65 and Ineligible for Medicare? What a disaster!

[Co2012]

Hi all,

Just trying to get some input on a problem a friend of mine is having.

She retired early 5 years ago. She will soon be 65. She blissfully went down to the SS office to apply for her Medicare benefits; eagerly anticipating the $250 hike in her pension check. When Medicare becomes your primary, your insurance coverage goes down substantially. Her bliss quickly turns to horror when she was told that she is ineligible. But how can this be? Isn't everyone eligible when they turn 65?

They explained to her that any school (and some public) employees hired before 1985, did not have Medicare payments taken out of their pay. So you have nothing coming.

This alarmed me as I, too, started with the school system before 1985. Although I feel certain that I am able to pay for my own health care coverage, it would definitely put a damper on my level of comfort in my retirement. I called SS and was told that it was true what my friend said but since I am married, I can file under my husband.

My friend is not as lucky. She has never been married. She's distraught and bewildered. For whatever reason, she did not prepare well for retirement but did feel sure that her pension could cover her bills and never envisioned this stumbling block. She thinks she may be able to still get coverage from STRS but at an unaffordable rate that may be close to what Medicare would charge. She wonders if she can apply for Obamacare even though she gets a pension check.

She feels she will have to come out of retirement and find employment somewhere for 2 1/2 years to qualify for Medicare (she has 33 quarters). She now fears losing her home. I just don't how to advise her. Any thoughts or advise? If there is no known advice, I hope this can serve as a warning to others who started work for a school system before 1985 to make sure that you know what your Medicare status is.

It's hard to believe that our school system never said a word about this Medicare situation and left some vulnerable and perhaps even poverty stricken.

[aja8888]

Are you sure? Try the eligibility tool for her:

Medicare.gov - Eligibility & Premium Calculator

[H2ODude]

I had always assumed EVERYONE got Medicare at 65. Then I was with a former co-worker last year who worked with me at a city with no SS and apparently had no Medicare. He said he was not going to get Medicare. I was sort of stunned. So I think the issue is real, I'm just not sure how it applies to whom. I'm glad I've had over 25 years of SS and apparently the same in Medicare deductions. At 62 paying $13k a year for HI I'm looking forward to my entitlement.

[Dreamer]

Most people do qualify for premium free Part A Medicare through either their own insured status or through their spouses and sometimes through their parent's if they were disabled before age 22. From what you wrote, it sounded like she still have insurance coverage through her former employer, but she would receive a $250.00 pension increase if she had Medicare? If she is going to be truly poverty stricken, she can apply for SSI (Supplemental Security Income) as an aged person at 65. It is a program that is based on need. She would apply at Social Security.

Part A costs | Medicare.gov explains Medicare eligibility briefly. She can still get Part A, but it would cost her $426.00 per month. She would also need to file for Part B and pay $104.90 per month. I hope this helps.

[aja8888]

Please run the tool I linked to above. I ran it like this:

* Have you worked at least 10 years for which you paid Medicare taxes? Yes No

* Do you live within the United States or one of its territories? Yes No

* Do you get group health benefits through your or your spouse’s current employer? Yes No

* I am already enrolled in Part A Part B Neither Part A nor Part B

* What's your marital status? Single Married Divorced

* Are you a U.S. citizen or legally living in the U.S. for the past 5 years? Yes No

Your Initial Enrollment Period based on your age
March 1, 2009 - September 30, 2009

Next General Enrollment Period Begins
February 16, 2014

Am I eligible to enroll?

You're eligible to sign up for Medicare Part A (Hospital Insurance) and Part B (Medical Insurance). Learn what Medicare covers- Opens in a new window.

You may not be able to get premium-free Part A (Hospital Insurance) based on the work history of you or your spouse (living, deceased or divorced). You can buy Part A for a monthly premium.

If you paid Medicare taxes for less than 30 quarters, the standard Part A premium will be $426.00. If you paid Medicare taxes for 30-39 quarters, the standard Part A premium will be $234.00. Some people pay a higher premium if they do not enroll when they are first eligible.

Most people pay a monthly premium for Medicare Part B. The standard monthly premium for Medicare Part B is $104.90 in 2014. Some people pay a higher premium based on their income or if they do not enroll when they are first eligible.

[Dreamer]

Actually I just remembered that you said she had 33 quarters of coverage, so she should be able to get the Part A premium for $234.00 per month.

[Mulligan]

I have a friend scrambling to get his credits. Like Dreamer said you can purchase it. The school personnel who could be snagged by this were the ones who not only started prior to that date, but never switched school systems. If they transferred to a different district after that date they would have been forced into acquiring Medicare premiums. It probably is never mentioned because their is so much turnover in administrative positions they are themselves probably not aware of the potential problem because they are paying into it already themselves. Maybe I do not understand, but paying the Medicare premiums wouldn't seem to be much more costly than what she has had to pay to continue her existing premium payment.

