Medicare is a federal system of health insurance for people over 65 years of age and for certain younger people with disabilities.  Medicare pays for much of the cost of hospital stays and doctor’s office visits for people age 65 and older.  But what does that mean and what do you need to know?

• There are different parts to Medicare:
• Medicare Part A is hospital care.  Most people don't pay a premium for Medicare Part A.  Medicare Part A has a $1,316 deductible if you are hospitalized, and additional costs apply if your hospital stay exceeds 60 days.
• Medicare Part B is medical insurance that covers doctor's visits and outpatient services.  The standard Medicare Part B premium is $134 per month in 2017, but it is primarily new enrollees and those who haven’t yet claimed Social Security who will pay this amount.  Most Social Security recipients will pay $109 per month for Medicare Part B in 2017 because Medicare premiums are prevented by law from increasing faster than Social Security payments for existing recipients. Premium costs are also higher for retirees with a modified adjusted gross income above $85,000 for individuals and $170,000 for couples.  There is a $183 Medicare Part B deductible in 2017, after which you will be charged 20 percent of the Medicare-approved amount for most services. There’s no annual limit on out-of-pocket expenses.
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If you are wondering about the need for Long-Term Disability Insurance, but figure you are covered with Social Security. Be sure to consider:

The Internal Revenue Service has issued final regulations for the shared responsibility payment for not maintaining minimum essential coverage under the Affordable Care Act.

• The final regulations largely finalize the rules proposed in February.
• The individual mandate differs from the employer mandate, which was delayed last month until January 2015.
• The individual mandate in contrast is still scheduled to take effect in 2014, when individuals who choose not to enroll in a health insurance program will have to pay a penalty of $95 per person per year, or 1 percent of their income, whichever is larger.
• The individual mandate penalty will gradually increase in 2015 to $325, or 2 percent of income, and in 2016 to $695, or 2.5 percent of income, whichever is bigger.

The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (often to as “Obamacare” or “Health Care Reform”) was signed into law in March 2010. (The law was upheld as constitutional by the U.S. Supreme Court in June 2012.)

The primary purpose of the law is to extend health care to millions of uninsured Americans. Here is a summary of how it may affect you so you can prepare for the short- and long-term impacts before they occur.

A self-employed client asked how the Federal government and the IRS will know in 2014 if she was or was not covered by health insurance. She does not currently have coverage and was evaluating not making any changes. However, unless she told the IRS, how would the government know to assess a penalty?