If a person is turning 65 and living on their Social Security benefits, they might qualify for help with the Medicare Part B premium ($99.90 per month) and their drug costs.  If a person applies for this help through the state of Arizona, there is no limit on how much a person can have in savings to qualify. If a person applies through Social Security, assets such as savings cannot exceed $13,070 for an individual or $26,120 for a couple.

The Arizona Health Care Cost Containment System (AHCCCS – pronounced “access”) administers the Medicare Savings Program in our state.  An application for the Medicare Savings Program can be submitted up to 45 days before a person’s Medicare coverage will begin.  To provide proof of income, a person can attach the annual award letter they receive from Social Security in December of each year.  If a person is not collecting Social Security as they are turning 65, providing proof of income becomes more complicated and they might be better off going through Social Security. Social Security will check their tax records.

When the state of Arizona approves a person for the Medicare Savings Program, AHCCCS will notify Social Security that the individual also qualifies for the low income subsidy for drug coverage.

Here are the levels for getting help in 2012:

Qualified Medicare Beneficiaries (QMBs):  States must pay all Medicare cost-sharing for Medicare beneficiaries with incomes up to 100% of the federal poverty level (FPL) and limited resources.  For this group, the 2012 level is $930.83/month ($11,170/year) for an individual; $1,260.83/month ($15,130/year) for a couple.

Specified Low-Income Medicare Beneficiaries (SLMBs):  States must pay the Medicare Part B premium for Medicare beneficiaries with incomes between 100% FPL and 120% FPL and limited resources. The limit for this group is $1,117 /month ($13,404/year) for an individual; $1,513/month ($18,156/year) for a couple.

Qualified Individual (QI): States have a limited amount of money from which they must pay, on a first come, first served basis, the Medicare Part B premium for Medicare beneficiaries with incomes between 120% FPL and 135% FPL and limited resources.  The limit for this group is $1,256.63/month ($15,079.50/year) for an individual; $1,702.13/month ($20,425.50/year) for a couple.

Add $20 disregard to each income level.  But a couple only gets to add $20 once.

EXTRA HELP FOR PART D:  Add $20 disregard to each amount.

Full Subsidy:  Medicare Part D provides a full drug subsidy with low co-payments to Medicare beneficiaries with incomes up to 135% FPL and limited resources.  For those individuals, the 2012 eligibility limit is $1,256.63/month ($15,079.50/year) for an individual; $1,702.13/month ($20,425.50/year) for a couple.

Partial Subsidy: Medicare Part D provides a partial subsidy of premium, deductible and co-insurance to Medicare beneficiaries with incomes up to 150% FPL and limited (but higher than allowed for full subsidy) resources.  The income limit for this group is $1,396.25/month ($16,755/year) for an individual; $1,891.25/month ($22,695/year) for a couple.

Many Americans are headed for retirement hell because they have saved too little for their  “golden years”. This is the conclusion of LIMRA, which used to be called the Life Insurance Marketing and Research Association. I read this in an article in the Hartford Courant that paints a bleak picture for 70% of Americans who have not saved enough for their retirement.

Having the discipline to save for retirement is more and more crucial because younger workers are less likely to have pensions than previous generations.  The problem is that people are likely to live longer and  they won’t have enough money.

Compounding the problem is that people who are saving for retirement aren’t likely to get big returns in the stock market over the next ten years.  With the Federal Reserve keeping interest rates low to help the economy, bonds and annuities will offer low returns for the foreseeable future. And putting money into a savings account or certificate of deposit is kind of like putting it under the mattress.

70 percent of Americans have less than $100,000 saved for retirement.

The Hartford Courant article says: A LIMRA analysis of how much U.S. households saved in investable assets — including 401(k) accounts and IRAs, but not including home values or pensions — shows that:

• 35 % of households have less than $10,000 in retirement savings.
• 24%  have from $10,000 to $49,999.
• 11% have from $50,000 to $99,999.

That means, not including their pension [if they have a pension], Social Security payments and the value of their home, the percentage of working Americans who said they have less than $25,000 in savings and investments has increased from 48 percent to 56 percent between 2007 and 2011.

This is why Social Security is so important.

I estimate that about half my clients are dependent on their Social Security check for their living expenses.  Most of these folks have very little in savings that would allow them to pay large co-pays for medical bills. Most of these folks are enrolled in Medicare Advantage plans that require them to pay between $3,400 and $6,300 each year in co-pays if they have serious medical problems – cancer being the big one. This is a MOOP (maximum-out-of-pocket) for the year, which is a actually protection against never ending medical bills.

A MOOP in a Medicare Advantage plan is a protection, or a cap, but many of my clients cannot write a check for $3,400, or $6,300 if they get sick. One lady told me she used her credit card to pay for her radiation therapy co-pays, which were around $5,000.  It took her three years to pay off her credit card – and her interest rate is probably 20% or more.

The health care reform law will require everyone to buy health insurance in 2014, and opponents cry, “You can’t make me buy health insurance!” Perhaps we need a law that requires everyone to save for their retirement. Oh, wait, that’s what Social Security does. But setting aside 6% of a person’s salary for Social Security adds up to far too little for a comfortable retirement. Everyone needs to put another 6% to 12% of their earnings into retirement savings if they want to avoid retirement hell.

Every day, around 10,000 people turn 65 and become eligible for Medicare.

Not everyone needs to enroll in Medicare because many will continue working and will be covered by their employer’s health insurance.  A person who works for a large employer with good health insurance (that probably includes coverage for a younger spouse) can keep that coverage and does not need to enroll in Medicare.  When that person retires, he/she will face no penalty for late-enrollment in Part B of Medicare.

But people who are self-employed, or work for a small company with lousy health insurance (with high deductibles, co-pays, and ridiculous premiums) will be thrilled to get into the Medicare system.  I have said to many people in this category, “You may be getting older, but you’ll finally get good health insurance!”

How you enroll in Medicare depends on your current situation related to Social Security.

1) If you are receiving Social Security payments you will automatically be enrolled in Medicare A and B. Part B has a monthly premium which will be deducted from your Social Security check at the start of the month in which you turn 65.  Your Medicare card will be sent to you three months before your birthday month.

2) If you are not drawing Social Security payments you will need to contact Social Security to tell them you want Part B. Part A has no premium, so you get this automatically.

The Social Security phone number is 800-772-1213.  You will also make arrangements to pay your Part B premium, which for 2012 is $99.90 per month (but much higher if your income is above $85,000/yr).  You have to pay 3 months at a time, but you can set up automatic bank withdrawals to pay the premium each month.

You should make sure you are signed up for Medicare three months before you turn 65.  So if your birthday is in June, now is the time to get started on your Medicare Part B enrollment. If your birthday is in April, you really need to get on the ball.

Once you’ve enrolled in Part B you will get your Medicare card.  Your Medicare card has important information that is required when you go to sign up for a Medicare supplement, Part D plan, or a Medicare Advantage plan (with Part D included). Your Medicare claim number is usually your Social Security number with a letter after it.  People who don’t use Medicare when they turn 65 will have different start dates for Part A and Part B.

Choosing your Medicare coverage:

Once you’ve got your Medicare card you need to choose your Medicare coverage.  Will you have only Medicare? (A financially risky choice.)  Will you get a Medicare supplement and a stand-alone Part D plan?  Will you enroll in a Medicare Advantage plan that includes Part D drug coverage?  On my website I provide a short video presentation, Intro to Your Medicare Choices.  Click here to to go that page.