Medicare Decisions and Expenses


One of the biggest retirement worries is the cost of healthcare. Like Social Security, Medicare is a fairly complex benefit with several options. But don’t get overwhelmed. Just follow these steps:

  1. Learn the basics of Medicare
  2. Consider your options and costs
  3. Create a plan

The basics of Medicare

This information will help you become familiar with the basics of Medicare. For details, visit or call 1-800-MEDICARE.

Parts of Medicare

There are four parts to Medicare:

  • Part A — hospital insurance provided by the U.S. government
  • Part B — medical insurance provided by the U.S. government
  • Part C (also known as Medicare Advantage) — hospital and medical insurance provided by private companies
  • Part D — prescription drug coverage

Together, Parts A (hospital insurance) and B (medical insurance) are known as Original Medicare. With Original Medicare, you’ll decide if you also want Medicare Part D (prescription drug coverage).

Part C or Medicare Advantage is an alternative to Medicare Parts A and B. You will get your hospital insurance and medical insurance through this plan. You may also get prescription drug coverage through the plan. If the Medicare Advantage Plan you choose doesn’t offer prescription drug coverage, you may be able to join a Medicare Prescription Drug Plan.

Medigap insurance

Keep in mind that you may also want Medigap insurance to help cover the copays and deductibles of Medicare. Medigap is a supplement to Medicare Parts A and B provided by private insurance companies. You cannot add a Medigap policy to Medicare Part C (Medicare Advantage).

When you’re eligible

You’re eligible for Medicare when you turn 65. If you’ll need coverage at age 65, it’s recommended that you sign up during the Initial Enrollment Period that begins three months prior to your birthday to avoid delaying your coverage. You are still eligible to sign up three months after your birthday, but your coverage will be delayed.

If you’re still working

If you’re covered under a group health plan based on your or your spouse’s current employment, you can wait to make a Medicare decision during an eight-month Special Enrollment Period that starts the month after your employment or coverage under the group health plan ends, whichever happens first. You usually don’t pay a late enrollment penalty if you sign up during the Special Enrollment Period.  CAVEAT:  If the employer has fewer than 20 employees, it can deny you coverage when you turn 65 and become eligible for Medicare.

If you prefer, you can enroll in Medicare Parts A and/or B during the seven-month period that begins three months before the month you turn 65, includes the month you turn 65, and ends three months after the month you turn 65, but keep in mind:

  • Typically, participation in Part A is free, but you do pay a monthly premium for Part B. To avoid paying that premium while you’re covered under a group health plan, you can enroll in Part A, and delay Part B or wait to enroll in both.
  • If you delay enrollment in Part B, your Medigap open enrollment period will also be delayed.

When to enroll in Part D and when to purchase a Medigap policy

With Original Medicare, if you want prescription drug coverage, you can enroll in Part D during your Initial Enrollment Period, a Special Enrollment Period (when, for example, other coverage ends) or the annual Open Enrollment Period.

If you want a Medigap policy, the best time to buy is during your six-month Medigap open enrollment period, which begins the month you’re enrolled in Medicare Part B. During that period, you can buy any Medigap policy sold in your state, even if you have health problems.

Medicare costs

Original Medicare
Part A
Hospital Insurance
You usually don’t pay a monthly premium for Medicare Part A if you or your spouse paid Medicare taxes while working.
Part B
Medical Insurance
In 2016, most people will pay $104.90 each month for Part B. However, if your modified adjusted gross income as reported on your Internal Revenue Service tax return from two years ago is above a certain amount, you’ll likely pay more.
Medicare Advantage
Part C Medicare Advantage plans are provided by private companies and the cost can vary quite a bit from one plan to another. Remember, these plans include hospital and medical insurance and typically include prescription drug coverage. You cannot add a Medigap policy.
Additional Options
Part D
Prescription Drug Coverage
Cost for Medicare Part D will depend on which plan you choose, and may incur an additional charge depending upon your income.
Medigap Policy Cost for an optional Medigap policy will depend on which plan you choose.

Medicare Parts A and B provide the lowest up-front costs, but can also create the most gaps. Medicare Parts A, B, D and Medigap together will create the highest up-front costs, but will provide the fullest coverage with the least amount of gaps.

Key dates

Pay attention to these important dates once you’re ready to enroll in Medicare.

