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What Your Clients Want To Know About Medicare Late Enrollment Penalties

Medicare is essential for many seniors, but missing enrollment deadlines can lead to costly penalties.

Here’s a quick guide to avoid these fees.

Medicare Late Enrollment Penalties are charges that beneficiaries may face if they don’t sign up for Medicare when first eligible. These penalties can apply to Medicare Part A, Part B, and Part D, potentially leading to higher premiums for the rest of their life.

For Part A, which covers hospital services, the penalty applies if your client doesn’t qualify for premium-free Part A and fails to sign up during the Initial Enrollment Period (IEP). The penalty: the client will pay an extra 10% on the Part A premium for twice the number of years your client could have signed up but didn’t.

The Part B penalty can be more significant. If your client delays signing up for Part B, which covers doctor visits and outpatient care, your client could pay an additional 10% on Part B premiums for each 12-month period the client was eligible but didn’t enroll.

Finally, Part D, which covers prescription drugs, carries a penalty if the client goes 63 or more days without credible drug coverage. The penalty is calculated by multiplying 1% of the “national base beneficiary premium” ($34.70 in 2024) by the number of months the client went without coverage.

Understanding these penalties and how to avoid them can save your money and ensure that timely Medicare coverage happens when needed.

If you want Medicare-certified assistance with a client, reach out to Dan Griset at CPS Insurance Services: dgriset@cpsinsurance.com or call (949) 225-7144.  Your client will be glad you helped at the right time!

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CPS LIVE! Top Sales Trends to Watch 🚨 Wednesday, June 19

CPS LIVE!  Top Sales Trends to Watch

Wednesday, June 19th – 11.00 AM to 11.30 AM PST

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Staying informed about the latest trends in the insurance industry is essential for professionals to thrive in this ever-changing landscape.  By embracing technology, meeting customer expectations, addressing regulatory changes, and navigating economic uncertainty, insurance advisors can position themselves for success.

Tune in as our Sales & Marketing Managers delve into the latest trends shaping the insurance sales industry. Register now!

Questions?  Contact our Sales Teams at (949) 863-0700.  Life Insurance – Option 1 / Annuities – Option 2 / LTC – Option 3 / DI – Option 4.

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5 Things Every Taxpayer Should Know About Medicare Taxes

Medicare, the federal health insurance program mandated primarily for people 65 and older, provides millions of people in the United States with access to healthcare services.  While many are familiar with Medicare coverage, understanding Medicare taxes, which involves everything from mandatory payroll deductions to additional taxes for high earners, is equally important for everyone, including those who are self-employed.

Here are 5 things every taxpayer should know about Medicare taxes, including what it is, who pays, and current rates.
  1. What is the Medicare tax?

Medicare tax is a federal employment tax that funds a portion of the Medicare insurance program.  Medicare is a U.S. federal health insurance program designed for people age 65 or older, and some people under age 65 with specific disabilities. Medicare has different parts: A, B, C, and D. Medicare Part A helps pay for inpatient hospital stays, skilled nursing facilities, hospice care, and home health care services.  Unlike Medicare Part B (medical insurance) and Part D (prescription drug coverage), which are partially funded through premiums and general revenue, payroll taxes primarily finance Medicare Part A.  Medicare taxes are part of the Federal Insurance Contributions Act (FICA) and are automatically deducted from employees’ paychecks to fund Medicare and Social Security programs.

  1. Who has to pay Medicare taxes?

Employed U.S. workers, including non-citizens, are required to pay Medicare taxes.  These deductions from your paycheck are mandatory.  The employer and the employee each contribute to Medicare taxes.  Self-employed individuals must also pay Medicare taxes, covering both the employee and employer portions.

  1. The basic Medicare tax rate.

The Medicare tax rate is 2.9% of earned income and wages.  As a W-2 employee, you pay half of that tax (1.45%), and your employer pays the other half, 1.45%.  Unlike Social Security taxes, which have a wage base limit, Medicare taxes are not subject to an income cap, meaning all your earned income and wages are subject to Medicare tax.

  1. Additional Medicare tax for high-earners.

High-income earners may be subject to additional Medicare surtaxes, including the Additional Medicare Tax and Net Investment Income Tax (NIIT).  The Additional Medicare Tax is 0.9% and applies to earned income exceeding certain thresholds: $200,000 for individuals and $250,000 for married couples filing jointly.  Employers do not have to pay a matching 0.9% with the additional Medicare tax.  The NIIT is a 3.8% tax on investment income such as capital gains, dividends, royalties, rent, and interest, based on your filing status and income.

