Quote of the Week
“Along with success comes a reputation for wisdom: – Euripides
Last week was another Quad IV week with the major market indexes down over 3% with the Nasdaq being down 3.92%. Our switch to a more conservative allocation has paid off especially in the month of April.
This letter is a little late this week because I wanted to see what the Fed was going to do about raising interest rates. Yesterday (Wednesday) they raised the Fed Funds Rate by 1/2 of one percent. That was expected. What surprised me was that the markets rallied bigtime on the news. I fully expected that the markets would decline on the news. Wrong. But when I looked deeper into Chairman Powell’s press conference, the reason the markets took off was his statement that there wouldn’t be any 3/4% or larger rate increases in the future at further Fed meetings. That is a small consolation but the market took it as a positive.
Today (Thursday) reality set in and the markets are off bigger than Wednesday‘s gain. As I have said in past letters, the Fed raising rates into a declining economy is bad for the stock market. You only need to go back to the fourth quarter of 2018 when the markets were down over 27% into the
Christmas holidays. I am convinced that the Fed is making a big mistake. They are trying to create a “soft landing” for the economy with the economy not going into a recession and that inflation will decline back to their target of 2% per year, We shall see if they can pull it off. The landing deck is starting to look like a postage stamp. Remember, the first quarter of this year has already shown negative growth in the U.S. Gross Domestic Product.
The underlying strength in the markets is dissipating rapidly. We have sold our positions in real estate and silver. We now currently hold positions in bonds, gold, gold miners, utilities, private equity, and the U.S. dollar. We are raising lots of cash just to be safe. Quad IV could possibly last for the rest of this year. Most risk on investments such as the stock market, commodities, and real estate (not homes) are going in the wrong direction.
Given the fact that I have less than three weeks left of working full time at Laurence Lof Financial Advisors, articles concerning retirement have sparked my interest. I have always ignored the topic of Medicare because it simply didn’t apply to me. For the record, it still does not apply for a few more years, but I am beginning to pay attention. The following caught my attention.
Medicare is a federal program that provides health insurance to retired individuals, regardless of their medical condition, and certain younger people with disabilities or end-stage renal disease. Here are some basic facts about Medicare that you should know.
What does Medicare cover?
Medicare coverage consists of two main parts: Medicare Part A (hospital insurance) and Medicare Part B (medical insurance). These parts together are known as Original Medicare. A third part, Medicare Part C (Medicare Advantage), covers all Part A and Part B services, and may provide additional services. A fourth part, Medicare Part D, offers prescription drug coverage that can help you handle the rising costs of prescriptions.
Medicare Part A (hospital insurance)
Generally known as hospital insurance, Part A covers services associated with inpatient hospital care. These are the costs associated with an overnight stay in a hospital, skilled nursing facility, or psychiatric hospital, including charges for the hospital room, meals, and nursing services. Part A also covers hospice care and home health care.
Medicare Part B (medical insurance)
Generally known as medical insurance, Part B covers other medical care. Physician care — whether you received it as an inpatient at a hospital, as an outpatient at a hospital or other health-care facility, or at a doctor’s office — is covered under Part B. Laboratory tests, physical therapy or rehabilitation services, and ambulance service are also covered. Medicare Part B also covers 100% of the cost of many preventative services and an annual wellness visit.
Medicare Part C (Medicare Advantage)
A Medicare Advantage plan is a private health-care plan that contracts with Medicare to provide Part A and Part B benefits. A Medicare Advantage plan covers all of the services that Original Medicare covers except hospice care. Some plans offer extra coverage for expenses not covered by Original Medicare such as vision, hearing, dental, and other health expenses. Most also offer prescription drug (Part D) coverage. Several types of Medicare Advantage plans may be available, including health maintenance organization (HMO) plans, preferred provider organization (PPO) plans, private fee-for-service (PFFS) plans, and special needs plans (SNPs). You can choose to enroll in either Original Medicare or a Medicare Advantage plan. If you enroll in a Medicare Advantage plan, you’ll generally pay a monthly premium for it, in addition to your Part B premium.
Medicare Part D (prescription drug coverage)
All Medicare beneficiaries are eligible to join a Medicare prescription drug plan offered by private companies or insurers that have been approved by Medicare. Although these plans vary in price and benefits, they all cover a broad number of brand name and generic drugs available at local pharmacies or through the mail. Medicare prescription drug coverage is voluntary, but if you decide to join a plan, keep in mind that some plans cover more drugs or offer a wider selection of pharmacies (for a higher premium) than others.
You can get information and help with comparing plans on the Medicare website, medicare.gov, or by calling a Medicare counselor at 1-800-Medicare.
What is not covered by Medicare Parts A and B?
Some medical expenses are not covered by either Part A or B. These expenses include:
- Your Part B premium
- Deductibles, coinsurance, or co-payments that apply
- Most prescription drugs
- Dental care
- Hearing aids
- Eye care
- Custodial care at home or in a nursing home
Medicare Part C may cover some of these expenses, or if you’re enrolled in Original Medicare you can purchase a supplemental Medigap insurance policy that will help cover what Medicare does not.
Are you eligible for Medicare?
Most people age 65 or older who are citizens or permanent residents of the United States are eligible for Medicare Part A (hospital insurance) without paying a monthly premium. You are eligible at age 65 if:
- You receive or are eligible to receive Social Security or Railroad Retirement Board benefits based on your own work record or on someone else’s work record (as a spouse, divorced spouse, widow, widower, divorced widow, divorced widower, or parent), or
- You or your spouse worked long enough in a government job where Medicare taxes were paid
In addition, if you are under age 65, you can get Part A without paying a monthly premium if you have received Social Security or Railroad Retirement Board disability benefits for 24 months, or if you are on kidney dialysis or are a kidney transplant patient.
