Massachusetts Estate Planning & Asset Protection Blog

Massachusetts Elder Law Attorney | Confusion Over Medicare

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Thu, Oct 25, 2012

Confusion Over Medicare Provides Opportunities for Financial Advisers to Help Boomers and Seniors

With so many people now working past 65, clients often ask their financial advisers when they should sign up for Medicare.

As is often the case with complicated government programs, the answer is: It depends.

Generally, anyone who has paid into Social Security and qualifies for Medicare should sign up for Medicare part A at when they turn 65, Part A covers hospitalization costs and is free.Medicare, elder law, attorney

But for those who are still working, deciding whether to sign up for part B, which covers doctor’s visits and outpatient services, is more complicated and involves lifelong penalties if crucial deadlines are missed.

Most beneficiaries are paying about $100 a month for Medicare part B premiums this year, and premiums are likely to increase slightly this year. Affluent retirees – those with annual income of $85,000 or more and married couples with annual income of $170,000 and up - pay even more.

Costs Add Up

Plus there is the added cost of a Medicare supplemental mental-insurance plan to cover the gaps in traditional Medicare, such as deductibles and co-payments, and Medicare Part D prescription drug coverage, which also has a surcharge for high-income earners. All those medical costs can add up.

“If you’re not taking into account future health care costs, you are doing your clients a disservice,” said Jay Fettig, president of BATTLE System, an insurance management software firm. “If you don’t offer Medicare as part of a financial plan, you risk losing clients to someone who does.”

Mr. Fettig’s company, whose name is derived from Business Acceleration Technology Through Lead Enrichment, offers a free Medicare Genie service to help individuals and their advisors choose the right Medicare plan for their needs. The tool, available at, matches users with appropriate plans, based on their answers to a few questions, and lists the costs of all providers in their area.

Gather the Facts

Should your client, who is still working, elect to use Medicare or stick with his or her employer’s group health plan?

“There is no quick answer to that,” said Arlie Mann, a Medicare specialist with BATTLE System. “I tell them to gather the facts about their insurance premiums and coverage, and we’ll compare it Medicare,” she said.

For those 65 or older who work for a company with 20 or more employees, the group plan is the primary user, and Medicare is secondary. As long as employees have group coverage from their current employer – or from their spouse’s current employer – they are exempt from the delayed-enrollment penalty that permanently raises their Medicare Part B premium by 10% for every 12-month period that they were eligible for Medicare but didn’t enroll.

An employee with good, affordable group health insurance may want to delay paying for Medicare Part B as long as he or she – or his or her spouse – continues to work.

Cheaper Option

For those with a high-deductible group plan, switching to Medicare may be cheaper, Ms. Mann said. B

But once an individual’s employment ends, he or she has just eight months to sign up for Medicare Part B without a penalty.

This period will run whether or not employees choose to continue to participate in their employer’s health insurance plan through the Consolidated Omnibus Budget Reconciliation Act of 1985 for up to 10 months. Those who choose COBRA shouldn’t wait until their COBRA eligibility ends to sign up.

If individuals don’t enroll in Part B during the initial eight months after they stop working, they may have to pay  penalty for the rest of their lives.

The rules are different for people who work for companies with 19 or fewer employees, said Kathryn Votava, president of, a health care consulting firm that works with individuals and advisers.

Because Medicare is the primary insurer in this case, those who miss the initial enrollment deadline for Medicare Part B, which begins three months afterward, will be hit with the delayed-enrollment penalty. Plus, they may have to wait up to 15 months to sign up for Medicare during the general-enrollment period, which runs from January through March each year.

In the meantime, the employer’s insurance plan, as the secondary insurer, is on the hook for just 20% of the medical costs of individuals, who must cover the remaining 80%.

Ellen Breslow, managing partner at EAB HealthWorks, a health consulting service that works with advisers and business owners, said advisers have a responsibility to lean how to help clients with Medicare issues.

“Although health care would seem outside the scope of an adviser’s area of expertise, the ability to incorporate it into an income management plan can influence an individual’s financial future,” she said.

More information and a questionnaire are available by clicking on the“wealth managers” tab at

(the above article can be seen in the Investment News newsletter from October 8-12)

At the Estate Planning & Asset Protection Law Center, we help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones.  We provide clients with a unique educational and counseling approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

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(the above article can be seen in the Investment News newsletter from October 8-12)

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