[Bestwifeever]

If the friend has 33 quarters she can go back to work for 21 months to earn 7 more quarters. Otherwise, according to the calculator, for her 33 quarters worked, she will have to pay $234 for part A (hospital); she will have to pay $104 for part B, but everyone has to pay for that coverage. So worst case on Medicare her health coverage goes up about $100 above the $250 she apparently is currently now paying for her health care (the amount that would have felt like a raise had Medicare been available to her at no cost, I think, but that she would now be paying for Medicare part A given her shortage of credits). Can she just stay on the school's health insurance?

If her budget is so tight that she needs the $250 that she is currently paying for HI, perhaps she should go back to work both to earn the SS credits and also to bolster the nest egg.

[Co2012]

Thanks for the rapid replies. I am getting some good information and I am going to share every bit with her.

Someone asked if I was sure about the ineligible. Yes, I am. I called SS regarding my own situation and was told were I not married, I would not qualify.

Thanks for whoever mentioned the 33 credits (I apologize, I do not yet know how to add quotes). That is definitely an option for her. Although it will probably work differently as STRS works in conjunction with Medicare to provide coverage as well as a prescription plan. So the premium may be higher but it is a place for her to start.

She currently pays $350 a month for coverage through STRS. I got the $250 figure based on the 100 deduction she would have to pay Medicare.
To get the math straight, had she been eligible for medicare, she would only had to pay $68.00 a month, which would have given her a $282 gain. This loss is devastating to her. Instead of paying $68 dollars, she thinks she looking at over $500 (not sure where she is getting this). I can understand how she feels. I am retired and paying over $500 for me and my husband and when I turn 65, I will pay $68.00. Had I not been married, I would have been looking at a loss of over $400--I'm not trying to rush it but I look forward to the increase.

It is true, she probably should go back to work to earn the extra 7 credits not only to to get the medicare but to make more money. Against advice, she retired without her house or car being paid off. She got so excited when me and her sister retired, she could not stand it. Now she finds her money really--really tight.

I'm sure had we known about this medicare glitch, after 1985, most would have gone to another school system and started fresh.

Thanks again! I love this board and have gotten so much useful information from it throughout the years. I just wish I had more time to spend on it and learn how to use it properly.

[AllDone]

Yes, if she is not eligible for Medicare, she can enroll in an individual plan through the ACA marketplace. That might be more economical, if her income is low enough to qualify for a substantial subsidy. However, without a subsidy buying into Medicare part A would make more sense.


See the following:
What the Health Insurance Marketplace Means for Seniors

[Indigo Mule]

How awful for your friend to not have had this explained to her by her HR people. In our school district, certificate-required positions (teachers, principals, and the like) hired before January 1992 were Medicare exempt. When it became mandatory for new hires, the pre-existing employees were given the option to opt in. A surprising number (about a third of them) chose not to.

(We still get an occasional retiree who contests that they opted out, even when shown their signature on the document, but we cannot compel the grandfathered employees to rethink their choice.)

[Co2012]

Quote:

Originally Posted by Indigo Mule How awful for your friend to not have had this explained to her by her HR people. In our school district, certificate-required positions (teachers, principals, and the like) hired before January 1992 were Medicare exempt. When it became mandatory for new hires, the pre-existing employees were given the option to opt in. A surprising number (about a third of them) chose not to. (We still get an occasional retiree who contests that they opted out, even when shown their signature on the document, but we cannot compel the grandfathered employees to rethink their choice.)

Indigo,

Your administrators must have been very conscientious and caring. I don't know why we were not told and we never had the opportunity to opt in in. Probably some people would have chosen to opt out because they had spouses to cover them. But if unmarried people opt out, they are making a huge mistake.

[Mulligan]

Quote:

Originally Posted by Co2012 Indigo, Your administrators must have been very conscientious and caring. I don't know why we were not told and we never had the opportunity to opt in in. Probably some people would have chosen to opt out because they had spouses to cover them. But if unmarried people opt out, they are making a huge mistake.

Co, based on what you said in a previous post concerning her confusion about the cost and her not clarifying to your understanding where her $500 loss is coming from, maybe the best thing you could do as a friend is start from scratch with her and make her show her costs on paper. Have her explain her present costs and then comparing it to the future costs of purchasing Medicare including that possible reduced option cost of having 33 credits, after these have options have been properly investigated. It is possible her math is incorrect in the total scheme of things. I would certainly want to review all options before reentering the workforce at 65 to get those additional credits. Maybe it was a uniquely specifically botched occurrence back in the day with her, but I know based on my memory people were allowed to opt in at the time, but were forced to if they moved school districts. I truly wouldn't be surprised if she had the chance to, but didn't catch the memo or let it slip her mind to sign up for it.

[ronin]

With our district, I am sure it had nothing to do with being conscientious or caring. It was a mandatory task and I know we all were made to make a choice and sign off on it. What we didn't get was much information on what the ramifications of our decisions would be. Fortunately, my wife and I looked into it and made the correct (for us) choice. I can easily imagine that there are those who do or will soon regret opting out and will have no memory of the event.

[Bestwifeever]

I imagine opting in meant you would start seeing 1.45 percent of your gross salary withheld from your paycheck. People who expected retiree health care to be provided might have believed this extra deduction was unnecessary and thus opted out.

