By Mary Jo Heins
ONE: You Pay More for Medicare Parts B & D if you Have a Higher Income
If you google “Medicare premium”, you’ll most often see $144.60 sited as the monthly premium for Part B. However, it could be higher due to IRMAA – Income Related Monthly Adjustment Amount. Here are the highlights:
If your Adjusted Gross Income (line 7b on the first page of your 1040) is over 87k as a single taxpayer or 174k for joint tax filers, you will pay more than the base Part B premium of $144.60/month and have an additional assessment for Part D (Rx plan).
There is a 2 year “look back” on your income.
To determine your 2020 Medicare premiums, they use your 2018 tax return.
Come November of 2019, you will receive a notice of your 2021 Medicare premiums based on your 2019 tax return.
Part B Premiums: https://www.medicare.gov/your-medicare-costs/part-b-costs
At the high end, Medicare Part B runs $491.60 per month. This could be a significant Gotcha in your retirement budgeting.
TWO: So You Checked the Box to have Your Rx Premium Taken out of Your Social Security Check Because It’s Easier…
You have a stand alone Part D prescription drug plan with XYZ Insurance Company. One of the options for paying the premium is to have it deducted from your Social Security check. You checked that box.
So instead of YOU ---> XYZ Insurance Company
You now have YOU ---> Social Security ----> XYZ Insurance Company
Really? You just added another entity into the equation and gave away your control!
This Gotcha came home to nest in 2019 when Social Security failed to remit premiums to insurance companies for Rx and Medicare Advantage plans. https://www.aarp.org/health/medicare-insurance/info-2019/medicare-social-security-error.html
Remitting the premium yourself is also advantageous if/when you want to change Rx plans. You don’t have to worry about Social Security messing up the move from one insurer to another.
Never have premiums deducted from your Social Security check.
Always retain control and remit the premium yourself, preferably through an automated, recurring method such as the EFT option on the application or through your bank’s bill paying mechanism.
Mary Jo Heins - http://medicareinsurancedenver.com/