Understanding Medicare When You’re Over 50

01/27/20: Addiction Recovery
Medicare is a complex program. While you don’t age into Medicare until you turn 65, there is some prep work you should start when you are at least 50 years old. In addition to general Medicare knowledge, you also must know your retirement plans as they can affect your Medicare enrollment.   Before you age into Medicare, here are a few must-know facts you should be familiar with. 

Pre-Retirement age of 50

The age you retire can affect your Social Security income as well as your Medicare plans. If you plan to retire before age 65, here are some things you should know. First, if you retire and take out Social Securing income before your full retirement age, your allotted Social Security income will be lowered. If you were born in 1960 or later, your full retirement age is 67 years old.   Starting your Social Security income at your full retirement age means you will get 100% of your Social Security monthly benefit. However, starting your benefits any earlier than that will decrease your benefits anywhere between 6.7% and 30%. If you retire and start your Social Security benefits early without having planned for the lower income, this could affect several parts of your retirement, such as your budget for Medicare. Regardless of when you retire, you can’t enroll in Medicare until you reach age 65. You should also note that if you’re already taking Social Security benefits by the time you’re 65, you will be auto-enrolled into Part A and Part B. 

Your Medicare Part A cost 

Your premium for Part A depends on how many years you have worked and paid into Medicare. Based on your work credits, you will either have a $0 premium or a $200+ premium. Work credits are earned per quarter. For example, if you work for ten years, that’s 40 quarters, therefore, 40 work credits.   If, by the time you retire, you’ve earned 40 quarters, you will have a $0 premium for Part A. However, if you have anything less than that, you will owe a monthly premium once you enroll in Part A. If you have 30 to 39 quarters, your Part A premium in 2020 will be $252. If you have less than 30 quarters, your Part A premium in 2020 will be $458. Therefore, before you retire, make sure you have worked in the United States and paid Medicare taxes for at least ten years, or else you’ll owe a hefty premium for Part A. 

Your insurance between retirement and Medicare 

As of 2020, the average retirement age is around 63 years old. If you retire anytime before 65, you will need a plan for health insurance until you are eligible for Medicare. While some companies have retiree health insurance, not all are as fortunate.   If your employer doesn’t offer retiree health insurance, you may be forced to consider COBRA or the Marketplace for your temporary coverage. Both of these options can be extremely expensive for seniors. Therefore, you should plan accordingly, so you don't drain your savings account on health insurance premiums. Working a couple more years to get you to Medicare age may be worth it. 

Your enrollment into Medicare before 50

Once you turn 64, the countdown starts for your Medicare entry. By the time you are 64 and 9 months old, you should know when you should apply for Medicare, how to apply, which parts and plans you should apply for, and how they work.   The earliest you can apply for Medicare is at the start of the month that is three months before your 65th birthday. For example, if you turn 65 on November 20th, your Initial Enrollment Period for Medicare will start on August 1st. Your Initial Enrollment Period continues for three months past your 65th birthday month, but for the earliest start date, you should apply during the first three months of your Initial Enrollment Period. If you do, then your Medicare will start on the first of your birthday month.  Once you have Part A and Part B, you will also be able to apply for the other plans that go alongside Original Medicare. You should have already researched these plans and have a pretty good idea of which ones you want by the time you sign up for Part A and Part B.   Transitioning into Medicare can be a stressful time, but it doesn’t have to be. Figuring all of this out well in advance will help you to be able to make smarter Social Security and Medicare decisions.  

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