[youbet]

Quote:

Originally Posted by ronin With our district, I am sure it had nothing to do with being conscientious or caring. It was a mandatory task and I know we all were made to make a choice and sign off on it. What we didn't get was much information on what the ramifications of our decisions would be. Fortunately, my wife and I looked into it and made the correct (for us) choice. I can easily imagine that there are those who do or will soon regret opting out and will have no memory of the event.

My DW, ultra financially conservative to a fault gal that she is, made the opposite mistake. She insisted on opting in and having Medicare payments taken from her check despite the fact that she qualified for Medicare based on my record. Thus, she threw away almost 2% of her income for years buying something she would have gotten anyway as my spouse.

As I recall, the opt in or opt out decision was mandatory. The school district needed everyone's signature one way or the other.

School districts where employees aren't SS participants don't like to talk about SS since it would cost them 6%+ if employees were able to receive the benefit of being in SS. But I believe Medicare is paid completely by the employee, so no reason for the school district to try to avoid the issue.

Illinois state employees and public sector teachers outside of Chicago are really regretting they aren't SS participants right now........ It's really fortunate they're at least Medicare eligible (if they started before '85 or opted in). Illinois, effective Feb 1st no longer offers TRIP (Teachers Retirement Insurance Plan) to retired teachers once they reach 65 yo.

[youbet]

Quote:

Originally Posted by Co2012 She feels she will have to come out of retirement and find employment somewhere for 2 1/2 years to qualify for Medicare (she has 33 quarters).

Your friend should investigate finishing her SS eligibility. The fact that she has 33 quarters and made no effort to finish up with some sort of minimal employment situation points to the fact that she really was naive about SS and Medicare. What was she thinking?

If she studies the rules for earning SS and Medicare credits, she may be pleasantly surprised at how little time and earnings it takes. If she finishes the required credits, not only will she have lower health insurance costs, she'll get a tiny SS check every month. If she lives to a ripe old age, the reduced HI costs plus the modest monthly SS check could add up to be significant.

She doesn't have to take a full time job to earn the credits.

[Mulligan]

Quote:

Originally Posted by youbet My DW, ultra financially conservative to a fault gal that she is, made the opposite mistake. She insisted on opting in and having Medicare payments taken from her check despite the fact that she qualified for Medicare based on my record. Thus, she threw away almost 2% of her income for years buying something she would have gotten anyway as my spouse. As I recall, the opt in or opt out decision was mandatory. The school district needed everyone's signature one way or the other. School districts where employees aren't SS participants don't like to talk about SS since it would cost them 6%+ if employees were able to receive the benefit of being in SS. But I believe Medicare is paid completely by the employee, so no reason for the school district to try to avoid the issue. Illinois state employees and public sector teachers outside of Chicago are really regretting they aren't SS participants right now........ It's really fortunate they're at least Medicare eligible (if they started before '85 or opted in). Illinois, effective Feb 1st no longer offers TRIP (Teachers Retirement Insurance Plan) to retired teachers once they reach 65 yo.

I was being a little less direct, but I fully agree with You, Bestwife, and Ronin. I really don't see how she got around the issue, with it not being addressed to her directly at that time (and subsequently forgotten). While unfortunate, I do not know how a person could not pay into the system and expect to receive the benefit. Paystubs clearly show deductions. Fortunately for most people it is incredibly easy to accumulate the necessary credits. Even though I started teaching at 22, I already met my Medicare vested needs by age 24 without the teaching Medicare deductions. Your last comment Youbet, jogged my memory from a few years ago. My then superintendent was thinking of ways to reduce healthcare costs and one of them was convincing the older than 65 retirees still on school health insurance to get off it and use their Medicare and supplemental insurance. He thought it was win-win for both sides. I then explained to him (as it was unbeknownst to him since he was younger than me) that all these people probably aren't idiots paying $500 a month for a supplemental to Medicare. I had to explain to him that they more than likely have no Medicare based on the fact they didn't have to contribute, which he had never heard of.

[youbet]

Quote:

Originally Posted by Bestwifeever I imagine opting in meant you would start seeing 1.45 percent of your gross salary withheld from your paycheck. People who expected retiree health care to be provided might have believed this extra deduction was unnecessary and thus opted out.

In the case of OP's friend, the expected retiree health care insurance is being provided. The catch is that if OP's friend had Medicare, the premium for the retiree health care would be much lower if Medicare is the primary coverage. This is common. She expected to begin paying the lower, Medicare primary, premium when she turned 65 but found out she doesn't qualify for Medicare, so no premium reduction.

It isn't a matter of being insured. It's an issue of the amount of the premium.

[Dreamer]

In 2014, she would need to earn $1200 for one quarter of coverage and $4800 for 4 quarters of coverage under a job covered by social security. If she could earn $4800 in 1 month, then she would have her 4 quarters for this year. If she found a high enough paying job, then she could earn her credits quickly. She would then need to work next year long enough to pick up 3 more quarters of coverage. They will post at the end of this year the amount needed for the 2015 quarter of coverage.