Curated by: Rubric Advisors
Retirement Planning
Medicare Planning
Understanding Medicare's complex enrollment rules, income-based surcharges, and coordination with other coverage is essential for avoiding costly penalties and maximizing healthcare benefits in retirement.
Medicare Planning
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Medicare Parts A-D Overview
- Part A: Hospital insurance, usually premium-free with 40+ work quarters
- Part B: Medical insurance covering doctors and outpatient care, $185/month in 2025
- Part C: Medicare Advantage, private plans combining A+B, often includes Part D
- Part D: Prescription drug coverage, average premium $55/month, penalty for delays
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Medicare Parts A-D Overview
- Part A: Hospital insurance, usually premium-free with 40+ work quarters
- Part B: Medical insurance covering doctors and outpatient care, $185/month in 2025
- Part C: Medicare Advantage, private plans combining A+B, often includes Part D
- Part D: Prescription drug coverage, average premium $55/month, penalty for delays
Enrollment Periods and Penalties
- Initial Enrollment: 7-month window around 65th birthday (3 months before and after)
- General Enrollment: January through March annually, coverage starts July
- Special Enrollment: Qualifying events like losing employer coverage extend deadlines
- Part B penalty: 10% per 12-month delay period, permanent lifetime surcharge
Medigap vs Medicare Advantage
- Medigap supplements Original Medicare with standardized plans A through N
- Medicare Advantage replaces Original Medicare but has network limitations
- Cannot have both Medigap and Medicare Advantage simultaneously
- Medigap guaranteed issue during 6-month window after Part B enrollment
IRMAA Income Surcharges
- High earners pay additional Part B and D premiums based on income from two years prior
- Individual MAGI thresholds start at $106,000 with multiple tiers through $500,000+
- Married filing jointly thresholds are double individual thresholds for most brackets
- Part B surcharges range from $69.90 to $419.30 monthly in 2025
Employer Coverage and HSA Coordination
- With 20+ employees, employer plan pays first and Medicare is secondary
- COBRA does not count as creditable coverage for Medicare enrollment purposes
- Cannot contribute to an HSA once enrolled in any part of Medicare
- Existing HSA funds remain available for qualified medical expenses tax-free
- Plan HSA contribution timing carefully around Medicare enrollment decisions
Annual Open Enrollment
- Medicare Open Enrollment: October 15 through December 7, changes start January 1
- Review plan formularies, networks, and costs annually for optimal coverage
- Medicare Advantage Open Enrollment: January 1 through March 31 for plan switches
- Document health changes and new medications when evaluating plan options
Key Planning Considerations
- Enroll in Medicare on time to avoid permanent penalties and coverage gaps
- Review income projections for IRMAA implications two years in advance
- Coordinate employer coverage transitions carefully with Medicare enrollment timing
- Stop HSA contributions before Medicare enrollment to avoid tax penalties
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