  1. Self-employed have to pay Medicare taxes.

Self-employed individuals must pay the total 2.9% Medicare tax rate and any additional Medicare tax if they are high earners.  The Self-Employed Contributions Act (SECA) requires self-employed people to pay taxes on their net earnings.  The self-employment tax rate is 15.3% (12.4% for Social Security and 2.9% for Medicare).  For 2024, the first $168,600 of self-employment income is subject to Social Security tax.  Income tax deductions can help lower your tax burden, as you can deduct half of your Social Security tax on your federal return.

Summary

All taxpayers, including employees, self-employed individuals, and retirees, need to know how Medicare taxes work.  This includes mandatory payroll deductions and additional taxes for high earners.  Having a good grasp of Medicare taxes can help you make informed financial decisions and plan for healthcare expenses before and during retirement.

If you have questions about Medicare costs and benefits, reach out to Dan Griset, the in-house CPS Medicare Advisor, at (949) 225-7144 or dgriset@cpsinsurance.com.

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Get Your Medicare Questions Answered

We give CPS Advisors and their clients all the answers to that and more, with guidance through Medicare enrollment.

As many individuals begin to approach retirement age they often wonder, ”When can I apply for Medicare?”  Generally speaking, the answer is when turning 65. 

While the answer may seem simple, the process can sometimes be a bit overwhelming and confusing. 

Lucky for you and your clients, we have answers.  Keep reading to find out how and when your clients can apply for Medicare benefits.

When is your client eligible to sign up for Medicare?

Most individuals are eligible for Medicare when they turn 65; however, there are a few instances in which they may be eligible before their 65th birthday.  Let’s take a look at each scenario in which your client would be eligible to apply for Medicare:

  • Age:  You are eligible to sign up for Medicare during a seven-month time frame around your 65th birthday.  The window of eligibility begins three months before your birthday,  continues through your birth month, and ends three months after your birthday.
  • Disability:  If you have a disability and have been receiving Social Security benefits for 24 consecutive months you are eligible to apply for Medicare regardless of age.
  • Lou Gehrig’s Disease:  If you suffer from Lou Gehrig’s disease, also known as amyotrophic lateral sclerosis (ALS), you automatically qualify for Medicare even if you aren’t 65.
What are the plans available to your Medicare-eligible client?

Generally speaking, your client has four main plan choices in Medicare:

  1. Medicare Part A, also known as Hospital Insurance, covers most inpatient hospital services, home healthcare, and hospice care.
  2. Medicare Part B, also known as Medical Insurance, covers most outpatient medical services such as preventive care, lab tests, x rays, ambulance services, and more.
  3. Medicare Part C, known as Medicare Advantage, is offered through private insurance companies and provides all the same benefits as Original Medicare plus more. Most Part C plans offer vision, dental, and prescription drug coverage.
  4. Medicare Part D provides prescription drug coverage and is offered through private insurance companies approved by Medicare.  A Part D drug plan usually is combined with a MediGap private insurance plan.

In addition to these plans, there are ten supplement insurance plans the client can purchase, known as MediGap Plans, that will help cover the gaps in coverage with Original Medicare (Parts A and B).

When are the deadlines to apply?
  • Initial Enrollment Period (IEP):  The Initial Enrollment Period is the first opportunity that occurs over a seven-month period of time.  The seven-month window begins three months before your client’s 65th birthday, the client’s birth month, and three months after the birthday month.  Your client may be subject to a lifetime late enrollment penalty If that enrollment doesn’t occur during these seven months.
  • Special Enrollment Period (SEP):  A Special Enrollment Period is available for those who continue working past 65 and have health coverage through their employer or spouse.  The time frame for a SEP is eight months, which begins one month after your employment or health coverage ends.  Failure to enroll within those eight months can result in a lifetime late enrollment penalty.
  • General Enrollment Period (GEP):  A General Enrollment Period begins on January 1st and ends on March 31st.  When your client misses the Initial Enrollment Period a new Medicare enrollment can occur during these three month.  Coverage will take effect the month following enrollment.  A lifetime late enrollment penalty is likely to result when a client misses the Initial Enrollment Period.
  • Annual Enrollment Period (AEP):  The Annual Enrollment Period runs from October 15th through December 7th.  During this time frame, the client can add Medicare plans, drop Medicare plans, and make changes to existing Medicare plans.  Any changes made during this enrollment period will take effect in January the following year.
How to Apply for Medicare

