Retirement.  It’s so close you can taste it.  You’re crossing days off your calendar waiting for that magical day to get here.  The only thing holding you back is your health insurance.  Eeek! You get sick just thinking about how much your premiums are going to be when you retire.  Your backup plan is holding out for Medicare, but you don’t know if you’ll make it at your job until 65.  What to do?

This is a common dilemma that many of my clients are going through.   They’re ill from the outrageous amount that will be exiting their checking account each month just to pay for their health insurance; and that’s not including the rest of their monthly bills.  They know they do have a backup plan in Medicare.

For those that can postpone till 65 to retire, they are in luck since they will immediately qualify for Medicare.  For those that qualify, here’s what you’ll need know about signing up to receive your Medicare benefits.

Are You Eligible More Medicare?

First things first, you may be wondering if you’re eligible to receive Medicare benefits.  In addition, you may be wondering what benefits that you’ll be entitled to.  If you’re confused – don’t worry, you’re not the only one - a quick and easy resource is to visit Medicare.gov.  From there you can click on an Initial Enrollment Package link that will walk you through a series of questions.  You can see a screen shot of the first page below.  You will be asked approximately 10 questions, some of which are listed here:

Medicare Benefits Eligibility Tool (CLICK HERE TO BEGIN)

After you’re done answering the questions, it will compute a “Results” page informing you on what you are covered for including: General Enrollment, Medicare Part A, Medicare Part B, Medicare Part C, and Medicare Part D.  I highly suggest you start here if you want your answers to your specific situation.

Automatic Enrollment in Medicare For Some

Anyone who has received a Social Security check or 24 months worth of Social Security Disability Insurance (SSDI) is automatically enrolled in Medicare Part A and Part B. Part A is hospital insurance; Part B is medical insurance.  For example, if your 65th birthday is February 20, 2011, your Medicare effective date would be February 1, 2011.

If you’re getting Social Security checks and approaching age 65, you’ll get a Medicare card in the mail three months before your 65th birthday.  Consider that your birthday card from them

Medicare benefits begin on the first day of the month in which you turn 65. If you are getting SSDI (regardless of your age), the card will arrive coincidental with your 22nd monthly payment and you are entitled to Medicare coverage with your 25th monthly payment.

Please note:  you must be a U.S. citizen or a legal resident of this country for five years or longer to be eligible for Medicare.

Social Security and Medicare

Enroll In Medicare

If you’re coming up on 65 and not receiving Social Security benefits, SSDI or benefits from the Railroad Retirement Board, you can still apply for Medicare coverage. You can visit your local Social Security Administration office or dial (800) 772-1213 or go to www.ssa.gov to determine your eligibility.

In this case, if you are eligible you have the choice of accepting or rejecting Part B coverage. If you want Medicare Part A and Medicare Part B, then you should sign your Medicare card and keep it in your wallet. If you don’t want Part B, you put an “X” in the refusal box on the back of the Medicare card form, and send the form to the address shown right below where your signature goes. About four weeks later, you will get a new Medicare card indicating that you only have Part A coverage.

When can you change your Medicare coverage?

There are different enrollment periods that Medicare offers to the public to change (add or decrease) their benefits.  Please take note of these periods for there are typically no exceptions.

What if You Can’t Afford Medicare Payments?

Each state has different programs for helping those out that can’t afford to pay for their Medicare benefits.  The programs may pay some or all of Medicare’s premiums and also may pay Medicare deductibles and coinsurance. To qualify, you must have Part A (hospital insurance), a limited income, and, in most states, your resources, such as bank accounts, stocks and bonds, must not be more than $4,000 for a single person or $6,000 for a couple. You’ll need to contact your state Medicare office for more details.

Special Medical Conditions and Medicare

Individuals with end-stage kidney failure who need dialysis or a transplant may qualify for Medicare regardless of age. Upon diagnosis, they can contact the Social Security Administration. Medicare coverage usually takes effect three months after a patient begins dialysis. People with Lou Gehrig’s Disease (ALS) are automatically enrolled in Medicare as soon as they begin receiving SSDI payments.

Questions On When You Need To Sign Up For Medicare?

The Centers for Medicare & Medicaid Services (CMS) is a branch of the U.S. Department of Health and Human Services. CMS is the federal agency that administers the Medicare program and monitors the Medicaid programs offered by each state. English and Spanish-speaking Customer Service Representatives (CSRs) at 1-800-MEDICARE can answer your questions. 1-800-MEDICARE CSRs can give you information about Medicare coverage and costs, health plan options, and your Medicare claims.

photo credit: Paul Schreiber

Many seniors have misconceptions on the differences between Medicare and Medicaid eligibility benefits.