  • Initial Enrollment Period: Age 65 (three months before, through three months after)
  • Special Enrollment Period: Extending up to eight months after your employment or group coverage ends. Note that you’re not eligible for a Special Enrollment Period when COBRA or any retiree health plan coverage ends.
  • General Enrollment Period: January 1 through March 31 each year
    If you don’t sign up for Medicare Parts A and/or B when first eligible or during a Special Enrollment Period, you can enroll during the General Enrollment Period. You may have to pay a higher Medicare Part B premium because you could have had Medicare Part B and didn’t take it. If you sign up for Part A and/or B during the General Enrollment Period, you may sign up for Part D from April 1-June 30. Your six-month Medigap open enrollment period will begin when you enroll in Part B.
  • Annual Open Enrollment Period: October 15 – December 7
    During this period you can:

    • Change from Original Medicare to a Medicare Advantage Plan or vice versa.
    • Switch from one Medicare Advantage Plan to another Medicare Advantage Plan.
    • Switch from a Medicare Advantage Plan that doesn’t offer drug coverage to a Medicare Advantage Plan that offers drug coverage or vice versa.
    • Join a Medicare Prescription Drug Plan or switch from one Medicare Prescription Drug Plan to another.
    • Drop your Medicare prescription drug coverage completely.

Learn more

Don’t put off learning more about Medicare. Use any of the resources below to make sure you fully understand the benefit:

  • Call 1-800-MEDICARE
  • Visit
  • Call your state’s Senior Health Insurance Information Program (SHIIP)

Mid-Year Tax Planning


If you just finished writing a hefty check to the IRS because you were subject to the Alternative Minimum Tax, Net Investment Income Tax, Additional Medicare Tax or earned significant capital gains on your investments, you probably don’t even want to think about taxes again until next spring. However, the reality is that there’s probably no better time than now to start planning to help you reduce your tax liability for 2015.

Of course, there’s no one single solution for reducing liability. And tax savings should never be the sole factor behind any investment decision, according to the Tax & Financial Planning Group for Wells Fargo Advisors. However, by thinking proactively about taxes and monitoring your use of tax-advantaged investments, you may be able to keep more of your money working for you.

Plan a summer tax meeting
By May, many tax professionals and Financial Advisors have wrapped up the current tax season. But that doesn’t mean you should avoid a conversation with your advisors so you can focus on your summer vacation plans. With April filings completed, your financial professional may have more time to consider tax planning for the year ahead,” notes Wells Fargo. “Plus, by midyear, you may have a better idea of the income or other financial changes you may be facing in 2015.”

Start with tax-friendly accounts
Many high-net-worth (and often highly taxed) individuals don’t take full advantage of the tax-advantaged accounts available to them. Why not? Primarily because eligibility and withdrawal rules can seem unusually complex. Common tax-advantaged accounts include 529 college savings plans, personal IRAs, Roth IRAs, and workplace 401(k) or 403(b) retirement plans. In addition, a growing number of employers now offer Roth 401(k)s, which combine the benefits of a traditional retirement plan and a Roth IRA, and cash-balance retirement plans, which are hybrids of a traditional pension and a 401(k).  By midyear, you may have a better idea of the income or other financial changes you may be facing.

Balance your tax obligations
No one can be sure what changes Congress will make to U.S. tax rates in the future — or what tax bracket you might fall into when you retire. This is an important reason to hold a wide range of investments — some that are taxable when you withdraw them in retirement and some that are completely tax-free in the future.

“This is a good reason not to put all of your investable assets in your workplace retirement plan or a personal IRA, for instance,” says Wells Fargo. “You could end up creating a very high-tax income stream after you stop working, when you can least afford it.”  Work with your tax advisor to make sure your tax commitments are balanced.

Consider “location, location, location”
If you’re investing in tax-advantaged accounts such as an IRA or work retirement plan to go along with after-tax investment accounts, you may want to include different types of holdings in each.  For instance, you might include low-tax investments — such as municipal bonds, tax deferred annuities or stocks that pay qualified dividends — in your after-tax accounts and higher-tax investments — such as corporate or U.S. government bonds — in your tax-sheltered accounts.

Straddle tax years when possible
There might be times when it make sense to liquidate some tax-incurring investments at the end of one tax year, and then wait and sell additional investments in the early part of the following tax year to spread out your tax exposure. Or if you anticipate a significant income change (up or down), you might want to either accelerate tax deductions into the current year or defer them to the following year to pay less in taxes. These kinds of strategies are best decided with the help of your or tax professional during a midyear meeting.

Don’t overlook the Roth — for your kids and grandkids
If leaving a family legacy is important to you, one way to do so may be to contribute to a Roth account for your children and grandchildren, starting in their teen years. Even though you won’t get a tax break for doing so, making contributions to this account is one way to harness some of the tax-free advantages of the Roth on your family’s behalf.  To contribute to a Roth, your child must have income from work. Contributions are limited to your child’s or grandchild’s actual compensation or the IRS maximum, whichever is less.  If you own your own business, you could hire your child to work for you during the summer.

The bottom line: Don’t wait until the end of the year to plan for next year’s taxes, because some of the best strategies may take a little time to consider or implement.  Contact Steve Siesser at for more assistance.


