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starting benefits at FRA or at age 70, her survivor keeps the higher of the two It is important to plan for the period
because spousal benefits do not accrue Social Security benefits for the rest of his from the loss of employer-sponsored
the extra 8% per year from FRA to or her life. health insurance and the beginning of
age 70. No individual or couple is average. An Medicare at age 65. Limiting the amount
However, planning for couples can be individual analysis must be undertaken of taxable income each year can provide
intricate, with many factors to consider. for each of your clients’ lives to offer great advantages for the cost of insurance
Health, age differential, family history, good Social Security advice. The AICPA under the ACA.
wealth (or lack of wealth), each person’s PFP Division has a Guide to Social Se- Medicare becomes your health in-
work history, and earning potential be- curity Planning that is available free to surance at age 65 if you are no longer
tween age 62 and FRA are only a few of PFP Section members. This publication receiving coverage under an employer
the factors to consider. can assist you in the many aspects of plan that has more than 20 participants.
Generally, if a couple or individual has Social Security. There are two basic coverages under
a large amount of invested assets, starting Medicare, Parts A and B. Part A covers
benefits at FRA makes sense. Why not Health insurance hospitalization and home health services,
receive more funds when you are able to Health insurance is costly when not and Part B covers physician and most
enjoy them by traveling, buying a second provided as a subsidized benefit from an outpatient services (generally, with a
home, or visiting children and grand- employer. What options are available for 20% copay). Part D covers prescription
children, compared to later years, when someone who no longer has that benefit? drugs. A supplemental insurance policy
the ability or desire to do those activities Coverage from traditional health insur- is recommended to assist with coverage
wanes? Waiting until age 70 to start the ance companies is expensive. An alterna- for the 20% copay. Supplemental health
Social Security benefits of a couple’s tive for someone who does not qualify insurance can cost from $170 to $300
higher wage earner is important when for other coverage is to buy a policy per month, depending on the cover-
the couple do not have significant assets through an Affordable Care Act (ACA) age chosen.
saved. The higher wage earner or his or health care exchange. It is extremely important to plan for
taxable income beyond age 65, as stock
option exercises, installment sales of
Social Security starting ages and total benefits businesses, or large required minimum
distributions (RMDs) from IRAs and
401(k) plans can increase the monthly
$1,600,000
Age when benefits began per person cost of Medicare Part B,
■ 62 ■ 66 ■ 70 as shown in the chart “Medicare Part
$1,400,000 B Premiums by Income Level” on
the next page.
$1,200,000 Depending on the Part D and
supplemental policies chosen, a couple
Total benefits $1,000,000 total premium cost annually for Parts
in the lowest income tier can incur a

A, B, and D and supplemental coverage
$800,000
of approximately $10,000, but couples
with income at the highest level can pay
$600,000 double that amount. The cost of Medi-
care is something to apprise your clients
of long before they turn 65. You should
$400,000
also plan as necessary to keep them from
paying extra for the coverage.
$200,000 The other Medicare coverage is Part
C, Medicare Advantage (MA). Nu-
$0 merous television commercials appear
75 85 95 between Oct. 15 and Dec. 7 each year,
Age at deaths which is the open enrollment period
for people who wish to switch from

www.thetaxadviser.com March 2022 49