Medicare Case Study

One of the most common questions we get as Financial Advisors is not about stocks or bonds, but actually related to Medicare. As you might imagine, we’ve encountered a number of unique circumstances when advising on clients on Medicare issues. We recently had a client (we’ll call him Tom,) call us with a number of questions because he never signed up for Medicare when he was first eligible. Tom turned 65 back in 2018 and decided not to enroll in Medicare Part B during his Initial Enrollment Period (IEP) because he was covered by his employer’s health insurance. He is 68 now and is retiring from his job at the end of the month. As a result, he is losing his coverage through his employer and wants to enroll in Part B. He had read that enrolling late in Part B will result in coverage gaps and penalties. We comforted Tom by informing him that he CAN enroll in Medicare Part B without paying late enrollment penalties or facing gaps in coverage as long as he enrolls during his Special Enrollment Period (SEP.) SEPs are periods of time outside of normal enrollment periods that are triggered by specific circumstances. The Part B SEP starts when you have coverage from your current employer (job-based insurance) and you are in your first month of eligibility for Part B. It ends eight months after you lose coverage from current employment, because the employment or insurance ends. In order to qualify for the Part B SEP, two criteria must be met: 1. You must have insurance from a current employer (from your job or your spouse’s job) or have had such insurance within the past eight months 2. You must have been continuously (no gap longer than eight months) covered by job-based insurance or Medicare Part B since becoming eligible for Medicare, including the first month you became eligible for Medicare. Essentially this means that if Tom had gone without employer coverage for more than eight months at some point after turning 65, he would no longer qualify for a Part B SEP. Tom has an eight-month period to enroll in Part B, starting from the month in which he loses his coverage through his employer. His Medicare coverage will begin the month after he enrolls. Since Tom is retiring at the end of the month, we advised Tom to enroll in Medicare Part B now so that his coverage starts next month and he avoids any gaps in coverage. If he does not enroll in Part B before the end of the month, he may be responsible for any health care costs he incurs in the months after losing job-based coverage and before his Medicare coverage starts. If you have questions related to Medicare eligibility, give us a call, we may be able to offer some advice.

This case study is hypothetical and for discussion purposes only. It is not intended to represent any specific return, yield or investment. Individual experiences referenced above may not reflect the future experience of any one client. The planning process discussed may not be suitable for your personal situation, even if it is similar to the example presented. Past performance is no guarantee of future results. Investing involves risk including the possible loss of principal. The Pitti Group Wealth management is not a legal or tax advisor. Be sure to consult your own tax advisor and investment professional before taking any action that may involve tax consequences.