Medicare

One of the biggest expenses you might face in retirement is healthcare. And it’s an expense that you may only be able to do so much to reduce.

If you’re tired of paying huge property taxes and spending a lot to maintain a larger home, you can always downsize. If you don’t want to bear the expense of a car, you could move to an area that’s walkable.

Image source: Getty Images.

But if you need to take certain medications to protect your health, you may not get much of a say in the matter. And if you have a medical condition that involves follow-up appointments, skipping them to save on the costs may not be an option (or at least not a wise one).

That’s why it’s so important to make sure you’ve chosen a suitable Medicare plan. The right plan could lead to big savings on health-related costs, not to mention make it easier to get the care you need.

Why you may be unhappy with your Medicare coverage

There are plenty of reasons why you may be less than pleased with your Medicare plan choice. If you have Medicare Advantage, you may be frustrated by:

• Limited provider networks, making it harder to see the doctors you prefer
• Prior authorization, which could delay your care
• High rates of denial, which could be stressful and lead to sub-optimal care
• Hefty out-of-pocket costs, which you could face even if your plan itself comes with a low or even $0 premium

Meanwhile, if you have Medicare Part D, you may be unhappy due to:

• High out-of-pocket costs for the specific medications you take
• Difficulty understanding your plan’s formulary and rules

All of these are valid reasons for wanting to ditch your Medicare plan. And soon enough, you may get that opportunity.

Relief is in sight

Though you may be stuck with your Medicare plan for the time being, soon enough, you should have an opportunity to make a change for the new year. Medicare’s fall open enrollment period is set to begin next month — specifically, on Oct. 15. Between then and Dec. 7, you’ll be able to make changes to your Medicare coverage.

During open enrollment, you can:

• Switch from your current Medicare Part D drug plan to another
• Switch from your current Medicare Advantage plan to another
• Sign up for Medicare Advantage for the first time
• Dump Medicare Advantage and switch over to original Medicare (and get a Part D drug plan to go with it)

It pays to explore your plan choices during open enrollment. But ahead of that, make a list of the issues you have with your current Medicare plan so you can make sure any new plan you get does a good job of addressing them. If high medication copays are a problem, for example, then you’ll want to find a Part D plan that treats the drugs you take more favorably.

One thing you don’t want to do, though, is rush through open enrollment if you’re dissatisfied with your current Medicare plan. Mark Oct. 15 on your calendar so you can begin pursuing other options as soon as possible and have ample time to analyze them.

There’s a reason so many retirees worry about running out of money. Once you move over to a fixed income, it’s important to keep your costs as fixed as possible. But as we all know, inflation has a sneaky way of driving living costs up.

This especially holds true in the context of healthcare. Fidelity says that a 65-year-old who’s leaving the workforce this year can expect to spend $172,500 on healthcare costs in retirement. That’s a 4% increase from last year, and a pretty daunting number overall.

Image source: Getty Images.

That’s why it’s so important to be strategic when it comes to all things Medicare. With that in mind, here are a few Medicare moves that could save you big money in retirement.

1. Enroll on time

Although Medicare eligibility generally begins at 65, you don’t have to wait until you turn 65 to sign up. Your initial enrollment period begins three months before the month of your 65th birthday, and it ends three months after the month you turn 65.

If you don’t enroll during that initial window, but rather much later, you’ll put yourself at risk of lifelong Medicare surcharges. Specifically, you’ll face a 10% increase in your Part B premium costs for each 12-month period you were able to get Medicare but didn’t enroll. And that surcharge is one that applies for life.

For this reason, it’s best to plan to enroll in Medicare on time unless you have qualifying group health coverage through an employer. In that case, you’ll generally qualify for a special enrollment period and won’t be penalized for failing to enroll during your seven-month initial enrollment window.

2. Review your plan choices annually

Each year, Medicare holds an open enrollment period from Oct. 15 through Dec. 7. During this window, existing Medicare enrollees can make a host of changes, such as:

• Joining a Medicare Advantage plan for the first time.
• Switching Medicare Advantage plans.
• Switching Part D drug plans.
• Moving from Medicare Advantage to original Medicare.

It’s important to review your plan choices each year, even if you’re reasonably happy with your existing coverage. That’s because:

• Your plan’s rules and costs can change.
• Your healthcare needs can change.
• There may just be a better plan out there for you.

Switching Medicare plans could, depending on the circumstances, result in lower premiums and copays. So it pays to do your research each fall.

3. Buy a Medigap plan

If you’re planning to stick with original Medicare, as opposed to Medicare Advantage, then it pays to buy Medigap coverage early on. Medigap is supplemental insurance, and it could kick in when you’re facing hefty costs like coinsurance for a hospital stay or skilled nursing facility.

