The Marriage Penalty Hurts Married People

A friend of my mother’s recently went through a divorce after more than 30 years of marriage. She had spent many of those years as a stay-at-home parent and was worried she wouldn’t have the work history to qualify for Medicare on her own. Her biggest question was, “What happens to my health insurance now?” It’s a common fear, and one that adds a layer of stress to an already difficult time. The rules surrounding divorce, Medicare, and eligibility can seem confusing, but they are designed to provide a safety net. We’ll explain how you can qualify for benefits, even on an ex-spouse’s record.

The Marriage Penalty Hurts Married People: Is it time for Quantz and me to get divorced? Karl Bruns-Kyler and The Big 65 Weighs In …

May this note find you in good health with your Medicare coverage working properly. Today’s topic: The Marriage Penalty Hurts Married People.

Now don’t worry about my provocative question, Q and I have been happily married for 33 years and besides…

Plato would never allow this to happen.

Nevertheless, an article from Marketwatch cited a Washington University Law Review article that documented how “federal law punishes older couples for being married.” This is unbelievable but true.

Now I hate to break the news to my dear friends Charles and Phyllis (they just celebrated 45 years of marriage), but older couples who live together but are unmarried pay lower taxes. They actually qualify for more federal benefits.

Of course, there are financial downsides to living together vs being married. If an unmarried partner dies, the survivor cannot get their higher Social Security benefit. However, if one partner of a married couple needs long-term care, they are required to deplete more of their savings before qualifying than two single people living together would need to spend.

Clients Bob and Sue just got back from an amazing trip to Hawaii. Bob always tracks their expenses carefully. Can you imagine what would happen if they had to pay higher airline ticket prices because they were married?

I guarantee Bob would have Sue drinking her coffee alone on the trip .

Don’t worry, Bob is a standup guy. He would miss Sue and Rudy way too much.

But you get my point.

This is a fundamental flaw with our system. At the very least, married couples should not be financially penalized. We shouldn’t have to divorce to have the same long-term care spend down and Medicaid requirements.

Back to Medicare…

Your Annual Notice of Changes should be arriving in the mail in the next couple of weeks.

Whether you have a Medicare Advantage Plan or a Part D drug plan, be sure to take a few minutes to go over the changes. Schedule an appointment with me if any of the following apply:

• if you see a significant increase in your medication costs,
• if you have a doctor that is no longer accepting your plan,
• if you are concerned or confused about benefit changes.

If you are in a Medicare Supplement Plan (Medigap) and we haven’t reviewed your premiums in the last eighteen months, it make sense for you to book a time on my calendar here to see if we can reduce the premiums and keep you with the same coverage. Not everyone can change, but it’s almost always worth a look (plus I enjoy catching up).

Scan the QR code above or go to The Big 65 to schedule an appointment.

Q and I had a great visit with her cousin Alice and her husband Bruce who came out to visit their daughter.

The last time we saw them was in the mid 90’s and I hope we don’t wait that long to see them again. Again, I am reminded that the marriage penalty hurts married people.

Back to news from Nepal …. I’m happy to report that my childhood buddy, Steve, achieved his goal and made it to Island Peak, 20,200 feet above sea level. Well done Steve.

Standing at the 20,000 plus feet and realizing there’s always another challenge ahead (another 9000 feet to the top of Everest), well, you realize there are always bigger challenges. Pick yours carefully.

Back on dry land …

If you see someone speeding and he looks like the green hornet, it could be my big brother Rob. Many of you know about Robert’s bike wreck four years ago and how that changed his life. Robert has refused to let his injury define him. He continues to practice medicine, to bike, to mentor others, to travel the world, and to live with intensity.

Whenever I get whiny or complacent, I think about my big brother and everything he overcomes every single day. Robert hates when I brag about him, but the dude is a bad-ass. I love him and am so proud of him.

Remember not to compare yourself to others.

Be your best self. Help others. Give thanks for what you have.

And when you and your friends have Medicare questions, I’ll be there.

Karl Bruns-Kyler
Medicare Insurance Broker, The Big 65

www.TheBig65.com

How Divorce Affects Medicare Eligibility

Going through a divorce brings a lot of changes, and it’s natural to wonder how it might impact your health insurance, especially when Medicare is involved. The good news is that divorce itself doesn’t disqualify you from Medicare. If you meet the age or disability requirements, you are still eligible. However, the details of your eligibility, particularly for premium-free Part A, and what you pay for coverage can change. Understanding these rules is the first step to making sure you have the right coverage in place for your new circumstances. It’s about knowing your options and how to access the benefits you’re entitled to, whether through your own work history or that of a former spouse.

