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How to Prepare Your Parents for Medicare and Social Security
Thousands of baby boomers are hitting retirement age every day, and they, along with their children, are starting to learn what retirement entails. Medicare and Social Security can be a bit confusing and it’s a learning process for everyone.
Misunderstanding the rules and restrictions that each retirement program has can cost you both time and money. If you’re a Gen X’er or Xennial, follow these few steps to help prepare your parents for transitioning into Social Security and Medicare.
Estimate your parents’ Social Security benefit
The Social Security Administration (SSA) calculates each person’s Social Security benefit by evaluating the highest-earning 35 years of income. The SSA takes the total income amount and applies a formula to figure out the monthly benefit for each person. Monthly benefits are based on the age they start taking benefits, as well.
Estimating your parents’ SS income helps you budget for your parents’ other retirement expenses like Medicare premiums. Use SSA’s Social Security Quick Calculator to estimate your parents’ SS income.
Keep in mind that this number is just a projection based on very limited information you are providing. For planning purposes, I would always assume that your parents will receive less and then plan accordingly.
Figure out your parents’ Medicare premiums
During the years your parents worked, they paid Medicare taxes. For this reason, most Medicare beneficiaries have earned premium-free Part A.
Typically even if one of your parents has never worked, as long as their spouse is covered they should still be eligible. However, it is always important to verify a non-working spouses coverage when you are preparing your parent’s retirement plan.
Medicare Part B isn’t paid for by taxes and has a monthly premium. Same goes for Part D. These two parts can have an income-related monthly adjustment amount (IRMAA) too. IRMAA is determined by the Medicare beneficiary’s income from two years prior to Medicare enrollment. Use SSA’s income charts to figure out your parents’ Medicare premiums. The charts start on page 5 and are broken down by your parents Modified Adjusted Gross Income (MAGI).
For example, if your parent individual MAGI is below $85,000 (Married MAGI of $170,000 or less), then the standard 2019 Premium is $135.50 with no additional costs for prescription drugs. Keep in mind that this is basic coverage and your parents will most likely need additional coverage based on their individual medical conditions.
I’ve got an excellent podcast from Danielle Robert, a medicare expert that goes into the different medicare coverage benefits available to your parents.
Learn your parents’ Medicare enrollment periods
Everyone has a unique Medicare Initial Enrollment Period. The IEP is when your parents should enroll in Part A, Part B, and Part D.
Your parents’ IEPs start three months before their 65th birthday, goes through their birthday month, and end three months later.
For example, if your mom’s birthday is on July 7th, her IEP starts on April 1st and ends on October 31st. Determine both of your parent’s IEPs, so they know when to enroll in Medicare to avoid late penalties.
It is super important to make sure that your parents are correctly enrolled in medicare so that they get the right coverage and are not subject to penalties. I highly recommend reaching out to one of the many medicare benefit companies like Boomer Benefits who will help guide you through this process.
These companies are experts in Medicare enrollment and their services are free. If someone is trying to charge you for Medicare Enrollment then it is most likely a fraudulent company. Any fees associated with Medicare are taken directly from your social security benefits and your parents should not be billed directly.
Look out for your parents’ Welcome to Medicare packet
Every person nearing the age of 65 gets a packet from Medicare. The type of packet depends on each person’s situation so you’ll need to help your parents review it carefully to ensure you have the correct coverage and have filled out all of the areas correctly.
This packet contains many important documents. Look out for it, so it doesn’t get thrown away by mistake.If for some reason you parents do not get this package reach out to the SSA immediately to have it resent to you.
People who have signed up for Social Security benefits prior to turning 65 are automatically enrolled in Part A and Part B. These people get a Welcome to Medicare packet 2-3 months before they turn 65.
If your parents want to delay Part B because they have creditable coverage through an employer, fill out the correct form from the packet and mail it back to the SSA.
Research Medicare plans with your parents
Most people can choose between Original Medicare and several different Medicare Advantage plans. Research each type of Medicare plan with your parents to help them decide what type of coverage they need.
First, decide whether they’d be better off with Original Medicare and Medigap or a Medicare Advantage plan. If you choose Original Medicare, you’ll likely need Part D coverage for prescription drugs. Most Medicare Advantage plans include this coverage.
Research the plans available in your parents’ area. Compare the costs and coverage of each plan.
Tools and resources
Medicare and the SSA have several tools and resources for people nearing retirement age. The following tools and resources can be used to prepare your parents for Medicare and Social Security enrollment:
- Social Security’s Quick Calculator
- Medicare’s and Social Security’s IRMAA charts
- Medicare’s Plan Finder Tool
- Medicare’s What’s Covered app
Although it isn’t mentioned in the above tips, using the What’s Covered app is a great way to learn what Medicare does and doesn’t cover.
Following these steps and using these tools will help you better prepare your parents for starting their Medicare and Social Security benefits.
***Special thanks to Danielle Roberts founder of Boomer Benefits who wrote this article. If you have any questions on how your medicare benefits work I highly recommend reaching out to her team, they will be able to answer literally any questions you have!***