Your initial Medigap enrollment window begins the month you’re enrolled in Medicare Part B and are 65 or older. And that window lasts six months.

It pays to buy your Medigap coverage during that time because you can’t be denied for pre-existing conditions. If you wait, you risk being denied coverage for your plan of your choice, or getting coverage at a (much) higher premium rate.

It’s natural to worry about money in retirement. But if you’re smart about Medicare, you can potentially lower some of your health-related expenses and stretch your nest egg further. So it pays to make these essential Medicare moves if you like the idea of having healthcare in retirement cost less.

WASHINGTON — The federal budget deficits caused by President Trump’s tax and spending law could trigger automatic cuts to Medicare if Congress does not act, the nonpartisan Congressional Budget Office reported Friday.

The CBO estimates that Medicare, the federal health insurance program for Americans over age 65, could potentially see as much as $491 billion in cuts from 2027 to 2034 if Congress does not act to mitigate a 2010 law that forces across-the-board cuts to many federal programs once legislation increases the federal deficit. The latest report from CBO showed how Trump’s signature tax and spending law could put new pressure on federal programs that are bedrocks of the American social safety net.

Trump and Republicans pledged not to cut Medicare as part of the legislation, but the estimated $3.4 trillion that the law adds to the federal deficit over the next decade means that many Medicare programs could see cuts. In the past, Congress has always acted to mitigate cuts to Medicare and other programs, but it would take some bipartisan cooperation to do so.

Democrats, who requested the analysis from CBO, jumped on the potential cuts.

“Republicans knew their tax breaks for billionaires would force over half a trillion dollars in Medicare cuts — and they did it anyway,” Rep. Brendan Boyle of Pennsylvania, the top Democrat on the House Budget Committee, said in a statement. “American families simply cannot afford Donald Trump’s attacks on Medicare, Medicaid and Obamacare.”

Hospitals in rural parts of the country are already grappling with cuts to Medicaid, which is available to people with low incomes, and cuts to Medicare could exacerbate their shortfalls.

As Republicans muscled the bill through Congress and are now selling it to voters back home, they have been critical of how the CBO has analyzed the bill. They have also argued that the tax cuts will spur economic growth and pointed to $50 billion in funding for rural hospitals that was included in the package.

Groves writes for the Associated Press.

Having extended most of the 2017 Tax Cuts and Jobs Act and added even more tax breaks, Congress is once again punting on the central fiscal question of our time: What kind of government do Americans want seriously enough to pay for?

Yes, the Big Beautiful Bill avoided a massive tax increase and includes pro-growth reforms. It also adds to the debt — by how much is debatable — and that’s before we get to the budgetary reckoning of Social Security and Medicare’s impending insolvency. Against that backdrop, it’s infuriating to see a $9-billion rescission package — one drop in the deficit bucket — met with cries of bloody murder.

The same can be said of the apocalyptic discourse surrounding the Big Beautiful Bill’s reduction in Medicaid spending. In spite of the cuts, the program is projected to grow drastically over the next 10 years. In fact, the reforms barely scratch the surface considering its enormous growth under President Biden.

Maybe we wouldn’t keep operating this way — pretending like minor trims are major reforms while refusing to tackle demographic and entitlement time bombs ticking beneath our feet — if we stayed focused on the question of what, considering the cost, we’re willing to pay for.

Otherwise, it’s too easy to continue committing a generational injustice toward our children and grandchildren. That’s because all the benefits and subsidies that we’re unwilling to pay for will eventually have to be paid for in the future with higher taxes, inflation or both. That’s morally and economically reprehensible.

Admitting we have a problem is hard. Fixing it is even harder, especially when politicians obscure costs and fail to recognize the following realities.

First, growing the economy can, of course, be part of the solution. It creates more and better opportunities, raising incomes and tax revenue without raising tax rates — the rising tide that can lift many fiscal boats. But when we’re this far underwater, short of a miracle produced by an energy and artificial intelligence revolution, growth alone simply won’t be enough.

Raising taxes on the rich will fall short, too. Despite another round of loud calls to do so, like those now emanating from the New York City mayoral campaign, remember: The federal tax code is already highly progressive.

Here’s something else that should be common knowledge: Higher tax rates do not automatically translate to more tax revenue. Not even close. Federal revenues have consistently hovered around 17% to 18% of GDP for more than 50 years — through periods of high tax rates, low tax rates and every combination of deductions, exemptions and credits in between.

