On Money & More – April 2024

AS YOU THINK ABOUT planning your retirement expenses, Medicare plays an essential role. This US government healthcare plan, established in 1965, serves as the insurance plan for over 65 million Americans. Medicare can be very confusing, with significant penalties for missed deadlines. For those who have not yet signed up, here are some things to be aware of:

  1. Who is eligible? Individuals who are 65 years or older and have worked and paid Medicare taxes for at least 10 years are generally eligible. Younger individuals with certain disabilities or a terminal illness may also qualify.
  2. When to sign up is key!

Initial Enrollment Period (IEP): Most people become eligible for Medicare when they turn 65. The Initial Enrollment Period spans seven months, beginning three months before the month of your 65th birthday, including your birthday month, and extending three months afterward. It’s essential to sign up during this period to avoid late enrollment penalties.

Special Enrollment Period (SEP): If you or your spouse are still working and covered by an employer’s group health plan when you turn 65, you may qualify for a Special Enrollment Period. This period allows you to enroll in Medicare without penalty during the eight months following the end of your employment or group health coverage, whichever comes first.

General Enrollment Period (GEP): If you miss your Initial Enrollment Period and don’t qualify for a Special Enrollment Period, you can enroll in Medicare during the General Enrollment Period, which runs from January 1st to March 31st each year. However, coverage won’t begin until July 1st of that year, and late enrollment penalties may apply.

  1. Coverage: Medicare has different parts:

Part A (Hospital Insurance): Covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health care.

Part B (Medical Insurance): Covers certain doctors’ services, outpatient care, medical supplies, and preventive services.

Part C (Medicare Advantage Plans): Offered by private companies and approved by Medicare, these plans combine Part A and Part B coverage.

Part D (Prescription Drug Coverage): Helps cover the cost of prescription drugs.

  1. Cost: While Part A is generally premium-free for those who have worked and paid Medicare taxes, Parts B, C, and D typically involve monthly premiums, deductibles, copayments, and coinsurance. The premium cost can be dependent on your recent income, a key consideration for investors looking to smooth income sources during their retirement years.

Knowing when to sign up is just the start, as the questions about which plan is most appropriate for you can be tricky. And while Joe Namath may be happy to give you advice in his commercials, his opinion might not be what’s best for you! If you have questions about how to proceed, or how your investments might impact on your Medicare premiums, Cutler would be happy to have a conversation.

All opinions and data included in this commentary are as of March 12, 2024, and are subject to change without notice. The opinions and views expressed herein are of Cutler Investment Counsel, LLC and are not intended to be a forecast of future events, a guarantee of future results or individual investment advice including the asset allocation provided. Nothing herein should be construed as tax advice. This article is provided for informational purposes only and should not be considered a recommendation or solicitation to purchase or sell securities. This information should not be used as the sole basis to make any investment decision. The statistics have been obtained from sources believed to be reliable, but the accuracy and completeness of this information cannot be guaranteed. Investing involves risk, including the potential loss of principle. Neither Cutler Investment Counsel, LLC nor its information providers are responsible for any damages or losses arising from any use of this information.