Even if you’re not eligible for free Part A coverage, you may still be able to purchase it by paying a premium. Call the Social Security Administration (SSA) at (800) 772-1213 for more information.
Although Medicare Part B (medical insurance) is optional, most people sign up for it. If you want to join a Medicare managed care plan or a Medicare private fee-for-service plan, you’ll need to enroll in both Parts A and B. And Medicare Part B is never free — you’ll pay a monthly premium for it, even if you are eligible for premium-free Medicare Part A.
How much does Medicare cost?
Medicare deductible amounts and premiums change annually. Here’s what you’ll pay in 2022 if you’re enrolled in Original Medicare:
|Part A (hospital)||None for most people, but noneligible individuals pay up to $499 per month (if they have 39 or fewer quarters of Medicare-covered employment)||$1,556 per benefit period||$389 a day for the 61st to 90th day each benefit period; $778 a day for the 91st to 150th day for each lifetime reserve day (total of 60 lifetime reserve days); $194.50 a day for the 21st to 100th day each benefit period for skilled nursing facility care|
|Part B (medical)||The standard Part B premium amount is $170.10. However, some people who get Social Security benefits will pay more than this amount. See below for more information.||$233 per year||After satisfying a deductible if one applies, you normally pay 20% of the approved amount for medical expenses (20 to 40% for outpatient mental health services, 20% for hospital charges for outpatient hospital services, nothing for laboratory services)|
Most people pay the standard Part B premium of $170.10. But if your modified adjusted gross income as reported on your federal income tax return from two years ago is above a certain amount, you’ll pay the standard premium plus an extra charge called the Income Related Monthly Adjusted Amount (IRMAA).
To determine if you’re subject to income-related premiums, the SSA uses the most recent federal tax return provided by the IRS. Generally, the tax return you filed in 2021 (based on 2020 income) will be used to determine if you will pay an income-related premium in 2022. You can contact the SSA at (800) 772-1213 if you have new information to report that might change the determination and lower your premium.
The table below shows what you’ll pay if you’re in this group.
|If you file an individual income tax return with income that is:||If you file a joint income tax return with income that is:||If you file an income tax return as married filing separately with income that is:||Monthly premium in 2022:|
|$91,000 or less||$182,000 or less||$91,000 or less||$170.10|
|Above $91,000 up to $114,000||Above $182,000 up to $228,000||N/A||$238.10|
|Above $114,000 up to $142,000||Above $228,000 up to $284,000||N/A||$340.20|
|Above $142,000 up to $170,000||Above $284,000 up to $340,000||N/A||$442.30|
|Above $170,000 and less than $500,000||Above $340,000 and less than $750,000||Above $91,000 and less than $409,000||$544.30|
|$500,000 and above||$750,000 and above||$409,000 and above||$578.30|
Since Original Medicare doesn’t cover every type of medical care, and you’ll have to pay deductibles and coinsurance, you may want to buy a Medicare supplemental insurance (Medigap) policy.
If you’re enrolled in a Medicare Advantage plan, you’ll generally pay one monthly premium for that plan in addition to your Medicare Part B premium. Each Medicare Advantage plan has different premiums and costs for services, and coverage varies, so what you’ll pay depends on the plan you have.
Who administers the Medicare program?
The Centers for Medicare & Medicaid Services (CMS) has overall responsibility for administering the Medicare program and sets standards and policies. The CMS also manages the official government website for Medicare, medicare.gov. But it’s the SSA that processes Medicare applications and answers Medicare eligibility questions.
How do you sign up for Medicare?
You’ll generally be automatically enrolled in Medicare when you turn 65 if you’re already been receiving Social Security or Railroad Retirement Board benefits for at least four months before you turn 65. The SSA will notify you that you’re being enrolled. If you’re not automatically enrolled and are eligible for Medicare at age 65, you have a 7-month initial enrollment period to sign up for Part A and/or Part B.
Although there’s no cost to enroll in Medicare Part A, you’ll pay a premium to enroll in Medicare Part B. If you’ve been automatically enrolled in Part B, you’ll be notified that you have a certain amount of time after your enrollment date to decline coverage. Even if you decide not to enroll in Medicare Part B during the initial enrollment period, you can enroll later during the annual general enrollment period that runs from January 1 to March 31 each year. However, you may pay a slightly higher premium as a result, depending on the circumstances
If you decide to postpone applying for Social Security past your 65th birthday, you can still enroll in Medicare when you turn 65. The SSA suggests that you call (800) 772-1213 three months before you turn 65 to discuss your options. The easiest way to apply for Medicare is online at socialsecurity.gov.
Copyright 2022 Broadridge Investor Communication Solutions, Inc
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These are Larry Lof’s opinions and not necessarily those of Cambridge, are for informational purposes only and should not be construed or acted upon as individualized investment advice. Past performance is not indicative of future results. Due to our compliance review process, delayed dissemination of this commentary occurs.
The S&P 500 index of stocks compiled by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. The Index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. Indices mentioned are unmanaged and cannot be invested into directly.
Technical analysis represents an observation of past performance and trend, and past performance and trend are no guarantee of future performance, price, or trend. The price movements within capital markets cannot be guaranteed and always remain uncertain. The allocation discussed herein is not designed based on the individual needs of any one specific client or investor. In other words, it is not a customized strategy designed on the specific financial circumstances of the client. Please consult an advisor to discuss your individual situation before making any investments decision. Investing in securities involves risk of loss. Further, depending on the different types of investments, there may be varying degrees of risk including loss of original principal.