Tom Schrette and Alan Cash

Tom Schrette and Alan Cash

Dear Tom and Alan:

I’m in a bit of a quandary. My wife is turning 65 in December and considering retiring from her job.

One problem is that her health insurance at work is excellent. The problem is that if she retires and goes on COBRA, she (we) have to pay the entire premium instead of continuing to have the boss pay.

Another consideration is that she could just go on Medicare and get something to pay for what Medicare doesn’t pay for.

Or…she could just continue to work until she gets sick of it! How do people sort out all this stuff?

M. Goose

Tom: You are correct, M., there are a number of factors that go into this decision for everyone who reaches 65.

Before her December birthday, your wife will be automatically enrolled in Medicare Part A.

She may ask to also enroll in Part B at the same time.

As long as she has both A and B, she is guaranteed to be accepted on any Advantage plan or Medicare Supplement plan she signs up for within six months of December 1.

If she continues to work, she does not have to sign up for Medicare Part B (it costs money).

The one caution I would have for you is to make sure her current policy at work is “creditable.”

Basically, the insurance company behind the group policy is required to inform the group each year that the plan meets certain minimum requirements.

Al: That term “creditable” is equally important in considering COBRA.

In an article in the September California Broker magazine, the author, Cory Jorbin, compliance officer for Hub International, points out:

“COBRA is also not considered ‘creditable’ coverage for Medicare enrollment purposes. That means a retiring employee who is eligible for Medicare, but elects COBRA and does not enroll in Medicare Part B, could have to pay a penalty for the rest of his or her time in Medicare.”

COBRA typically lasts from 18 to 36 months depending on a lot of stuff I don’t understand.

But if your wife gets on COBRA and goes beyond 6 months past her birthday, her next guaranteed period is not until COBRA is “exhausted.”

Tom: Our reader says the current coverage at work is “excellent” and that the boss pays for it.

No matter how good a worker Mrs. Goose is, I’m sure the employer would like to get out from under that enormous monthly premium.

We’ve outlined the expense of the Anthem Blue Cross Innovative F Plan in previous columns.

For our reader, the cost for his wife under Medicare A & B with a supplement would be: $135.50 for Medicare Part B; $122.60 for Innovative F; and whatever additional charges the government might impose in case their joint income exceeds $170,000.

Al: I would imagine the employer would be absolutely giddy at the prospect of reimbursing $260 per month versus whatever he/she has to pay now.

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Submit questions to schrette@gmail.com or alancash@gmail.com.