Jan Neal Law Firm, LLC

Alabama Estate, Elder and Special Needs Law

Tag Archives: Health Insurance


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Getting Part B Without Penalty After Moving From Marketplace to Medicare

Medicare is extending its offer of relief from penalties for certain Medicare beneficiaries who enrolled in Medicare Part A and had coverage through the individual marketplace. Beneficiaries who qualify will be able to enroll in Medicare Part B without paying a penalty for late enrollment if they enroll by September 30, 2018.

Individuals who do not enroll in Medicare Part B when they first become eligible face a stiff penalty, unless they are still working and their employer’s plan is considered “primary.” For each year that these individuals put off enrolling, their monthly premium increases by 10 percent — permanently. Some people with marketplace plans – that is, plans purchased by individuals or families, not through employers — did not enroll in Medicare Part B when they were first eligible. Purchasing a marketplace plan with financial assistance from the Affordable Care Act can be cheaper than enrolling in Medicare Part B. However, Medicare recipients are not eligible for marketplace financial assistance plans. And because marketplace plans are not considered equivalent coverage to Medicare Part B, signing up late for Part B will result in a late enrollment penalty.

To address this problem, the Centers for Medicare and Medicaid Services (CMS) is allowing individuals who enrolled in Medicare Part A and had coverage through a marketplace plan to enroll in Medicare Part B without a penalty. It is also allowing individuals who dropped marketplace coverage and are paying a late enrollment penalty for Medicare Part B to reduce their penalty. CMS is now expanding the offer of possible relief to people who should have signed up for Part B during a special enrollment period that ended Oct. 1, 2013, or later but instead used exchange plans. It is also extending the deadline to September 30, 2018 (the earlier deadline was September 30, 2017). To be eligible for the relief, the individual must: Have an initial Medicare enrollment period that began April 1, 2013 or later; or have been notified on October 1, 2013, or later that they were retroactively eligible for premium-free Medicare Part A; or have a Part B Special Enrollment Period that ended October 1, 2013, or later. This offer is available for only a short time. To be eligible for the relief, individuals must request it by September 30, 2018.

Gather any documentation you have to prove that you are enrolled in a marketplace plan. Individuals who are eligible should contact Social Security at 1-800-772-1213 or visit their local Social Security office and request to take advantage of the “equitable relief.”

 


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How to Deduct Long-Term Care Premiums From Your Income

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Taxpayers with long-term care insurance policies can deduct some of their premiums from their income. Whether you can use the deduction requires comparing your medical expenses to your income in a complicated formula.

Premiums for qualified long-term care insurance policies are tax deductible to the extent that they, along with other unreimbursed medical expenses (including Medicare premiums), exceed 10 percent of the insured’s adjusted gross income. In tax year 2016, taxpayers 65 and older only need medical expenses to exceed 7.5 percent of their income, but in 2017, taxpayers 65 and older will have the same 10 percent rule as everyone else.
The amount of long-term care insurance premium that is deductible is based on the taxpayer’s age and changes each year. For the 2016 tax year, taxpayers who are 40 or younger can deduct only $390 a year, taxpayers between 40 and 50 can deduct $730, taxpayers between 50 and 60 can deduct $1460, taxpayers between 60 and 70 can deduct $3,900, and taxpayers who are 70 or older can deduct up to $4,870 in premiums.

What this means is that taxpayers must total all of their medical expenses and compare them to their income. For example, suppose 64-year-old Frank has an adjusted gross income of $30,000 and long-term care premiums totaling $5,000 as well $1,000 in other medical expenses. Ten percent of $30,000 is $3,000. Frank can only deduct any medical expenses that exceed $3,000. The 2016 limit for deducting long-term care premiums is $3,900. That means Frank can only count $3,900 of his long-term care premiums. If he adds the $3,900 in long-term care premiums to the $1,000 in other expenses his total medical expenses are $4,900. He can deduct $1,900 in medical expenses from his income.

If Frank is 70 in 2016, the calculation changes because his medical expenses only need to exceed 7.5 percent of his income, which would be $2,250. The amount of premiums he can deduct is also increased because of his age–he can deduct up to $4,870 in premiums. Subtracting the income limit from his medical expenses ($4,870 in long-term care premiums and $1,000 in other expenses), Frank can deduct $3,620 in medical expenses from his income. In 2017, Frank will only be able to deduct medical expenses that exceeded 10 percent of his income, so the amount he can deduct will go down.


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Quarterly Newsletter Available

shutterstock_63936919Our quarterly newsletter, Elder Law Bookmarks, was sent today.  Articles included in the newsletter are:

  • People with Disabilities Can Now Create Their Own Special Needs Trusts
  • Is it Better to Remarry or Just Live Together?
  • Repealing Obamacare Will Have Consequences for Medicare
  • For Better or Worse, States Are Turning to Managed Care for Medicaid Long-Term-Care
  • Make Reviewing Your Estate Plan One of Your New Year’s Resolutions

If you want to be added to the mail list, send an email to neal@janneallaw.com.

 


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Case Study: The Value of Medicare Open Enrollment Plan Comparisons

medical technology concepts illustration designThe importance of Medicare plan comparisons during Open Enrollment are published everywhere you look, but sometimes I think that those warnings go unheeded because folks just do not understand how drastically coverage by the same plan can change year to year.

I saw up close and personal how beneficial the SHIP program is and the importance of Open Enrollment this week.  A gentleman we will call Mr. A came to a State Health Insurance Assistance Program (SHIP) Open Enrollment event in the South Central Alabama Development Commission region.  He drove 20 miles to check out his coverage because he was unsure of whether he needed to keep or change his Medicare Part D prescription drug plan (PDP) for 2017.  He opted to do the safe thing and  check it out.  Thank goodness he did.

Mr. A’s prescription drug plan for 2016 had a zero premium and covered his 10 medications prescribed by his doctor.  That all worked out well, and during 2016 Mr. A’s total out of pocket expenses related to his prescription drug plan totaled $542.00.  This was a manageable arrangement for him.

When a comparison of plans was run Mr. A was shocked to learn that his 2016 prescription drug plan would have a premium of $26.80,  a deductible of $400.00, and his 10 medications had been reconfigured on the plan formulary resulting in 2 of his medications no longer being covered and 3 of his medications reclassified as Tier 3 medications, meaning that his copayments would be higher. In all, Mr. A would have had to pay $3276.00 in out of pocket expenses related to his prescription drug plan during 2017 if he made no changes in coverage.

The comparison provided Mr. A with several options, and he selected a plan that would result in $360.00 in total out of pocket expenses for 2017, saving him $2916.00 over what he would have had to pay if he had not had a comparison run.

While Medicare enrollees can run their own comparisons, they will need to use the online plan finder provided by Medicare.  Comparisons are performed free and counseling provided through the SHIP program funded through the Alabama Aging and Disability Resource Centers.  To learn more call 1-800-AGE-LINE.