COBRA coverage and Medicare
QMy spouse and I are covered by COBRA offered by my former employer. I will turn 65 late this year, and my spouse early next year. The COBRA coverage will extend through both of our 65th birthdays. Do we still have to sign up for Medicare by age 65, or are we considered to be on a company plan?
A. Generally, COBRA coverage ends at age 65. To avoid lateenrollment penalties, you should enroll in Medicare during your initial enrollment period, which starts three months before your 65th birthday and extends for seven months.
Even if you can continue COBRA coverage beyond age 65, you still need to enroll in Medicare, says Medicare expert Diane Omdahl, president of 65 Incorporated, a Medicare education site.
Medicare enrollment is necessary for any coverage that is not related to current employment, she says. You may be able to continue COBRA coverage for services, such as dental, that Medicare does not cover.
Q. What do you think about defined-maturity bond funds as an easy means to build a bond ladder?
A. Defined-maturity bond funds hold diversified portfolios of bonds that mature in a single year, and they make a final payout to investors in the year of maturity.
Examples include the iShares iBonds exchange-traded funds, with maturity dates ranging from 2019 to 2028; and Fidelity Municipal Income funds, maturing from 2021 through 2025.
A handful of defined-maturity bond funds with staggered maturity dates can be a good alternative to a traditional bond ladder, in part because it's difficult for small investors to diversify properly when buying individual bonds.
These funds now come in municipal, investment-grade corporate, high- yield and even emerging markets flavors, so you can also diversify your ladder across the risk spectrum.
Q. What tax records should I hold on to related to my home?
A. Keep records of your home purchase and any significant home improvements as long as you own your home. Up to $250,000 in homesale profit is excluded from taxes if you're single (or up to $500,000 in profits if you're married filing jointly) and have lived in the house for at least two of the five years before the sale.
Adding the cost of home improvements to your cost basis can help trim any taxable capital gains when you sell.
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