Freeman's Blog


September 19th, 2016 by

Almost 20% of Americans 65 and older are still working — the highest level since before the establishment of Medicare in 1965.

This amounts to almost 9 million workers who are eligible for Medicare, and the number should grow as about 8,000 baby boomers turn 65 every day until 2030.1–2

Some employers may require employees or covered spouses to enroll in Medicare when they become eligible in order to retain their employer-sponsored health insurance. But many workers who are eligible for both types of coverage have to navigate an array of rules and other considerations regarding costs and coverage.

Americans working longer

Primary vs. Secondary Insurance

If an employer has 20 or more employees, the employer coverage is primary and would pay first for eligible expenses. Medicare is secondary and may pay for some expenses not eligible by the employer coverage. If an employer has fewer than 20 employees, Medicare would be primary and the employer coverage would be secondary, which is why small businesses may require eligible employees or spouses to enroll in Medicare in order to keep their employer-sponsored coverage.

Part A Hospital Insurance and HSAs

Medicare Part A helps pay for inpatient hospital care as well as skilled nursing facility, hospice, and home health care. Because Medicare hospital insurance is free for most people, consider enrolling in Part A even if you have employer coverage. It could be helpful to have both types of insurance to fill any coverage gaps. However, if you have to pay for Part A, you may want to wait before enrolling.

If you have a high-deductible health plan through work, keep in mind that you cannot contribute to a health savings account (HSA) after you enroll in Medicare (A or B). The HSA is yours, even if you can no longer contribute to it, and you can use the tax-advantaged funds to pay Medicare premiums and other qualified medical expenses. So it might be helpful to build your HSA balance before enrolling in Medicare.

Should opt out of premium-free Part A in order to contribute to an HSA? It depends on what you consider to be more valuable. Your two options are secondary hospital insurance coverage or advantage-tax contributions to pay future expenses. You can use HSA funds free of federal income tax and penalties as long as the money is for health-care expenses. HSA contributions and earnings may or may not be subject to state taxes.

Part B and Part D

Medicare Part B medical insurance, which helps pay for physician services and outpatient expenses, requires premium payments, so it would be wise to compare the costs and benefits of Medicare to your employer’s plan. If you’re happy with your employer coverage, you can generally wait to enroll in Part B. The same is true of Medicare Part D, which helps pay for prescription drug costs.

Enrollment Periods

Late-enrollment penalties may apply if you do not enroll in Medicare Part A and Part B when you are first eligible. If employer-sponsored health insurance covers you, these penalties generally do not apply. However, you must enroll within 8 months after the last day of employment or the employer-sponsored health coverage ends (whichever occurs first).

A penalty for Part D prescription drug coverage may apply if you go 63 or more days without having creditable prescription drug coverage. Alternatively, during the two-month period after your workplace coverage ends, you could enroll in a Part C Medicare Advantage Plan that has prescription drug coverage.

Medicare rules are complex, and these are only guidelines. For more detailed information, visit
1) U.S. Bureau of Labor Statistics, 2016
2) The New York Times, May 13, 2016

Freeman Owen, Jr -Retirement Specialist

By working with a retirement plan, you can be sure to account for any changes that affect medicare and your health insurance. Let’s talk.

Meet me for a FREE retirement strategy consultation at my office at 1-833-313-7233 | MD, VA & DC. 


September 9th, 2016 by

Social Security and Medicare are commonly referred to as America’s safety net. They provide vital monthly income to retirees and disabled workers and their families. But it’s no secret that things are changing. With an aging American population and increasing healthcare cost, there are many challenges. Payroll taxes fund both programs from the paychecks are current US workers. This money is placed into specific trust funds that each program draws on to pay out benefits.

Social Security has 2 trust funds.

Namely, Old-Age and Survivor’s Insurance (OASI) and Disability Insurance (DI). OASI provides income to retired and deceased workers and their families. DI provides income to disabled workers and their families.

trustee reports 2016

Medicare also has 2 trust funds.

Namely, Hospital Insurance (HI) and Supplementary Medical Insurance (SMI). HI provides inpatient hospital care under Medicaid Part A. SMI provides physician and outpatient benefits under Medicare Part B. It also provides prescription drug benefits under Medicare Part D.

trustee reports 2016

Every year, the trustees of the Social Security and Medicare trust funds release detailed trustee reports to Congress. These trustee reports anticipate the financial health of these programs.

Here’s the trustee reports for 2016:

OASI trust fund reports that their fund will empty by 2035. After that time, payroll taxes alone will cover only 77% of scheduled benefits.

DI trust fund for disability payments will exhaust by 2023. After that time, payroll taxes alone will cover only 89% of scheduled benefits.

HI trust fund, using it’s current rate of usage, will deplete by 2028. After that time, payroll taxes alone would cover 87% of benefits and only 79% of benefits by 2040.

SMI trust fund differs from the other trust funds. It’s funds originate from the US treasury and the general fund rather that payroll taxes. Therefore, under current law, the trust fund remains in balance.

What do all these trustee reports mean?

Social Security and Medicare are not going away anytime soon. However, time is running out on their ability to continue paying out full benefits. There have been a variety of potential solutions, but there has been no political agreements or actions. Ultimately, we will wait to see if the next congress will take steps to strengthen America’s safety net.

Source: Social Security & Medical Boards of Trustees 2016 Annual Reports

Freeman Owen, Jr -Retirement Specialist

If you are concerned about how your retirement plans will be affected by these projections, let’s talk “retirement strategies”.

Meet me for a FREE retirement strategy consultation at my office at 833-313-7233 | MD, VA & DC.