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Investing/Strategies / Retirement Investing
|Subject: Re: Higher Medicare premiums for Top 25%||Date: 4/14/2013 1:38 PM|
|Author: JAFO31||Number: 72014 of 74001|
TMFMurph: "I and my employers paid in over $65,000 to Medicare since 1966. If one calculates the time value of that money until today, I could have purchased private insurance superior to Medicare at age 65...and still had plenty to give to numerous charities."
Why do you assume that your employer would have paid the Medicare tax amount to you?
I have never located a separate statement of the Medicare tax rate before 1991, when the cap in earnings taxed for Medicate was raised above the earnings amount taxes for FICA. From 1966 through 1990, there was one combined tax rate and a single earned income cap. For 1991 through 1993, there was a separate earned income cap. Commencing with 1994 the earned income cap for Medicare has been unlimited.
In addiiton, I do not think that it is reasonable to project the 1.45% Medicare tax rate back to 1966 given that overal combined FICA and Medicare Rate was 4.2% in 1966 (on the first $6,600 of earned income) and did not reach the current 7.65% until 1990.
I am curious has to how you calculated "your" total payments to Medicare.
1.45%/7.65% is 19.95%; call it 20% to make the math easy for me.
Maximum combined FICA AND MEDICARE tax for 1966 was 277.20.
20% of that amount is $55.44
$55.44 compounded at 7% for 40 years is $830.18, which I doubt (WAG) would have paid one month of the FMV price of a policy to insure you at age 65.
Maximum amount of FICA AND MEDICARE tax for 1990 was $3,924.45
20% of that amount is $784.90.
$784.90 compounded at 7% for for 16 years is $2,317.15, which is probably not more than two months of the FMV price (WAG) of a policy to insure you at age 65.
SWAG, the Medicare payments for 25 years from 1966 through 1990 would perhaps purchase maybe 40 months of FMV insurance. Call it 48 months, or 2 year of insurance for you and your spouse.
Now perhaps once the Medicare income limit was raised, or the cap eliminated entirely, you had a big earned income and paid huge amounts of taxes, but compounding since 1991 (higher cap) or since 1994 (uncapped) is a considerably shorter compounding period then since 1966.
And I wonder how much the FMV cost of a policy would be increased for a 65 year olf as they age each year?
I am not nearly as sanguine that you could have purchased a policy superior to Medicare for the balance of your life (and yoru spouse's life) and still had plenty to give to numerous charities.
I also note that any giving to charity prior to your death would be decreasing the amount available to compound to support the policy costs.
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