Retirement Planning

The ABCs of Medicare “When You’re Sixty-Four”

October 19, 2022

In a popular song released in June of 1967, Paul McCartney (now 80 years old) wonders if he will receive Valentines, birthday greetings, and bottles of wine when he’s 64. If McCartney was American, the song very well may have included a line about signing up for Medicare.

What is Medicare?

Medicare is a federal program that provides healthcare coverage to Americans 65 and over (as well as qualifying individuals with a disability or end-stage kidney failure).

Unlike Medicaid, which is for low-income individuals, Medicare is for all qualified Americans, including the wealthy. If you or your spouse have paid into the system during your working years (typically ten years or more), you are entitled to receive Medicare Part A (which covers inpatient healthcare) for free. However, for Medicare Part B, which is for doctor’s visits and lab services, you will need to pay a premium.1

When the time comes to sign up, you may be automatically enrolled if you have already begun taking Social Security (depending upon how long you’ve been collecting). Otherwise, you will need to register manually, either online at or at your local Social Security office.

The Number One Medicare Mistake People Make

If you do not have qualified alternative healthcare coverage when you’re turning 65, you need to sign up for Medicare Part B within your seven-month Initial Enrollment Period (IEP) to avoid a penalty. Not registering at the right time is one of the biggest mistakes people make when it comes to signing up for Medicare.

Example Initial Enrollment Period

For someone whose 65th birthday is this month


First day of month, three months prior to 65th birthday




65th Birthday Month




Last day of month three months after 65th birthday

[Note: if your birthday is on the 1st of the month, enrollment begins one month prior.]

If you register late, the penalty may be stiff (10% for each 12-month period you could have had Part B but neglected to sign up) and last as long as you have Medicare Part B.

Medicare is single, not family, coverage.

Therefore, after you sign up for Medicare, your spouse and/or other dependents may need separate health insurance coverage.

Open Enrollment

Once you are a Medicare beneficiary, you have the opportunity to review your coverage each year to make sure it’s still appropriate for you, and potentially choose a new plan during the open enrollment period.

Medicare Open Enrollment

Medicare Open Enrollment is October 15th through December 7th this year.

Medicare Coverage Options

The components of Medicare include:

  • Part A = Hospital Insurance, which covers inpatient care in a hospital or skilled nursing facility, and hospice care.
  • Part B = Medical Insurance, covers medically necessary doctor’s services, outpatient care home health services, including durable medical equipment, mental health services, and some preventative services.
  • Part C = Medicare Advantage, covers all of Medicare Part A and Part B benefits, and potentially other services, such as vision, hearing, and dental services, and most plans include Medicare Part D.
  • Part D = Drug Coverage, for the prescription drugs you need.

You have the option to choose Original Medicare or Medicare Advantage, with the primary differences as follows:2

Original Medicare

Medicare Advantage (Also known as Part C)

Provider/ Administrator

  • Run by the government
  • Run by private insurance


  • Medicare Parts A & B
  • Does not cover care outside of the U.S.
  • Medicare Parts A & B
  • May be limited to network care
  • Many plans do not cover medical care outside of the U.S.

Incremental Costs and Limits

  • Part B premium
  • Separate premium for Part D
  • Typically 20% of Medicare-approved amount out of pocket (OOP)
  • No yearly OOP limit
  • Part B premium (and potentially plan premium)
  • Most plans include Part D
  • Out of pocket costs may vary
  • Yearly OOP limit

Supplemental coverage

  • Medigap may cover OOP expenses, as well as cover emergency care outside of the U.S.
  • Cannot buy and do not need Medigap
  • May be able to purchase a supplemental plan for coverage outside of the U.S.

Medicare Costs

The Social Security Administration determines your Medicare Parts B and D premiums based on your modified adjusted gross income (MAGI), using your income tax return from two years prior. High earners may be charged an Income Related Monthly Adjustment (IRMAA), or incremental premium. For 2022, the MAGI threshold used for IRMAA calculations is as follows:

  • Married, filing jointly = $182,000
  • All other = $91,000

How You Pay

Monthly premiums are deducted from your Social Security benefits, which may be why some people mistakenly believe IRMAA is a Social Security adjustment. However, if you enroll in Medicare before you begin collecting Social Security, your premiums are billed quarterly.

Washington Trust Helps You Plan for Your Healthcare Costs in Retirement

Your Washington Trust Wealth Advisor helps you plan ahead for your healthcare expenses to give you the peace of mind that you are prepared. It’s important to let your Advisor know when you and/or your spouse plan to enroll in Medicare, so he or she will keep in mind how dividend payments and capital gains could potentially trigger an IRMAA Medicare premium.

If you are not currently a Washington Trust client and would like to plan ahead for a secure retirement, please contact us to learn more.

How does Medicare impact your HSA?

You must stop contributing to your HSA at least 6 months before you apply for Medicare, but you can withdraw funds from your HSA after your Medicare coverage begins.

1 What does Medicare cost?

2 Medicare & You 2023: The official U.S. government Medicare handbook

3 IRMAA Sliding Scale Tables, Program Operations Manual system (POMS), Social Security Administration

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