (PAMF) and associated groups:  While Sutter Health added another Sutter PAMF medicare advantage plan (with Prescription Drugs) last year, the Palo Alto Medical Foundation parent dropped two other plans on January 1, 2024.

That leaves only two Sutter PAMF Advantage HMO plans in Santa Clara County.  Physicians directories continue to be updated for 2024, and changes could occur in the future:  So reach out to our licensed sales agents for the latest availability on a new PPO plan as of April 2024 or call 1(800) MEDICARE or visit medicare.gov.

Schedule your Free 15-minute Telephone Consult

Sutter PAMF Advantage Plans of Santa Clara Valley and San Mateo Counties:

  1. Alignment Healthcare Sutter Advantage- 020 or 023

  2. Wellcare No Premium (HMO) HO562- 128

(408) 252-7300 CALL TODAY to talk to a local, California licensed sales agent

…or submit the Contact Request Form below and a licensed, local, independent insurance agent will respond within 24 hours

Remember, local is Better!

“We do not offer every plan available in your area.  Any information we provide is limited to those plans we do offer in your area.  Please contact Medicare.gov or 1-800-MEDICARE to get information on all your options.”

More About IRMAA

More About IRMAA:  For audiences age 61 to 64

In the last 12 months, I received too many callers, “surprised (or shocked) by IRMAA,” which inspired a previous, introductory (Part 1) article on the topic.  Today’s article, “More About IRMAA,” is Part 2, and goes into greater detail, providing resources for further research.  We hope it is helpful.

Short Background

Whereas Medicare Part A is free for most people, Part B is not.  Part B enrollees pay a monthly premium representing about 25% of the Part B estimated program costs.  For 2022,  this so-called, “Standard” premium is $170.10 per month.  The government subsidizes the rest, but…

The Cost is Greater Than You Think

Your cost to participate in Medicare Part B and Part D is higher if your income exceeds certain thresholds. For 2022, the first IRMAA threshold is triggered when a person files as Single and has income over $91,000 ($182,000 for Married, filing Jointly).

“Your cost to participate in Medicare Part B and Part D is higher if your income exceeds certain thresholds”

More About IRMAA

IRMAA is the Acronym for Income-Related Monthly Adjustment Amount; there are two versions associated with Medicare:

  1. IRMAA-B for Medicare Part B
  2. IRMAA-D for Medicare Part D

How bad can this get?  In 2022, the max out (worst case) IRMAA is $578.30 monthly for Part B, and $77.90 for the Part D IRMAA.  Consider that this cost “doubles” when a couple enrolls in Medicare A and B, meaning the annual IRMAA cost could be as high as $15,748.  For the planners in my audience, the monthly budget breaks down like this:

Monthly Costs for Spouse 1:

  • Part B Standard premium: $170.10
  • Part B IRMAA: $578.30
  • Part D IRMAA: $77.90
  • Medicare Supplement Plan G: $127.52 (65 year-old in Santa Clara County)
  • Part D Prescription Drug Plan: $33.37 (national average)

Monthly Costs for Spouse 2:

  • Same as above, (less a Household discount for the Medicare Supplement policy)

IRMAA Seems Worse in The South Bay

IRMAA impacts 4% of Medicare beneficiaries, according to the Social Security Administration.  In practice, we have observed it closer to 40% to 50%:  Many individuals residing in the San Jose

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metro area pay more because the threshold is low i.e. $182,000 (Married, filing Jointly) or $91,000 for all other filers.

Compounding the problem, “income” is taken from two (sometimes three) years prior to Medicare, which is often the pinnacle of your career.  During this period “income spikes” may occur, due to cashing in of stock options, taking capital gains etc.  These show up in your MAGI (line 11), but with foreknowledge (and a little financial engineering), I believe many can reduce the size of IRMAA.

Know and Prepare for IRMAA

In the years leading up to your Medicare application, Individuals should consider contacting a local independent agent experienced in Medicare and bring your CPA/ tax advisor into the conversation.  There are a few solid agents willing to discuss your options now, in exchange for an opportunity to represent your supplemental insurance in the future.

Do Not Pay Too Much

Recently, a delightful couple called me from I received a call from Saratoga:  the younger spouse is turning 65 in two months, but the older spouse is a senior engineer, and at age 72, not yet ready to retire.  The younger spouse was concerned of Medicare penalties if they did not enroll in Part A and Part B.  While every situation is unique, her phone call saved the family thousands of dollars by learning how she could delay Medicare, without penalty.  Do not pay too much:  just to be sure, request a consult at 408-252-7300.

In The Good-To-Know Corner

“Income” is based on MAGI (line 11 of your 1040 Federal Income tax return), plus adjustments for tax-free interest.  Fortunately, the IRMAA is not permanent, and SSA recalculates it every  year.  You may file an appeal in limited circumstances.