This remarkable stability is no fluke. It reflects a basic reality of human behavior: When tax rates go up, people don’t simply continue what they’ve been doing and hand over more money. They work less, take compensation in non-taxable forms, delay selling assets, move to lower-tax jurisdictions or increase tax-avoidance strategies.

Meanwhile, higher rates reduce incentives to invest, hire, and create or expand businesses, slowing growth and undermining the very revenue gains legislators expect. It’s why economic literature shows that fiscal-adjustment packages made mostly of tax increases usually fail to reduce the debt-to-GDP ratio.

Real-world responses mean that higher tax rates rarely generate what static models predict as we bear the costs of less work, less innovation and less productivity leading to fewer opportunities for everyone, rich or poor.

If the underlying structure of the system doesn’t change, no amount of rate fiddling will sustainably result in more than 17-18% in tax collections.

Political dynamics guarantee further disappointment. When Congress raises taxes on one group, it often turns around and cuts taxes elsewhere to offset the backlash. Then, when the government does manage to collect extra revenue — through windfall-profits taxes, inflation causing taxpayers to creep into higher brackets, or a booming economy — that money rarely goes toward deficit reduction. It gets spent, and then some.

It’s long past time to shift the conversation away from whether tax cuts should be “paid for.” Instead, ask what level of spending we truly want with the money we truly have.

I suspect that most people aren’t willing to pay the taxes required to fund everything our current government does, and that more would feel this way if they understood our tax-collection limitations. That points toward the need to cut spending on, among other things, corporate welfare, economically distorting subsidies, flashy infrastructure gimmicks, and Social Security and Medicare.

Until we align Congress’ promises with what we’re willing and able to fund, we’ll continue down this dangerous path of illusion, denial, and intergenerational theft — as we cope with economic decline.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University. This article was produced in collaboration with Creators Syndicate.

WASHINGTON — The go-broke dates for Medicare and Social Security trust funds have moved up as rising health care costs and new legislation affecting Social Security benefits have contributed to earlier projected depletion dates, according to an annual report released Wednesday.

The go-broke date — or the date at which the programs will no longer have enough funds to pay full benefits — was pushed up to 2033 for Medicare’s hospital insurance trust fund, according to the new report from the programs’ trustees. Last year’s report put the go-broke date at 2036.

Meanwhile, Social Security’s trust funds — which cover old age and disability recipients — will be unable to pay full benefits beginning in 2034, instead of last year’s estimate of 2035. After that point, Social Security would only be able to pay 81% of benefits.

The trustees say the latest findings show the urgency of needed changes to the programs, which have faced dire financial projections for decades. But making changes to the programs has long been politically unpopular, and lawmakers have repeatedly kicked Social Security and Medicare’s troubling math to the next generation.

President Trump and other Republicans have vowed not to make any cuts to Medicare or Social Security, even as they seek to shrink the federal government’s expenditures.

Social Security Administration Commissioner Frank Bisignano, sworn into his role in May, said in a statement that “the financial status of the trust funds remains a top priority for the Trump Administration.”

“Current-law projections indicate that Medicare still faces a substantial financial shortfall that needs to be addressed with further legislation. Such legislation should be enacted sooner rather than later to minimize the impact on beneficiaries, providers, and taxpayers,” the trustees state in the report.

The trustees are made up of six people — the Treasury Secretary serves as managing trustee, alongside the secretaries of Labor, Health and Human Services, and the commissioner of Social Security. Two other presidentially-appointed and Senate-confirmed trustees serve as public representatives, however those roles have been vacant since July 2015.

About 68 million people are enrolled in Medicare, the federal government’s health insurance that covers those 65 and older, as well as people with severe disabilities or illnesses.

Wednesday’s report shows a worsening situation for the Medicare hospital insurance trust fund compared to last year. But the forecasted go-broke date of 2033 is still later than the dates of 2031, 2028 and 2026 predicted just a few years ago.

Once the fund’s reserves become depleted, Medicare would be able to cover only 89% of costs for patients’ hospital visits, hospice care and nursing home stays or home health care that follow hospital visits.

The report said expenses last year for Medicare’s hospital insurance trust fund came in higher than expected.

Income exceeded expenditures by nearly $29 billion last year for the hospital insurance trust fund, the report stated. Trustees expect that surplus to continue through 2027. Deficits then will follow until the fund becomes depleted in 2033.

The report states that the Social Security Social Security Fairness Act, enacted in January, which repealed the Windfall Elimination and Government Pension Offset provisions of the Social Security Act and increased Social Security benefit levels for some workers, had an impact on the depletion date of SSA’s trust funds.