After asking, “When can I apply for Medicare?” The next most common question is, “How do I apply for Medicare?”  There are various ways your client can apply for Medicare including:

  • Online at ssa.gov
  • By phone at 1-800-772-1213
  • In-person at your local social security office
  • Through a licensed and certified Medicare Insurance Agent
Documents Needed to Enroll in Medicare
  • Birth certificate or other proof of birth
  • Proof of United States citizenship or legal residency
  • Driver’s license
CPS Advising for Your Medicare-Eligible Clients

Trying to figure out which coverage is best while juggling enrollment periods, costs, insurance gaps, and more can leave anyone feeling frustrated and helpless.  Enlisting the help of an experienced Medicare Insurance Agent can help ease the stress of enrolling in Medicare.  With over 40 years of insurance experience, the in-house Medicare Advisor at CPS, Dan Griset, can guide your clients through the Medicare planning and enrollment process.  If you aren’t certified for Medicare and want to retain your clients, introduce Dan as your Medicare specialist.  He’ll go to work on your behalf while you earn a referral fee.

Interested?  Contact Daniel E. Griset, CLU, Medicare Advisor, at dgriset@cpsinsurance.com, (949) 225-7144, or schedule a quick call with Dan HERE.

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Navigating Medicare at 65: Ensuring Your Doctor Stays In The Picture

The majority of doctors in the United States accept Medicare. However, before turning 65, your clients should establish whether their doctor accepts Medicare, as some doctors who accept Medicare may not accept new Medicare patients. It’s also important to examine if they’ll be enrolling in Original Medicare, Medigap, or a Medicare Advantage Plan, as this can affect the choice of doctor.

Original Medicare allows clients to keep their doctor as long as they accept Medicare assignment and accept new Medicare patients. A client does not have to choose a primary care doctor, and a referral is not needed to see a specialist.

However, it is always a good idea to check with the doctor to see if Medicare assignment is accepted and they the doctor is currently accepting new Medicare patients.

A MediGap (sometimes called “supplement”) plan allows clients to receive medical services from any provider in the United States who accepts Medicare.  If the doctor accepts Medicare, the MediGap plan will often pay the doctor directly.

Most doctors participate in the Medicare program, therefore Medicare patients can maintain their doctor as long as the physician takes part in the Medicare program.

For HMO Medicare Advantage plans, using in-network healthcare providers is typically required. Going out-of-network may result in uncovered costs. Medicare Advantage plans with a PPO feature offer more flexibility but still require checking to see if the your doctor is in-network. Before choosing a plan, requesting a provider network listing can ensure the a doctor is in the network. Checking the network annually is important since providers in the network may change.

As your clients approach he age of 65 and consider their options for Medicare, it’s important to assess their healthcare needs and resources before choosing a plan that best aligns with their preferences and their ability to keep their current doctor.

A certified Medicare advisor can assist in providing coverage options that prevent any interruption in key healthcare relationships. 

Have Medicare questions? Contact Dan Griset, CPS’s certified in-house Medicare advisor, at (949) 225-7144, dgriset@cpsinsurance.com, or schedule a call HERE.

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Certified or not, CPS can help you with Medicare Planning!

While CPS can help drive more sales for those already certified to sell Medicare, this video talks specifically about ways we can help those advisors that aren’t certified to offer the full range of Medicare solutions. 

We all know that certified or not, the Medicare conversation is important – and CPS can have that conversation for you if you’d like the assistance.  Learn how our planning process works and how an advisor that’s not certified to offer Medicare can benefit financially from the program.

Questions?  Contact the CPS Medicare Team at (949) 225-7144.

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CPS LIVE! Strategies for Successful Sales 💸 Wednesday, May 8

CPS LIVE! Strategies for Successful Sales

Wednesday, May 8th – 11.00 AM to 11.30 AM PST

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In the fast-paced world of insurance sales, the competition is fierce and the stakes are high. Agents are constantly on the lookout for innovative strategies to boost their sales and stay ahead of the curve. But with so many options available, it can be challenging to navigate the complexities of the market.

Tune in to hear directly from the CPS Sales & Marketing Managers to learn about the latest trends and top performing products we’re seeing the most success with in the dynamic world of insurance sales.

Questions? Contact our Sales Teams at (949) 863-0700. Life Insurance – Option 1 / Annuities – Option 2 / LTC – Option 3 / DI – Option 4.