Medicare is an Individual Plan

One of the most important things to understand is that Medicare is not a family plan. Unlike the private health insurance you may have shared with your spouse, Medicare coverage is entirely individual. You and your former spouse must each have your own separate Medicare plan. This means your eligibility and costs are assessed on a personal basis, even if you qualify for benefits based on your ex-spouse’s work record. This individual structure ensures that your personal access to healthcare coverage isn’t directly tied to your marital status, providing a stable foundation as you move forward.

Your Personal Eligibility is Unchanged by Divorce

Let’s clear up a common worry right away: getting divorced does not take away your fundamental eligibility for Medicare. If you are 65 or older, or if you qualify due to a disability, your right to enroll in Medicare remains intact regardless of your marital status. Your personal work history and age are the primary factors that determine your own eligibility. The main area where divorce comes into play is in how you might qualify for premium-free Part A (hospital insurance) and how your monthly premiums for other parts of Medicare are calculated, which we’ll explore next.

Qualifying for Medicare Through a Divorced Spouse

For many people, a major financial benefit of marriage is qualifying for Social Security and Medicare benefits based on a spouse’s work history. Fortunately, this benefit doesn’t necessarily disappear after a divorce. If you were married for at least 10 years and haven’t remarried, you may be able to qualify for premium-free Medicare Part A based on your ex-spouse’s work record. This is especially helpful if you have an insufficient work history of your own to qualify for premium-free coverage. The best part is that your decision to claim these benefits has no effect on your ex-spouse’s own Medicare benefits or the benefits of their current spouse. It’s a provision designed to provide a safety net for individuals who may have spent years out of the workforce.

Using an Ex-Spouse’s Work Record for Premium-Free Part A

To get premium-free Part A, you or your spouse typically need to have worked and paid Medicare taxes for at least 10 years (which equals 40 quarters). If your own work record doesn’t meet this threshold, you can use your ex-spouse’s record instead. This rule is a lifesaver for individuals who, for example, were stay-at-home parents or caregivers. As long as your ex-spouse has the required 40 quarters of work credits, you can leverage their history to secure your own premium-free hospital insurance, provided you meet a few key conditions related to your marriage and current status.

The 10-Year Marriage Rule

The “10-year rule” is the cornerstone of qualifying for Medicare on an ex-spouse’s record. To be eligible, you must meet four specific conditions. First, you must have been married to your former spouse for 10 consecutive years or longer. Second, you must be currently unmarried. Third, you must be at least 65 years old. Finally, your ex-spouse must be at least 62 years old and eligible to receive Social Security retirement or disability benefits. If all these conditions are met, you can apply for benefits based on their record.

Other Conditions You Must Meet

What if you don’t meet all the conditions for premium-free Part A through an ex-spouse? For instance, maybe your marriage lasted nine years, or you’ve since remarried. In that case, you won’t be able to use their work record. However, that doesn’t mean you can’t get Medicare Part A. If you’re 65 or older, you can still purchase Part A, but you will have to pay a monthly premium for it. The cost depends on how long you or your spouse worked and paid Medicare taxes.

How Divorce Can Change Your Medicare Costs

Beyond eligibility for Part A, a divorce can significantly impact your out-of-pocket Medicare costs. This is primarily because certain Medicare premiums are based on your income. When you were married, your income was likely calculated jointly. As a single person, your individual income will be used, and the thresholds for higher premiums are different. This change can either increase or decrease your monthly costs, depending on your new financial situation. It’s essential to understand how these adjustments work so you can budget accordingly and take steps to lower your premiums if your income has dropped. This is an area where expert guidance can be invaluable, as the rules can feel complicated when you’re already managing so much.

Understanding the Income-Related Monthly Adjustment Amount (IRMAA)

The Income-Related Monthly Adjustment Amount, or IRMAA, is an extra charge added to your Medicare Part B (medical insurance) and Part D (prescription drug plan) premiums if your income is above a certain level. The Social Security Administration (SSA) determines your IRMAA based on the modified adjusted gross income you reported on your IRS tax return from two years ago. For example, your 2024 premiums are based on your 2022 tax return. Because divorce changes your tax filing status and likely your income, it can directly affect whether you have to pay IRMAA, making it a critical factor in your new healthcare budget.

How IRMAA Works for Single vs. Married Individuals

The income brackets that trigger IRMAA are different for individuals than for those who are married and file taxes jointly. For married couples, the income threshold is higher. After a divorce, you will file your taxes as a single person. If your individual income is still high, you might find yourself in a higher premium bracket than before, even if your income is less than half of your previous combined household income. Conversely, if your personal income is now significantly lower, you may fall below the IRMAA threshold and see your premiums decrease.