Romina Boccia, a director of Budget and Entitlement Policy at the libertarian CATO Institute called the repeal of the provisions “a political giveaway masquerading as reform. Instead of tackling Social Security’s structural imbalances, Congress chose to increase benefits for a vocal minority—accelerating trust fund insolvency.”

“It’s a clear sign that populist pressure now outweighs fiscal responsibility and economic sanity on both sides of the aisle,” She said.

Pair that with a Republican reconciliation bill that increases tax giveaways while refusing to rein in even the most dubious Medicaid expansions, and the message is unmistakable: Washington is still in giveaway mode.

AARP CEO Myechia Minter-Jordan said “Congress must act to protect and strengthen the Social Security that Americans have earned and paid into throughout their working lives.” “More than 69 million Americans rely on Social Security today and as America’s population ages, the stability of this vital program only becomes more important.”

Social Security benefits were last reformed roughly 40 years ago, when the federal government raised the eligibility age for the program from 65 to 67. The eligibility age has never changed for Medicare, with people eligible for the medical coverage when they turn 65.

Nancy Altman, president of Social Security Works, an advocacy group for the popular public benefit program said in a statement that “there are two options for action: Bringing more money into Social Security, or reducing benefits. Any politician who doesn’t support increasing Social Security’s revenue is, by default, supporting benefit cuts.”

Congressional Budget Office reporting has stated that the biggest drivers of debt rising in relation to GDP are increasing interest costs and spending for Medicare and Social Security. An aging population drives those numbers.

Several legislative proposals have been put forward to address Social Security’s impending insolvency.

Hussein writes for the Associated Press. AP reporters Amanda Seitz and Tom Murphy in Indianapolis contributed to this report.

The United States Department of Justice (DOJ) is carrying out a criminal investigation into UnitedHealth Group for possible Medicare fraud.

The Wall Street Journal (WSJ) first broke the story on Wednesday.

UnitedHealth said it had not been notified by the DOJ about the “supposed criminal investigation reported”, and the company stood by “the integrity of our Medicare Advantage program”.

The DOJ’s healthcare-fraud unit is overseeing the criminal investigation, which focuses on the company’s Medicare Advantage business practices, WSJ reported, citing people familiar with the matter.

While the exact nature of the potential criminal allegations against UnitedHealth is unclear, it has been an active probe since at least last summer, the newspaper said.

A DOJ spokesperson declined to comment to the WSJ about the fresh criminal probe. The department did not immediately respond to requests for comments from the Reuters news agency.

Last week, UnitedHealth said in a regular filing that it had been “involved or is currently involved in various governmental investigations, audits and reviews”, without disclosing further details.

The new investigation follows broader scrutiny into the Medicare Advantage programme, in which Medicare-approved plans from a private company supplement regular Medicare for Americans age 65 and older by covering more services that the government-only plans do not, such as dental and vision services.

In February, the WSJ reported a civil fraud investigation into UnitedHealth’s Medicare practices. The company had then said that it was unaware of any new probe.

In the same month, US Senator Chuck Grassley of Iowa launched an inquiry into UnitedHealth’s Medicare billing practices, requesting detailed records of the company’s compliance programme and other related documents.

The DOJ earlier this month filed a lawsuit accusing three of the largest US health insurers of paying hundreds of millions of dollars in kickbacks to brokers in exchange for steering patients into the insurers’ Medicare Advantage plans.

Nearly half of the 65 million people covered by Medicare, the US programme for people aged 65 and older or with disabilities, are enrolled in Medicare Advantage plans run by private insurers.

The insurers are paid a set rate for each patient, but can be paid more if patients have multiple health conditions. Standard Medicare coverage is managed by the government.

Brewing turmoil

The health insurer has been under pressure for months. On Tuesday, UnitedHealth Group’s CEO, Andrew Witty, stepped down unexpectedly, and the company simultaneously suspended its 2025 financial forecast due to rising medical costs, triggering an 18 percent drop in shares to a four-year low.

Stephen Hemsley, who led the company for more than a decade until 2017, is taking back the reins following setbacks including the December murder of Brian Thompson, the CEO of its insurance unit, which catapulted UnitedHealth into the public consciousness.

On Thursday, after the news of the probe broke, UnitedHealth Group shares plunged 18 percent to hit a five-year low.

“The stock is already in the doghouse with investors, and additional uncertainty will only pile on,” James Harlow, senior vice president at Novare Capital Management, which owns shares in UnitedHealth, told the news agency Reuters.

If losses hold, UnitedHealth will be the worst-performing stock on the S&P 500 index in two of the last three days.

The past month’s selloff has wiped out nearly $300bn from UnitedHealth’s market capitalization, or more than half of its value since its shares hit a record high in November.