“The potential for an IRMAA should factor into the timing of receiving capital gains and the scheduling of your retirement date.”

The potential for an IRMAA should factor into the timing of receiving capital gains and your retirement date, and ultimately your application for Medicare.  Key Point:  You have greater control of these factors during the three or four years prior to retirement, so talk to your tax advisor and find a local, independent agent early in the process..

Local Is Good – Independent is Better

A local, independent agent can discuss mitigation strategies and options, such as the fine balance of working a few months longer than scheduled, while carefully avoiding late enrollment penalties (Part B and Part D).  Due to baby boomer demographics, good agents are much sought after, so start a conversation early, and build that business relationship before you need it.

Watch this video on YouTube.
San Jose, California

408-252-7300

Would you like me to be your independent agent?  Call me and let’s have a discussion, to make sure we are a good fit.  Request a phone meeting with Marc, at 408-252-7300.

Editor’s Note:  Marc Derendinger is an independent agent serving Santa Clara County residents for more than 30 years.  He helped the City of San Jose establish its first-ever group voluntary long-term care plan in 2001, served as an advisor to the State of California DHCS California Partnership for Long-term Care, and currently serves as insurance broker for the San Jose Police Officers’ Association.  Marc gives back to the community by offering free assistance to new Medicare beneficiaries, residing in California:  Call (408) 252-7300.

Resources

My Medicare Supplement Is Getting More Expensive

I finally understand why my Medicare Supplement is getting more expensive.  In the beginning (age 65), most California plans are under $150 per month.  Yet, if you do not take action, it will continue to increase and your smiles will turn to frowns as you get older.

A Common Example

My 85 year-old mother switched Medicare Supplement (medigap) insurance companies and saved $75 per month for the same plan!  So, why is my Medicare Supplement getting more expensive?  In my opinion, the three biggest culprits are below:

3 Biggest Reasons Your  Medicare Supplement is getting more expensive

  1. You purchased a medigap plan that is based on an “Attained Age” pricing methodology, rather than a community rated model.  Therefore, rates go up as you get older.
  2. Medicare (CMS) annually increases Medicare Part A and Part B deductibles, coinsurance, and copayments.  The annual increased copayment responsibility is passed through to your Medicare Supplement (medigap) plan, which of course adjusts rates to offset the higher costs.
  3. General medical inflation.

Excerpt from Medicare’s (CMS) “Guide To Choosing A Medigap Policy”

Medigap Basics- Medigap Pricing Methodology- p 18

Are Medicare Supplements Really All The Same?

Many Medicare Supplement (medigap) plans are excellent, but they are not all the same.  So if

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your Medicare Supplement is getting more expensive, research if your policy was filed with the State of California as Attained Age or Community Rated, as depicted above.  Rather than do all the research yourself, find a trusted local independent agent who represents many plans.  Let the agent do the work, because it costs you nothing.

 

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In California, premiums are the same whether you buy directly from a company or with an agent’s help.  And, thanks to the California birthday rule, it is easy to change Medicare Supplement (medigap) insurance companies during your birthday month, each year.  Note: This is a California rule, and is not available in all states.

Don’t Pay too much, request your free insurance agent consultation below, or Phone (408) 252-7300:

Test Driving Medicare Advantage Plans in Santa Clara Valley

Are recent events tempting you to test drive any of the Medicare Advantage plans in Santa Clara valley? It seems more and more doctors are shying away from traditional Medicare (original Medicare Part A and Part B) in Santa Clara valley.  There is a buzz about reports that Sutter/ PAMF (Palo Alto Medical Foundation- formerly Camino Medical Group, Sunnyvale Medical Clinic etc.) is limiting access to new Medicare patients on traditional Medicare (read story). Yet, Stanford Medicine offers fewer choices in Medicare Advantage.

According to the Kaiser Family Foundation, in 2021 42% of Medicare beneficiaries nationally have chose a Medicare Advantage plan over traditional Medicare.  This statistic has been growing for years.  So if your current physician is contracted with a Medicare Advantage plan…or if you are willing to try one of these plans, in order to gain access to Sutter/PAMF, should you give it a test drive (note:  the number of plans is expanding in 2023- see related story)?

Stanford Medicine and Palo Alto Medical Foundation have popular Medicare Advantage plans in Santa Clara valley. Some individuals are doing a test drive, in order to gain access to Sutter/ PAMF.  Before you “drive,” first, get independent advice, locally.

