You turn 65, life gets busy, and the Medicare enrollment window slips past. Unfortunately, that mistake does not disappear when you finally sign up. Part B adds a permanent 10% surcharge for every full 12-month period you delayed enrollment. With the standard 2026 Part B premium at $202.90 per month, up from $185.00 in 2025, the base cost is already moving higher.
For retirees facing that penalty, the goal is straightforward: generate enough reliable income to offset the higher monthly premium without creating unnecessary tax problems elsewhere. Invesco S&P 500 High Dividend Low Volatility ETF (NYSEARCA:SPHD), Fidelity High Dividend ETF (NYSEARCA:FDVV), and iShares National Muni Bond ETF (NYSEARCA:MUB) each approach that problem differently.
The Penalty You Cannot Outrun
The penalty can be brutal. For example. Delay Part B for two full years, and your premium can be 20% higher. That additional cost generally follows you for as long as you have Part B.
Higher-income retirees can also face IRMAA surcharges. A single filer with modified adjusted gross income above $109,000, or $218,000 for married couples filing jointly, can see the monthly cost rise even further. That makes both the amount and tax treatment of retirement income important.
SPHD: A Monthly Paycheck That Grew Into the Bill
SPHD screens the S&P 500 for the highest yielders with the lowest 12-month volatility, then pays you monthly. That cadence matters when Medicare pulls its premium every month.
The fund has made 166 consecutive monthly distributions, and payments have climbed steadily. SPHD paid $0.21473 per share in July 2026, compared with $0.15681 in July 2025. Trailing 12-month distributions total $2.38571 per share, while the current distribution rate annualizes to roughly $2.58 per share based on the latest payment.
SPHD has also delivered respectable performance without relying heavily on the mega-cap technology stocks driving much of the broader market. The ETF is up 12.61% year to date and 14.04% over the past year, while its 10-year total return stands at 101.27%. Its heavier exposure to utilities, consumer staples, and other higher-yielding sectors gives retirees a different risk profile than a standard S&P 500 fund.
FDVV: Dividend Quality With a Growth Engine
FDVV takes a different approach. The fund provides dividend exposure while maintaining meaningful positions in some of the market’s largest growth companies. NVIDIA accounts for 6.84% of the portfolio, followed by Apple at 5.69%, Microsoft at 4.49%, and Broadcom at 3.49%. Those positions are balanced by dividend-paying companies across financials, utilities, and other sectors.
That growth exposure matters because Medicare premiums are unlikely to remain at today’s level indefinitely. Inflation continues to push retirement expenses higher, and a projected 2027 Social Security COLA near 3.1% reinforces the need for income that can grow over time.
FDVV has done a good job balancing those objectives. The fund is up 14.5% year to date and 20.59% over the past year, with a 10-year total return of 260.32%. For retirees with a longer time horizon, that additional capital appreciation can help offset rising healthcare costs that a higher current yield alone may not cover.
MUB: Tax-Exempt Income That Protects Your IRMAA Line
MUB fills the fixed-income role. The ETF holds primarily investment-grade municipal bonds and pays monthly distributions that are generally exempt from federal income tax. It has paid $3.413726 per share over the trailing 12 months, while its latest distribution annualizes to approximately $3.44 per share.
The 0.05% expense ratio is another advantage, particularly for a fund whose primary purpose is income and capital preservation rather than aggressive growth. MUB is up 0.8% year to date and 5.05% over the past year.
There is an important Medicare distinction, however. Tax-exempt municipal bond interest is still included when calculating modified adjusted gross income for IRMAA. MUB can therefore reduce your federal income-tax burden, but it does not allow you to avoid an IRMAA threshold simply because its distributions are federally tax-exempt. That distinction matters when deciding how much municipal-bond exposure belongs in a retirement portfolio.
The Trade-Off
None of these ETFs eliminates the cost of a late Medicare enrollment penalty. Instead, each addresses a different part of the problem. SPHD provides monthly dividend income with a more defensive equity profile. FDVV adds greater long-term growth potential, while MUB provides relatively stable, federally tax-exempt bond income.
There are trade-offs. SPHD can still decline sharply during an equity bear market. FDVV’s technology exposure creates more sensitivity to a mega-cap correction. MUB remains exposed to interest-rate risk, as its weak five-year performance demonstrates.
However, owned together, the three funds provide a reasonable mix of current income, long-term growth, and fixed-income diversification. A permanent Medicare surcharge raises your retirement expenses, but it does not have to derail the rest of your income plan.
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