Savvy Senior – May Columns

1.      How Health Insurance Marketplaces Will Help Early Retirees

2.      How Married Couples Can Boost Their Social Security Checks

Savvy Senior

How Health Insurance Marketplaces Will Help Early Retirees

Dear Savvy Senior,

What can you tell me about the new Obamacare health insurance exchanges that begin next year? I am interested in retiring early at age 61, but need to find some affordable health until my Medicare benefits begin at 65.

Ready to Retire

 

Dear Ready,

The new health insurance exchanges – also known as Health Insurance Marketplaces – that begin in 2014 will be a welcome benefit to millions of Americans who need health insurance, especially uninsured baby boomers and pre-Medicare retirees who often have a difficult time finding affordable coverage.

How It Will Work

As part of the Affordable Care Act, starting Oct. 1 you will be able to shop and compare health insurance policies in your area, and enroll in one directly through your state’s Health Insurance Marketplace website. The policies will go into effect on Jan. 1, 2014.

You’ll also be happy to know that federal law dictates that Marketplace insurers cannot deny you coverage or charge you higher rates based on pre-existing health conditions, and they can’t charge women more than men. But, they can charge older customers more than younger ones – up to three times more.

Every state will have a Marketplace, but each state can choose how it will operate. Seventeen states and the District of Columbia will run their own state-based Marketplace, seven states will partner with the federal government, and 26 states will offer federal Marketplaces. The differences between federal and state programs will be subtle. You will be able to access your state’s Health Insurance Marketplace at healthcare.gov.

The policies available through these Marketplaces will be sold by insurance companies and will provide a package of 10 essential benefits, including emergency services, hospital care, lab services, prescription drugs, doctor visits, preventive care, rehab services and maternity care.

To make shopping and comparing a little easier, the health plans will be divided into four different levels – bronze, silver, gold and platinum – each offering similar benefits but with a different cost structure. The bronze plan will have the lowest monthly premiums but have highest out-of-pocket costs, while the platinum plans will have the highest premiums but the lowest deductibles and co-payments.

The Marketplaces will also offer a toll-free hotline to help you choose a plan that meets your needs and budget. These helpers aren’t associated with any particular plan, and they aren’t on any type of commission, so the help they give you will be completely unbiased.

Costs and Tax-Credits

Prices will vary depending on where you live, your age and the health plan you choose. Exact cost structures for most Marketplaces will be released within the next few months.

To help make coverage affordable, sliding scale tax-credits will be available if you earn less than 400 percent of the poverty level – that’s $45,960 for a single person and $62,040 for couples. These tax-credit subsidies will provide immediate savings off your monthly premiums.

To find out if you qualify, or see how much a tax-credit will reduce your monthly costs, you’ll need to submit a Marketplace application in October, or when you decide enroll. In the meantime, you can calculate your potential tax-credit premium savings by using the Kaiser Family Foundation calculator at healthreform.kff.org – click on “Interactive Features” and then scroll down to “Subsidy Calculator.”

For more information on the Health Insurance Marketplaces including a checklist of things you can do now to help you choose a plan, visit healthcare.gov/marketplace.

Send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK73070, or visit SavvySenior.org. Jim Miller is a contributor to the NBC Today show and author of “The Savvy Senior” book.

 

Savvy Senior

How Married Couples Can Boost Their Social Security Checks

Dear Savvy Senior,

I’ve heard that there are strategies available that can help married couples increase their Social Security benefits when they retire. My wife and I are approaching retirement age and would like to understand these options. What can you tell us?

Getting Prepared

 

Dear Getting,

If you’re willing to wait to full retirement age and beyond, married couples have several unique claiming options that could actually add tens of thousands of dollars to your Social Security checks over your retirement. Here’s what you should know.

Waiting Strategy

Before we go over the different benefit boosting options for married couples, it’s important to know that the most commonly used strategy for increasing retirement benefits is to delay taking them.

While workers can start collecting their Social Security retirement benefits as early as age 62, postponing them to full retirement age (which is 66 if you were born between 1943 and 1954), or better yet to age 70, can make a big difference.

Let’s say, for example, that you’re eligible for a $1,200 monthly benefit at age 62. By waiting to 66 your monthly benefit would increase to $1,600. And by delaying to age 70, you would boost your benefit a whopping 76 percent to $2,112. Delaying will also increase your wife’s survivor benefit if you die first. Waiting, however, beyond age 70 will not increase your benefits.

Claim and Suspend

In addition to waiting, Social Security also offers two other little known strategies for married couples, but you must be at least full retirement age (currently 66) to use them.

The first one is called “claim and suspend” (see ssa.gov/retire2/suspend.htm) that allows a worker at full retirement age to file for Social Security so their spouse can begin collecting a spousal benefit, but asks to receive their own benefit later. 

This is best suited for one-earner couples where one spouse worked full-time and the other spouse did not work outside the home or did not work long enough to qualify for Social Security retirement benefits.

Here’s an example of how it works: Let’s say that you are age 66, but want to keep working until 70 to collect a higher benefit. Let’s also say your wife is a nonworking spouse who just turned 62 and would like to start receiving spousal benefits on your work record. The problem is she can’t get them until you sign up. So you file for your Social Security benefits but request an immediate suspension which allows your wife to claim spousal benefits, without locking you into a lower payment for life. Then when you do decide to start collecting, at age 70, you end the suspension and receive a higher benefit for delaying.

This strategy can also be used if you have children under 18, or 19 if they are still attending high school, or are disabled. Each dependent child is eligible for up to 50 percent of the retiree’s full benefit. And, if any child is younger than 16, your spouse can also qualify for additional benefits as a caregiver, even if she’s under age 62.

Claim Twice

For two-career couples, the second strategy known as “claim twice,” lets you collect Social Security (at full retirement age) first as a spouse and later using your own work record.

Here’s how it works: Let’s say that you are 66 and would like to continue working until age 70. But, your wife started collecting her benefits on her own work record at age 64. You could file a “restricted” application with Social Security and collect a spousal benefit which is half of what your wife gets. Then, once you reach 70, you stop receiving the spousal benefit and switch to your own benefit, which will be 32 percent higher than the benefit you would have collected at your full retirement age.

Send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK73070, or visit SavvySenior.org. Jim Miller is a contributor to the NBC Today show and author of “The Savvy Senior” book.