What to Do if Your Income Drops After Divorce

If your income has gone down significantly because of your divorce, you don’t have to wait two years for your Medicare premiums to reflect that change. The Social Security Administration recognizes divorce as a “life-changing event” that can be grounds for recalculating your IRMAA based on your more recent, lower income. This can provide immediate financial relief at a time when you may need it most. You just need to take the initiative to report the change and provide the necessary documentation to get the process started, which can make a real difference in your monthly expenses.

Requesting a Premium Recalculation

To request a new IRMAA decision, you’ll need to fill out and submit Form SSA-44, Medicare Income-Related Monthly Adjustment Amount – Life-Changing Event. On this form, you will report the divorce and provide evidence of your new, lower income. This could include a divorce decree and a statement of your current earnings or pension. If your request is approved, the SSA will adjust your Part B and Part D premiums right away, rather than making you wait for the standard two-year look-back period to catch up.

Planning for Other Medicare Costs

Your monthly premiums are just one part of the financial puzzle. A divorce often requires a complete reevaluation of your budget, making it more important than ever to plan for other Medicare costs like deductibles, copayments, and coinsurance. These out-of-pocket expenses can add up quickly, especially if you have ongoing health needs. This is a critical time to review your overall coverage, including any Medicare Supplement (Medigap) or Medicare Advantage plans, to ensure they align with your new financial reality. At The Big 65, we help clients find this balance every day, ensuring their coverage meets their needs without breaking their budget.

Enrolling in Medicare After a Divorce

If your divorce causes you to lose your health insurance, you’ll need to act promptly to enroll in Medicare to avoid gaps in coverage and potential late enrollment penalties. This often happens if you were covered under your ex-spouse’s employer-sponsored health plan. The good news is that losing your health coverage this way makes you eligible for a Special Enrollment Period (SEP). This gives you a dedicated window of time to sign up for Medicare without having to wait for the General Enrollment Period, ensuring a smoother transition for your healthcare needs. Knowing the rules around this enrollment window is essential for protecting both your health and your finances.

Losing Health Coverage Triggers a Special Enrollment Period (SEP)

Losing private health insurance due to a divorce is considered an involuntary loss of coverage, which qualifies you for a Medicare Special Enrollment Period if you are 65 or older. This SEP is designed specifically for situations like this, allowing you to enroll in Medicare outside of your Initial Enrollment Period without facing penalties. It’s a crucial protection that helps ensure you can maintain continuous health coverage during a major life transition. Understanding how to use your SEP is key to making the process as seamless as possible and avoiding unnecessary stress during an already challenging time.

How the SEP Helps You Avoid Penalties

The main benefit of a Special Enrollment Period is that it helps you avoid the lifetime late enrollment penalty for Part B. If you miss your initial window to sign up for Part B and don’t have other qualifying coverage, you could face a penalty that increases your premium for as long as you have Medicare. The SEP allows you to sign up for Part A, Part B, and also choose to enroll in a Part D prescription drug plan or a Medicare Advantage plan, all without being penalized for enrolling “late.”

How Long You Have to Enroll

Your Special Enrollment Period for Medicare typically lasts for eight months, starting from the month you lose your employer-sponsored health coverage. It’s highly recommended that you don’t wait until the end of this period to enroll. To ensure there’s no gap between your old plan ending and your new Medicare coverage beginning, you should start the process as soon as you know your coverage end date. This proactive approach helps guarantee you have the healthcare you need, right when you need it, without any stressful interruptions in coverage.

What Happens if You Remarry or Are Widowed?

Life is full of unexpected turns, and your marital status can change more than once. It’s helpful to know how events like remarriage or the death of a spouse can affect your Medicare benefits, especially if you were relying on a former spouse’s work record. The rules are fairly straightforward and are designed to connect your benefits to your current marital situation. Whether you remarry or are widowed, your eligibility will typically shift to be based on your own record or that of your new or deceased spouse, ensuring your benefits reflect your current circumstances.

Rules for Remarriage

If you decide to remarry, you generally lose the ability to claim Medicare benefits based on your ex-spouse’s work record. Your eligibility will then be based on your own work history or that of your new spouse. If you get divorced again or your new spouse passes away, you may be able to switch back to claiming benefits on your first spouse’s record, as long as that first marriage lasted at least 10 years. These rules ensure your benefits are tied to your most recent marital status, providing a clear path for your eligibility.

