A STEEP PRICE FOR MEDICARE recommended by Paul Ferraresi

Planning may help high income seniors avoid paying up to four times the going rate for Part B and Part D coverage.

In 2017, the standard premium for Medicare Part B is $134 a month. Most enrollees pay for Part B via reductions in their Social Security benefits, and the overall average monthly fee is $109.

Yet some senior pay almost quadruple that much – $428.60 a month ($957.20 for married couples) – for the exact same medical insurance.

Seniors who pay more for Part B also pay Medicare as much as $76 per month extra for prescription drug coverage, known as Part D.

This is the IRMAA – the income related monthly adjustment amount. If people are on Medicare, and their tax return shows high income, Medicare adds the IRMAA amount to their monthly premium.

Modified adjusted gross income over $85,000 ($170,000 on joint returns) brings IRMAA into play, with amounts increasing as MAGI hits certain thresholds. (Here, MAGI includes tax-exempt interest income.)

THE TWO-YEAR LAG

The Medicare trustees’ 2016 report projects that Part B monthly premiums, which have risen from a maximum of $161.40 in 2007 to $428.60 today, will continue to climb, reaching as much as $564 in 2025. Thus, Medicare Part B is likely to become more of a financial planning issue.

One key is to realize that there is a two-year lag between the income observed by Medicare and the resulting payments. Money that flows into a Medicare enrollee’s pocket in 2017 will be reported on a tax return filed in 2018, which determines Part B premiums due in 2019.

When seniors retire, they may pay the higher premium for two more years until that income history drops off their records. In order to reduce Part B premiums sooner than two years, you should appeal your higher IRMAA premium immediately upon retirement, if your income has dropped dramatically. One of the things that could qualify Medicare recipients for an IRMAA reduction is that they have stopped working.

You will qualify for the appeal under the life-changing event of ‘work stoppage.’ You can call Social Security or visit in person to present evidence of retirement to have your Medicare premiums recalculated.

Watch my new FREE webinar, How To Double Your Social Security Benefits While Reducing Your Taxes By 80% In Retirement, take advantage of the free offer at the end.

Check out our other blog, the Wealthy Future Blog, to learn all the principles of Missed Fortune, as outlined by best-selling author, Doug Andrew. The articles, audio and video programs will provide information which you will find both enlightening and empowering!

You can also visit our website at Founders Group to learn more about how we can help you optimize your assets or provide you with any financial advice.

Leave a Comment

If you like what you're reading here, feel free to comment!

Name: (Required)

E-mail: (Required)

Website:

Comment: