Announcer: It’s time now on KROS for Financial Focus, brought to you by NelsonCorp Wealth Management. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research Incorporated, a broker dealer, member of FINRA, SIPC. Investment advisor representative Cambridge Investment Research Advisors Incorporated, a registered investment advisor. Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. Now here’s today’s Financial Focus program.
Nate Kreinbrink: Good morning and welcome to this week’s Financial Focus brought to you each and every Wednesday morning right here on KROS. Well, this is Nate Kreinbrink and Mike Steigerwald with me. Last show in August. August is flying by. Kids are back in school.
Mike Steigerwald: School is in session.
Nate Kreinbrink: Fall season is here. I don’t … You were saying it’s kind of an exciting, fun time.
Mike Steigerwald: Yeah, yeah. Well, it’s the start of something. Again, start of the new year, start of the new school year, start of football season. You know?
Nate Kreinbrink: Yeah.
Mike Steigerwald: A lot of fun things.
Nate Kreinbrink: It is, it is kind of a fun time. And again, I definitely enjoy summer and all that that brings, but the fall season, as you can kind of feel, seasons-
Mike Steigerwald: Crisp, the crispness in the air.
Nate Kreinbrink: And we kind of had that for a couple mornings here just recently. And so it was you’re woken up and you go outside early in the morning and there’s a little chill to the air, a little dew on the grass and just that fun time. It’s cool. Like you said, those involved in definitely following the sports season, I mean, football is pretty much underway. Baseball season, last month stretch for those that are making that push. Again, high school sports, you see it in the newspaper as far as the high school seasons for area schools, football, volleyball, golf for some of those, cross country. It’s just …
Mike Steigerwald: It’s back.
Nate Kreinbrink: It’s back. It is back. Stuff on TV again then too, a little bit.
Mike Steigerwald: Yeah, yes.
Nate Kreinbrink: But no, as we talk today, again, we always try to keep themes from week to week, and usually the fourth Wednesday of every month, we usually like to track a little bit of Medicare here. And again, Mike and I threw back and forth a few different ideas, a few headlines that are in there, but wanted to bring it back a little bit and talk a little bit just about when you should enroll in Medicare. And I think there’s a lot of maybe, I guess you would say misconceptions out there as far as when you need to apply for Medicare and switch onto it and when you necessarily would not have to, if it would make sense to not do it yet. And then again, everyone keeps throwing around the term penalties and, “I don’t want to get penalized. I don’t want to miss something.” So again, understanding when your timeframe is. And again, when you think of Medicare, Medicare usually starts for the majority of individuals when you turn 65. That is the first year that you are eligible for it. Again, unless you have a disability or something that you could qualify for, an exception where you could apply earlier, for the majority of individuals, you become eligible for Medicare when you turn 65. Now, the biggest misconception is that you don’t have to go on Medicare as long as you have other coverage. So again, we’ll get into that as we go. But when you think about turning 65, you’re already retired, you’re not covered under a spouse’s plan. When you think of your 65th, the month that you turn 65, think of it as a seven-year window sandwiched right in between that month that you turn 65. You can apply for it three months prior, you have the month of and then three months past age 65 to hit that seven-year window. If you do it within that timeframe, you will not have a penalty when you look at it. So again, when you think about it there, you can’t get it to start prior to the month you turn 65, but you can apply for it and get it all set up to go into effect the first day of the month when you turn 65. So again, that’s something that I think people misconstrue a little bit. And again, a lot of questions that come around that.
Mike Steigerwald: Yeah, definitely. There’s been a number of meetings that we’ve held recently with folks that there’s some uncertainty around that. You hear the word penalty and yep, immediately people think, “I don’t want to be penalized.” So they think it’s a bad rush that they have to get moving on this. I’ve talked to folks that just turned 64 and are thinking, “I’ve got to get signed up. I’ve got to do it. I don’t want to be late.” And that’s true, right? We want to make sure that if we can’t avoid those penalties, we want to because unfortunately if you are subject to those penalties, the Part B late enrollment, Part D late enrollment penalties will never go away. So I don’t want to trivialize it, but a lot of times there’s just some maybe bad info or maybe not the whole story being told. And there’s a lot of fear around that where oftentimes if you have creditable coverage, whether it’s from your own plan at work and you’re going to stay working past age 65, or maybe you’re covered on a spouse’s plan and you’re allowed to stay on that plan after you turn 65, you don’t really have to do anything when you turn 65. I mean, I think it’s been beaten into everyone’s head that, “65 means I’ve got to do this,” and sometimes that’s not the case and you know what? You might be better off by waiting.