Maryland Parental Leave Act


Maryland will soon have a new unpaid leave requirement for small employers. Effective October 1, 2014, the Parental Leave Act (PLA) will apply to employers with at least 15 and not more than 49 employees in the state of Maryland. Eligible employees must be allowed to take up to six weeks of unpaid leave for the birth, adoption, or placement for adoption or foster care of a child. An employee is eligible if they have worked for their employer for at least 12 months, for at least 1,250 hours in the previous 12 months, and at a work site with at least 15 employees within 75 miles.

Similar to leave under the Family and Medical Leave Act (FMLA), the employer must continue group health plan coverage under the same terms as during active employment. If the employee does not return to work, the employer may recover their premium expense from the employee. When the employee does return to work, the employer must restore them to their previous position or to an equivalent position with equivalent benefits, pay, and other terms.


Getting Married Can Affect Your Premium Tax Credit


The IRS reminds newlyweds to add a health insurance review to their to-do list. This is particularly important if you receive premium assistance through advance payments of the premium tax credit through a Health Insurance Marketplace.

If you, your spouse or a dependent gets health insurance coverage through the Marketplace, you need to let the Marketplace know you got married. Informing the Marketplace about changes in circumstances, such as marriage or divorce, allows the Marketplace to help make sure you have the right coverage for you and your family and adjust the amount of advance credit payments that the government sends to your health insurer.

Reporting the changes will help you avoid having too much or not enough premium assistance paid to reduce your monthly health insurance premiums. Getting too much premium assistance means you may owe additional money or get a smaller refund when you file your taxes. Getting too little could mean missing out on monthly premium assistance that you deserve. You should also check whether getting married affects your, your spouse’s, or your dependents’ eligibility for coverage through your employer or your spouse’s employer, because that will affect your eligibility for the premium tax credit.

Other changes in circumstances that you should report to the Marketplace include:

  • the birth or adoption of a child,
  • divorce,
  • getting or losing a job,
  • moving to a new address, gaining or losing eligibility for employer or government sponsored health care coverage, and
  • any other changes that might affect family composition, family size, income or your enrollment.

In addition, certain life events – like marriage – give you and your spouse the opportunity to sign up for health care during a special enrollment period. That means that if one or both of you is uninsured, you may be able to get coverage now.  In most cases, the special enrollment period for Marketplace coverage is open for 60 days from the date of the life event.

More Information

Find out more about the premium tax credit and other tax-related provisions of the health care law at See IRS Publication 5152 for more information about reporting changes in circumstances to the Marketplace.

Find out more about the health care options at


Keep Up With the Educational Tax Credits


Are you, your spouse or a dependent heading off to college? If so, here’s a quick tip from the IRS: some of the costs you pay for higher education can save you money at tax time. Here are several important facts you should know about education tax credits:

  • American Opportunity Tax Credit.  The AOTC can be up to $2,500 annually for an eligible student. This credit applies for the first four years of higher education. Forty percent of the AOTC is refundable. That means that you may be able to get up to $1,000 of the credit as a refund, even if you don’t owe any taxes.
  • Lifetime Learning Credit.  With the LLC, you may be able to claim a tax credit of up to $2,000 on your federal tax return. There is no limit on the number of years you can claim this credit for an eligible student.
  • One credit per student.  You can claim only one type of education credit per student on your federal tax return each year. If more than one student qualifies for a credit in the same year, you can claim a different credit for each student.  For example, you can claim the AOTC for one student and claim the LLC for the other student.
  • Qualified expenses.  You may include qualified expenses to figure your credit.  This may include amounts you pay for tuition, fees and other related expenses for an eligible student. Refer to for more about the additional rules that apply to each credit.
  • Eligible educational institutions.  Eligible schools are those that offer education beyond high school. This includes most colleges and universities. Vocational schools or other postsecondary schools may also qualify.
  • Form 1098-T.  In most cases, you should receive Form 1098-T, Tuition Statement, from your school. This form reports your qualified expenses to the IRS and to you. You may notice that the amount shown on the form is different than the amount you actually paid. That’s because some of your related costs may not appear on Form 1098-T. For example, the cost of your textbooks may not appear on the form, but you still may be able to claim your textbook costs as part of the credit. Remember, you can only claim an education credit for the qualified expenses that you paid in that same tax year.
  • Nonresident alien.  If you are in the U.S. on an F-1 student visa, you usually file your federal tax return as a nonresident alien. You can’t claim an education credit if you were a nonresident alien for any part of the tax year unless you elect to be treated as a resident alien for federal tax purposes. To learn more about these rules see Publication 519, U.S. Tax Guide for Aliens.
  • Income limits. These credits are subject to income limitations and may be reduced or eliminated, based on your income.

For more information, visit the Tax Benefits for Education Information Center on Also, check Publication 970, Tax Benefits for Education or contact Steve Siesser at