As baby boomers reach age 65, there are two important questions worth asking: Is it time to retire? And is it time to enroll in Medicare and access Social Security income?
Baby boomers work past 65 for several reasons. Some will continue working because they need the income, while others enjoy their jobs and the social interaction it provides. From now until 2030, there are about 10,000 baby boomers turning 65 each day, so a lot of seniors are pondering if the time is right to retire.
Regardless if you work past 65 or retire, it’s time to decide what to do about your federal retirement benefits: social security and Medicare. There is a clear answer on social security. Do you need access to your social security at 65?
If so, there is a small price to pay. That’s because the government considers full retirement age to be 66 for Americans born between 1943 and 1954. You’ll receive 93.3 percent of the monthly benefit in perpetuity if you don’t wait until age 66. However, having access to 12 months of incremental income could be worth it to you. Visit www.ssa.gov/retire to learn more. There are tools to estimate life expectancy and a benefits calculator that estimates lifetime social security income based on your age of retirement.
Whatever you decide, apply for social security benefits three months before you want to access them.
Know the parts to Medicare
So what should baby boomers do about Medicare if they decide to keep working, or plan to retire? That answer is a little more complex. There are several parts to Medicare, each offering different kinds of benefits.
Medicare Part A is hospital insurance. It covers things like inpatient hospital stays, skilled nursing care and home health. This is an entitlement program gained by working for most of your adult life, or from another qualifying event. Beneficiaries are entitled to Medicare Part A coverage without having to pay a monthly premium. However, beneficiaries are responsible for deductibles and their share of cost (like 20% coinsurance or a copay) for covered services. Seniors with employee sponsored health coverage that turn 65 should enroll in Medicare Part A even if they plan to work past age 65.
Medicare Part B is medical insurance (doctor visits, outpatient services, labs, etc.) and not an entitlement program. Most seniors become eligible for Part B by reaching age 65 and being a U.S. citizen. Medicare Part B has a monthly premium which is set by the federal government and can change from year-to-year. While all qualifying seniors are encouraged to enroll in Medicare Part A at 65, baby boomers who continue to work past 65 may decide to defer enrollment in Medicare Part B if they have employee sponsored medical insurance that provides adequate coverage. Each working senior’s decision is different based on things like their current level of coverage, health status and pursuit of financial peace of mind. Fortunately, private health plans like Blue Cross of Idaho offer Medicare consultations free of charge to help baby boomers decide what choice is best for them.
Medicare Part D is prescription drug coverage. The federal government oversees Part D, but ironically, seniors obtain Part D coverage from commercial health plans or other private companies authorized to sell Part D plans. Baby boomers working past 65 should have comparative Part D-like coverage from a group insurance plan. Otherwise, they are strongly encouraged to enroll in Part D at 65 so they don’t incur a late enrollment penalty later if they choose to enroll in a Part D plan.
All of this can be confusing, it is for a lot of seniors, but there is a short 8-minute video from Blue Cross of Idaho that quickly explains the ABC’s of Medicare and how it works. The video also explains how you can receive Medicare coverage from plans like Blue Cross of Idaho, who combine all parts of Medicare into one convenient plan.