People make mistakes, which is why Medicare beneficiaries are advised to take notes when speaking with a Social Security or Medicare representative.
Here was a retiree who had left active employment three months earlier and moved to Oregon. His local Social Security office, then in another state, told him he would have to wait until January to enroll in Medicare.
In Salem he made an appointment with a Senior Health Insurance Benefits Assistance volunteer counselor seeking clarification about the delayed enrollment.
It’s true: With Medicare, some actions must delay to January.
However, Medicare enrollment for someone newly retired isn’t one of them. In fact, the man could enroll in Medicare in any of the eight months after his active work ended (including the retirement month).
Medicare can be complicated, and mistaken information understandably may be dispensed. This man’s story is a good example of why taking and keeping good notes – date and time of the conversation, agency and phone number called, name of the person with whom you spoke, what was said – is important.
This includes conversations with SHIBA counselors and insurance agents, too.
If you would like to make a SHIBA appointment, or to ask a question to be answered here, please see the end of this column.
Q: Years ago, a colleague told me that one should convert traditional IRA funds to Roth IRAs before enrolling in Medicare. She didn’t say why, and I didn’t ask. Now that I’m approaching 65 it’s on my mind. Any ideas?
Because your colleague tied her recommended IRA conversion to Medicare, it’s a safe bet that she was thinking about limiting the size of the Medicare Part B premium.
First, let’s recap the basics: Traditional IRA funds are invested as pre-tax money, with the taxes coming due when you withdraw the money during retirement. By contrast, money invested in a Roth IRA has already been taxed, so the full amount is available during retirement. Traditional IRA funds may be converted to Roth, at which time the tax is paid.
Now, how this may relate to what your colleague said: Most Medicare beneficiaries pay a Medicare Part B premium this year of $165 a month. But people with more generous incomes pay a higher Part B premium, which can go as high as $560.50 a month.
Even if one goes into the lowest income triggering a Part B premium surcharge, for an individual that would amount to almost $800 for the year (an additional $65.90 a month). A Centers for Medicare & Medicare Services table shows how income affects the Medicare Part B premium (after clicking on the link, scroll down a bit to find the table).
So, if in retirement you withdraw money from a traditional (untaxed) IRA, that may put you into a higher income bracket that triggers the higher Part B premium. Even if you don’t need that money for expenses, you will be required to start withdrawing a percentage of it every year when your age triggers what’s called a required minimum distribution.
To reduce what Medicare counts as taxable income to calculate the Medicare Part B premium, your friend may have been thinking it would be a good idea to convert traditional IRA funds to Roth IRA before you withdraw the money. To prevent unwelcome surprises, though, research how the conversion works before doing it.
Jim Sellers of Salem is a certified Medicare counselor with the Senior Health Insurance Benefits Assistance (SHIBA) program. To ask a question to be answered in this column, e-mail [email protected]. To schedule a free SHIBA phone appointment with a volunteer Medicare counselor, call 800-722-4134.