Throw in long term care insurance, and the water gets even more muddier. Even as a Certified Financial Planner, it’s tough trying to stay on top of all the issues concerning seniors.

To help clear some of the mental fog that comes along with these issues, I decided to bring in a subject matter expert to help out.  Tiffanny Sievers, Attorney at Law and founder of SI Elder Law has been kind of enough to share her expertise on the differences between Medicare and Medicaid and how seniors can plan for their later years. Here’s what she had to say….

1. What steps can one make to prepare for dealing with elder issues?

In order to properly prepare for elder issues a individual first needs to have a good foundation of good planning documents. This means having a Power of Attorney for Property and a Power of Attorney for Health Care. These documents allow someone you pick to make property and health care decisions for you when you are unable to do so yourself. Second they need to be prepared for an untimely death. It is better to plan when you are healthy than when you are sick.

Of course, meet with an attorney and that attorney can help you decide what documents you will need to make sure that your wishes are carried out after your death, such as a last will and testament or trust. Third, meet with your financial advisor to determine what investments will give your beneficiaries the best tax benefits and make sure that you have enough Life Insurance to pay for your burial expenses.

Finally, you need to make sure that you have enough assets to avoid running out of money. Once you run out of money, you run out of options. One needs to meet with an elder law attorney, like myself, to make sure that your assets are properly placed to avoid running out of money if you need long term care either at home or in a nursing home.

2. How long will Medicare cover nursing home costs?

In a nursing home, Medicare will cover the first 20 days 100% and then the next 80 days at 80% if you continue to improve medically. After the first 100 days no matter how much improvement you make, Medicare will stop paying and you must either move out or find some other way to pay.

3. What is the difference between Medicare and Medicaid? Common misconceptions?

Medicaid

Almost everyone over the age of 65 is on Medicare and it doesn’t matter what your assets are. However, you must qualify for Medicaid, Medically and financially. Medicaid will only pay if you have limited assets. This means that after Medicare stops paying you have to spend down your assets until you are just about broke before you qualify for Medicaid.

4. How much does it cost to be in nursing home?

Nursing homes in Southern Illinois cost between $2200 and $5500 a month. In Chicago, one month is $7,500 and up. Assisted Living Ranges from $1,500 to $4,500 a month. Private caregivers in your home range between $3000 and $12,000 a month depending on how much care is needed.

5. What are the ways to pay for nursing home costs?

In my opinion, there are five ways to pay for nursing home costs:

1. Private Pay – with good old fashion cash.
2. Long Term Care Insurance – If you have bought “nursing home insurance” the policy will pay a certain amount of money per day for your stay in a nursing facility. You must have bought a policy before you needed nursing home care.
3. Veterans Benefits – The Veterans Administration offers a VA Pension benefits for Veterans or Widows of Veterans if you meet three criteria:

• 1. Served at least 90 days of active duty
• 2. One of those days was during a period of war
• 3. Were something other than dishonorably discharged from the military.

4. Medicare – as discussed above will only pay for part of the first 100 day stay in a Skilled Care Facility
5. Medicaid – Medicaid pays for your entire stay at a nursing home or supportive living facility. It does not pay for care at home.

Medicaid, unlike Veterans benefits, does not pay a cash benefit but only pays directly for services. In fact, you will never receive any cash from Medicaid. Medicaid has no limit, it will pay for any kind of care that you need. For example, Medicaid will pay for the removal of a splinter or for open heart surgery, no matter the cost.

In order to qualify for Medicaid there are asset and income limitations. If you are married, the community spouse cannot have more than $109, 560 plus a house in assets. If you are married, the community spouse will get to keep about $2700 a month of the couple’s combined income. Whatever income the couple has over the $2700 the nursing home will be awarded.

If you are single, you must have less than $2000 in assets and all of your income will go to the nursing home less $30 a month.  What SI Elder Law does, is help protect assets so that you can be on Medicaid and not be completely broke.  In most cases, SI Elder Law can save half of your assets once you are in a nursing home and you will receive Medicaid benefits.  The sooner that you call SI Elder Law the more money that we can save.

6. What hope, if any, is there for those that didn’t plan?

With the current laws right now in Illinois, if you haven’t done any planning and are already in a nursing home, I can save half of your assets. The sooner you get to me the more money that I can protect. For some of my clients, I am able to protect everything.

7. Anything else?

Remember, that any transfer of assets, if not done the correct way can give you a big penalty period and that might have been avoidable. It is best to talk with an Elder Law attorney before moving any assets so that you get the shortest penalty period possible or avoid a penalty period at all.

If anyone is already facing the possibility of nursing home care, I offer a free consultation in my office to see if there is anything that I can do to help.

photo credit: Patrick – msigarmy.com