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5 Sales Ideas in 20 Minutes or Less 💸 Wednesday, March 27

CPS LIVE! 5 Sales Ideas in 20 Minutes or Less

Wednesday, March 27th – 11.00 AM to 11.30 AM PST

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Ready to take your sales game to the next level? This session of CPS LIVE! will provide you with fresh sales ideas that are sure to drive results.

Hear directly from the CPS Marketing Managers as they share the latest sales strategies and top selling products for Life Insurance, Annuities, Long-Term Care, Income Protection and Medicare.

Questions? Contact our Sales Teams at (949) 863-0700. Life Insurance – Option 1 / Annuities – Option 2 / LTC – Option 3 / DI – Option 4.

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Boost Your Commissions with CPS LIVE 💸 Wednesday, March 6

Boost Your Commissions with CPS LIVE!

Wednesday, March 6th – 11.00 AM to 11.30 AM PST

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In today’s dynamic marketplace, insurance sales trends are constantly shifting and evolving.  Keeping up on these trends is crucial for advisors looking to stay ahead of the curve and maximize their sales potential. 

Tune in to hear directly from our Sales Managers on what’s working in the industry so you stand out in a crowded market, attract more clients, and achieve long-term success.

Questions?  Contact our Sales Teams at (949) 863-0700.  Life Insurance – Option 1 / Annuities – Option 2 / LTC – Option 3 / DI – Option 4.

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Medicare Enrollment Mistakes And Other Hazards To Avoid

You’ve heard the song “It’s Not Easy Being Green”, it can also be said that it’s not easy turning 65!  As momentous as that time of life can be, most seniors are unprepared for leaving their employer medical plans at work and making decisions about new Medicare coverages in a very complicated, changing insurance marketplace.

Inevitably, these first-time challenges coincide with a flood of direct mail, phone calls, and continuous TV advertising to create even more confusion.

In the midst of climbing the Medicare learning curve, avoiding enrollment mistakes and other hazards is very important.

Here are key mistakes to avoid:
  • Missing enrollment for Medicare at the right time:  Failing to enroll when you’re first eligible can lead to late enrollment penalties and higher monthly premiums for Medicare Part B, which covers doctor visits and other outpatient services.
  • Missing a special enrollment period:  If you’re still working past 65 and have employer coverage, you can delay Part B without penalty.  However, once you stop working or lose that coverage, you must sign up during the special enrollment period to avoid late penalties.  Medicare does not count retiree health insurance or COBRA as job-based coverage.
  • Triggering a lifetime penalty:  Not enrolling in Medicare Parts A, B, and D or Medicare Advantage during the initial eligibility period can result in lifetime penalties, particularly for Part B, where you pay an extra 10% for each year you delay.
  • Overlooking annual coverage reviews:  Since Medicare plans and conditions change annually, it’s crucial to review your coverage during the Annual Enrollment Period or Open Enrollment Period to ensure it still meets your needs and is cost-effective.
  • Choosing a Medicare plan without prescription drug coverage:  Failing to enroll in a Part D plan can leave you without coverage for medications, which can be costly and eventually lead to a lifetime late enrollment penalty.
  • Missing an open enrollment period:  Overlooking an enrollment period can result in penalties and missed opportunities to enroll in certain plans
  • Not seeking help:  Given the complexities of Medicare, consulting with experts or counselors can help optimize your coverage.
  • Not understanding how Medicare coordinates with other coverage:  It’s important to know how Medicare works with any current coverage you have to avoid gaps or overlaps.
  • Not checking the formularies of available drug plans:  Ensuring that your medications are covered by your plan’s formulary can prevent unexpected costs.
  • Signing up for automatic renewal without reviewing annual changes:  Plan benefits and costs can change annually, so it’s important to review your plan’s benefits and costs each year.
  • Responding to flashy advertisements:  It’s important to research and understand the details of a plan rather than being swayed by marketing
  • Making financial moves that increase your Medicare premiums:  Since certain income levels can result in higher Part B premiums, it is important to be aware of how your financial decisions in one year may affect what you will be paying to Medicare a couple of years later.

These are some of the key enrollment issues and hazards that can affect the value and cost of Medicare benefits for those turning 65 and later in their years as a Medicare beneficiary.  Advice and assistance from a certified Medicare expert will help a senior who is turning 65 to make well-informed, timely decisions about Medicare protections.

Contact CPS Medicare Advisor, Daniel E. Griset, CLU, at (949) 225-7144 or dgriset@cpsinsurance.com for assistance navigating your client through the Medicare space.

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