Before You Test Drive Medicare Advantage Plans

I would answer you first need a lot of information, including understanding the risks of Medicare Advantage plans. If I were to develop a list of best practices to research the issue, it would begin with finding a competent, local independent agent whom you are comfortable

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with.  Make sure you discuss what, if any, trial rights (i.e. guarantees that you can return to traditional medigap coverage) would apply to your situation.  Another recommendation is… find a doctor, before you apply to Medicare.

Best Practices for individuals approaching Age 65

  • Find your doctors well before applying for Medicare
  • Find a local, experienced Independent Agent, representing lots of insurance companies

Medicare Advantage Trial Period

When you enroll in a Medicare Advantage plan for the first time, you may have Medicare “trial” protections and additional rights under California law, which could allow you to return to traditional Medicare with supplemental (medigap) coverage.  However, these rights do not apply in all circumstances and you should seek a consultation from a competent independent agent before enrolling.  I cannot emphasize this enough.

How do Independent Agents Get Compensated?

Local Independent agents do not charge fees, using them does not add to the cost of your insurance.  In fact, they are only compensated when they help you complete an enrollment application for insurance coverage.  Medicare sets the compensation dollar amount and for Medicare Advantage plans, it is the same from insurer to insurer. So there is really no incentive to favor one plan over another.  However, not every agent is independent and not every independent agent represents a large number of plans. You need to ask questions.  

When you find one, treasure that relationship, because good agents get booked up quickly through referrals.  You are going to need their help over the years because insurance companies have a tendency to bring new plans into the county and close older plans as time goes on.

By local, I mean an agent who is not out of state and not digital (online only).  Chances are good that local agents know your county better:  They hear and know what’s going on with local doctors and medical groups e.g.Sutter/ PAMF, SCIPPA, PMG.  Plus, Medicare Advantage and standalone prescription drug plans are contracted on a county by county basis. New plans are coming and going every year.

Here are my best practice suggestions for choosing a local, independent agent:

  • Represents at least three Medicare Advantage plans
  • Represents at least five Medicare Supplement (medigap) plans
  • Represents at least four standalone Part D prescription drug plans
  • Lots and lots of client references– ask for them or check YELP or both

Finding a Doctor

When I suggest “Find A Doctor” I am alluding to the recent development of some doctors shying away from traditional Medicare.  The Kaiser Family Foundation published an issue brief in 2020 that estimates 1.5% of California doctors have formally opted out of Medicare. While that leaves a healthy 98.5%, the recent Sutter/PAMF reports could be a game-changer.

Even Medicare Advantage (HMO) plans require you to designate a Primary Care Physician on your enrollment application.  Bottomline you need to find a doctor.

Here’s my suggestion:  Find your doctors(s) before you apply to Medicare and solidify the relationship by making sure you have been seen within the last year or two.  According to reports, PAMF is defining “existing patient” to mean someone who has been seen by their doctor within the last three years.

I have additional ideas for individuals working past 65 (read story).

Bottomline, find a doctor and find a competent, local independent agent.

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Do You Really Need Medigap Insurance?

Do you really need Medigap (Medicare Supplement) Insurance?  What is the worst-case financial exposure for those who rely solely on Medicare Part A and Part B?  Many Californians are surprised to learn traditional or original Medicare does not have out of pocket limits.  Yet, this type of protection is common with employer-sponsored insurance.  

“Do Californians really need Medigap (Medicare Supplement) Insurance?” 

Before looking closer at your potential financial out of pocket, let’s be clear on the terms we are using:  Medigap (Medicare Supplement Insurance) is not Original Medicare; rather it is private insurance that supplements Original Medicare benefits, such as Part A and Part B. OK, let’s continue…

Assuming an average copayment of 20% for Part B expenses, you could face large financial liability, should you experience surgical work for Cancer, Cardiac, Hip, Knee etc. i.e. services that are not uncommon for individuals over 65. 

“The short answer is yes, you do need Medigap (Medicare Supplement) insurance. “

Yet, your financial exposure could be far worse:  The preceding paragraph made no mention of your copayment responsibility under Medicare Part A, should you experience hospitalization or skilled nursing services.

For example, Medicare grants each beneficiary a specified number of Hospital Days per lifetime.

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Hospital Days also have significant copayments (see example here), paid by you.  A Medicare Supplement (Medigap) policy can add 365 additional days to the 60 day lifetime limit.  In summary, Medigap is offered by private insurance companies to supplement the Original Medicare program.  If you purchase it when turning 65, the cost is relatively inexpensive, sometimes costing less than what the government charges for Part B. 

Never pay more than you have to for Medigap.  It is wise to use an independent agent to research several plans at once, saving you time.  Good to know:  You pay the same monthly premium using an independent agent, as you would purchasing directly from the insurer.  So why take a chance of paying more?

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San Jose, California

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