Many individuals today either started their own company or ventured into the workforce as freelancers or contractors. If you are self-employed and are about to participate in Medicare, you may not be aware of how self-employed your Medicare options are. And in some situations, you might potentially get some tax advantages as a self-employed person.
If you have coverage through the employer's spouse, you might be able to postpone enrollment. In order to do this, it would be appropriate for the employer to have 20 or more workers and creditable drug coverage. In addition, you will need to find out whether the organization wants Medicare qualifying dependents to participate in Medicare at age 65 to remain on the employer's health insurance coverage. If they do, you will need to enroll in Medicare during the initial enrollment period – to continue on the employer's plan and avoid late enrolment penalties.
You can also decide if you want Medicare and the company plan. You are entitled to retain both and the employer's insurance plan would become subordinate to Medicare.
Self-employed with a retirement cover
Retired self-employed employees should consult with their benefits administrator to clarify the provisions of their retirement package when it comes to Medicare. The retirement account will become secondary coverage while you're on Medicare. The retirement plan will also remain the primary insurance policy for the younger spouse and dependents.
In 2012, a reform to the IRS tax code offered an incentive for certain self-employed persons to subtract from their self-employed income the total sum they pay for Medicare premiums. This requires premiums for parts A, B, C, or D of Medicare.
When you send your Form 1040 for taxes, your Medicare premiums will be combined with any other eligible health care costs you have as part of your claimed itemized medical cost deductions.
The tax situation of each individual is different, so ask your tax advisor to find out if this adjustment applies to you. The effect on your tax bill can be significant.
If you are self-employed, you can have your own health insurance coverage or be covered by the employer's spouse. How you currently get coverage affects what you need to do when it comes to enrolling in Medicare.
If you are accountable for your own health insurance, such as with a Marketplace plan, you can keep it until your Medicare coverage starts, so you can cancel it without penalty or choose to keep it. If you retain your Marketplace package, it will become secondary to Medicare. Be mindful that when you get Medicare Part A, you will lose any tax credits or lower out-of-pocket savings currently provided by the plan.
Since a Marketplace option does not allow you to delay Medicare without a financial penalty, you would need to apply for Medicare during the initial enrollment period at the age of 65. You will have a total of seven months to participate in Parts A and B of Medicare as well as Part C or Part D of Medicare. The various parts of Medicare will have different rates and will cover different items.
Many people do not know how self-employed people will influence their Medicare choices. If you have additional concerns about Medicare or your private health plan, you can get customized health insurance advice free of charge from your local State Health Insurance Assistance Program (SHIP). If you have any tax-related concerns about Medicare insurance payments, consult your tax accountant.
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