Special Rules for Widows and Widowers

If your spouse passes away, you may be able to qualify for premium-free Part A based on their work history. To be eligible as a widow or widower, you generally must have been married for at least nine months before your spouse’s death. If you are divorced from a spouse who has since passed away, you can still claim benefits on their record if your marriage lasted 10 years or more and you have not remarried before age 60. These provisions offer continued support after the loss of a partner, providing a measure of financial stability for your healthcare needs.

Other Health Insurance Options to Consider

While Medicare is the primary focus for those 65 and older, it’s not the only health insurance option to think about after a divorce, especially if there’s a potential gap in coverage or you’re not yet eligible for Medicare. Depending on your situation, you might need a temporary solution to bridge the time between losing your old plan and starting a new one. Exploring all your options, like COBRA or an ACA Marketplace plan, can help you stay covered and protect your health and finances during this transitional period. It’s always wise to look at the complete picture of available health plans.

COBRA Coverage

COBRA (Consolidated Omnibus Budget Reconciliation Act) is a federal law that allows you to temporarily continue the same employer-sponsored health coverage you had through your ex-spouse. After a divorce, you can typically elect to keep this coverage for up to 36 months. While COBRA provides continuity of care with the same doctors and benefits, it can be very expensive. You are responsible for paying the full premium, including the portion your ex-spouse’s employer used to contribute, plus an administrative fee. It’s a solid option for short-term coverage but may not be financially sustainable for everyone.

Affordable Care Act (ACA) Marketplace Plans

If you are under 65 or find COBRA to be too expensive, the Affordable Care Act (ACA) Marketplace is another excellent option. Losing your health coverage due to divorce qualifies you for a Special Enrollment Period on the ACA Marketplace, allowing you to shop for a new plan. Depending on your new income, you may be eligible for subsidies that significantly lower your monthly premiums. The Marketplace offers a variety of plans with different levels of coverage, so you can choose one that fits your health needs and your new budget.

Frequently Asked Questions

I didn’t work enough to qualify for Medicare on my own. Can I still get it after my divorce? Yes, you absolutely can. This is a common worry, but there are rules in place to help. If you were married for at least 10 consecutive years and have not remarried, you can qualify for premium-free Part A (hospital insurance) based on your former spouse’s work record. Your ex-spouse must be at least 62 and eligible for Social Security for you to use their record. This provision ensures that people who may have spent years out of the paid workforce, perhaps as caregivers, still have access to the benefits they need.

If I use my ex-spouse’s work record for my Medicare, will it affect their benefits or their new spouse’s? No, it will not affect them at all. Your decision to claim Medicare benefits on your ex-spouse’s record is a private matter between you and the Social Security Administration. It does not reduce their own Medicare or Social Security benefits, nor does it impact the benefits of their current spouse. The system is designed this way so you can get the coverage you are entitled to without creating financial issues for your former partner.

My income is much lower now that I’m single. Why are my Medicare premiums still so high? This happens because Medicare premiums are often based on your tax return from two years ago. When you were married, that was likely a joint return with a higher combined income. The good news is you don’t have to wait two years for this to correct itself. A divorce is considered a “life-changing event,” which allows you to ask for a recalculation of your premiums based on your new, lower income. You can do this by submitting Form SSA-44 to the Social Security Administration.

I lost my health insurance from my ex’s job. Did I miss my chance to sign up for Medicare? No, you haven’t missed your chance. Losing health coverage because of a divorce qualifies you for a Special Enrollment Period (SEP). This gives you an eight-month window to enroll in Medicare without facing any late enrollment penalties. To avoid any gaps in your health coverage, it’s a good idea to start the enrollment process as soon as you know when your old plan will end. This SEP is a critical protection that helps you maintain continuous coverage during a major life change.

What happens to my Medicare eligibility if I get remarried? If you remarry, your eligibility for Medicare will generally shift. You will no longer be able to use your previous spouse’s work record to qualify for benefits. Instead, your eligibility will be based on either your own work history or the work history of your new spouse. The rules are set up to tie your benefits to your current marital status, providing a clear path for your coverage as your life circumstances change.

Key Takeaways

Qualify for Medicare on an ex-spouse’s record: If you were married for at least 10 years and are currently single, you can use your former spouse’s work history to get premium-free Part A hospital insurance without impacting their benefits.
Lower your premiums after an income drop: Divorce is a life-changing event that allows you to request an immediate review of your Medicare premiums. If your income is now lower, file Form SSA-44 to potentially reduce your Part B and Part D costs right away.
Use your Special Enrollment Period to avoid penalties: Losing health insurance due to divorce gives you a special window to sign up for Medicare. Enrolling promptly during this period is crucial to prevent gaps in coverage and avoid permanent late enrollment penalties.

Divorce and Medicare: Your Guide to Coverage