Nate Kreinbrink: Right. And I think too, when you look at it, I mean, people go and like, “Okay, I’m turning 65. I need coverage. Okay, now what do I do? Where do I even go to start to look at this?” They’ve been inundated with a bunch of mailings that have been sent to them and it’s all overwhelming. What do you do? And the easiest thing to keep in mind is a rule of thumb that is if you are already on Social Security, you should get your Part A and Part B card already mailed to you roughly about two to three months prior to you turning 65. That will automatically come to you in the mail. That’s that red and blue Medicare card. And again, that covers parts A and B. Those are considered original Medicare. Now, above and beyond that, you would need to decide, again, what type of coverage you want to get to fill in the gaps with drug plans, coverage. Those are through private insurance companies, so you’d have to go online, medicare.gov, or get with somebody to help you navigate those questions, the different options and what fits best to you. But again, if you’re enrolled in Social Security, you should get, again, roughly about three months prior to you turning 65, that Medicare A and B card. So as you roll through that, and I know you hit on it there a little bit as far as, again, it’s not always a given if you have other options. And those other options, again, for most commonly is you’re going to continue to work past your age 65th birthday. So again, if you are turning 65, you’re still working, you have coverage through your employer, you’re able to keep that coverage through your employer, it’s creditable health coverage, you can keep that coverage. You do not have to go on Medicare. There is no penalty. And for a lot of times, again, we want to look at what is the best coverage, what are you paying, and make that decisions. But again, in a lot of cases, they stay on their work plan.
Mike Steigerwald: Yep, yep. Again, most people, when we tell them that, eyes wide open, you know?
Nate Kreinbrink: Mm-hmm.
Mike Steigerwald: They can’t believe, “Is this [inaudible 00:08:16]”-
Nate Kreinbrink: “I don’t have to change?”
Mike Steigerwald: Yeah.
Nate Kreinbrink: “You mean I don’t have to change?”
Mike Steigerwald: Yeah, yeah. Oftentimes it’s a good thing. I will state that occasionally I’ve run into this where plans, depending on your employer and the health plan, may tell you when you turn 65, you’ve got to go on Medicare. So that could be one stipulation. Same thing if you’re covered on a spouse’s plan through their employer. It may be the case that, oh, once the spouse turns 65, they are no longer eligible for our plan. They’ve got to go on Medicare. So sometimes that will happen, so just be aware of those kind of things. Obviously there would be some communication from the health plan giving you that heads-up that, “You’re going to have to do something. We know you’re turning 65 soon.” Stuff like that, just pay attention to just so you’re not missing anything on that end.
Nate Kreinbrink: Well, and I think too, you hit it on the head there. Every plan is different. And again, if your employer and you’re continually working is carrying the coverage, you’re turning 65, you’re staying on there, maybe a spouse is still on your work plan coverage. Are they able to stay on at 65 as well? Or if they turn 65 and have an option for Medicare, do they have to take it? Again, every plan is different as far as what they allow, what they can do once you hit 65, once a spouse hits 65. So again, that’s the homework that you need to do leading up to that to, again, make sure that we understand what we’re able to do at 65. And then again, look at all those different options when you do it. Because again, it is a huge decision when you start looking at it, and if you’re comfortable with the work plan and the cost and the coverage of what you’re getting makes sense, again, just stay on it. You don’t have to. Again, but then as you transition past age 65, you’re continually working, when you are looking at that retirement date, that’s when that discussion then needs to happen because you can’t have a gap in coverage. Again, if you retire, you leave an employer plan, you’re past age 65, again, we need that Medicare to start then that month after your coverage ends from your current or prior employer.
Mike Steigerwald: Yeah, want to avoid the gaps for sure.
Nate Kreinbrink: Yes. The gaps is when penalties usually apply. And I think that’s where I think people hear that term and then they think that they have to go onto it. But again, it depends. And I know that’s an answer to a lot of what we talk about, but again, a lot of these decisions, as we’ve discussed, are individuals specific to-
Mike Steigerwald: Absolutely.
Nate Kreinbrink: … the person that’s making those decisions. So again, when you look at it, we want to have an idea as far as what your options are, what makes the most sense. Another kind of quirk that goes into this is people hear this open enrollment period that we have coming up here at the end of the year from October 15th to December 7th. That’s for people that are already on plans looking to maybe make switches. Their plan maybe is going to change or be updated or even dropped starting January 1st. So that’s the time period for people that are already on plans, specifically drug plans, to look at it and to see if there’s any changes for the upcoming year. So again, it’s a lot that goes into it, a lot of unknowns. And again, for most people, it’s the first time ever transitioning to this Medicare world. They’re so used to what they’ve had. And again, anytime people have changes, there’s this hesitancy as far as, “I don’t want to mess it up. I want to do it right. This is what I’ve heard. Is this true? Is it not true? To what extent?”
Mike Steigerwald: Ask the questions. That’s what I would say. Make sure you ask the questions.
Nate Kreinbrink: So got questions, give us a call. We’d be happy to sit down and go through your options. Did want to mention real quick here before I run out of time that every month NelsonCorp is featuring a new charity of the month. For the month of August, we are featuring the White Oaks Therapeutic Equestrian Center in Morrison. Again, this is Nate and Mike bringing you this week’s Financial Focus. Thanks for tuning in and have a great rest of your week.
Announcer: Financial Focus is a production of NelsonCorp Wealth Management in Clinton and Davenport. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research Incorporated, a broker dealer, member of FINRA, SIPC. Investment advisor representative Cambridge Investment Research Advisors Incorporated, a registered investment advisor. Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. For more information, visit our website at www.nelsoncorp.com