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Author: thomasr0 One star, 50 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121327  
Subject: Medicare Part B Means Testing Date: 1/6/2011 2:32 AM
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AARP recently published a summary of Medicare Part B Premiums that Baby Boomers will begin paying beginning in 2011. There will be 3 "standard" premiums paid in 2011. Those already on Medicare and paying the $96.40 per month since 2009 will continue paying that monthly fee because those fees are frozen due to no CPI increase in 2009 & 2010. Those who started paying Part B in 2010 will pay $110.50 per month because there was a second year of no CPI increases in 2010. However, baby boomers starting to pay Medicare Part B premiums in 2011 will pay $115.40 per month for Medicare Part B. My twin brother & sister were born in November, 1944 and so they are paying Part B premiums of $96.40. However since I was born in August 1946, I will be paying 20% higher monthly premiums of $115.40 in 2011.

But there is another change apparently happening in 2011 that institutes "means testing" in determining Medicare Part B monthly premiums. If my taxable income is more than $85,000 as a single taxpayer or $170,000 filing jointly, I begin paying even higher Part B premiums of $161.50/mo up to a maximum of $369.10/mo. There is a means-testing surcharge for Part D drug coverage too that likewise increases between $12 and $69.10 per month beyond the $85,000 (single) & $170,000 (joint) taxable income limits.

My single adjusted gross income (line 37) is in the high $70's. I am hoping the "taxable income" Medicare is using for its "means testing" is the (line 43) taxable income level which for me is in the high $60's. I would like to know for sure which one Medicare is using if I am going to make any large capital gains that push me over the $85K means-testing, taxable-income limit. Has anyone else been looking into this issue? I am assuming that the $85/170K "taxable income" number would not include muni-bond interest. Will Medicare be adjusting the Part B & Part D monthly premiums each year? If your income varies up and down, year-to-year through these means-testing limits and you are paying Medicare premiums based on the previous year's "taxable" income, this could get complicated.

Tom
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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 111883 of 121327
Subject: Re: Medicare Part B Means Testing Date: 1/6/2011 6:13 AM
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But there is another change apparently happening in 2011 that institutes "means testing" in determining Medicare Part B monthly premiums.

This has been in effect for several years now. Here's a link to an SSA fact sheet:

http://www.socialsecurity.gov/pubs/10536.html

Phil
Rule Your Retirement Home Fool

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Author: billjam Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 111885 of 121327
Subject: Re: Medicare Part B Means Testing Date: 1/6/2011 9:27 AM
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As Phil said, higher premium based on income is not new.

One thing that is still waiting to get us is the catchup in Part B premiums when SS COLA finally happens, maybe in 2012. By then I expect the Part B premium will be $120 or higher. Assuming a $25 increase in SS benefits, I expect Part B premium will jump $120 and wipe out the increase for those who have been paying the old $96 rate. I can hear the screaming already. Since I'm paying $110 already at least I'll have a few dollars extra in my check.

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Author: Crosenfield Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 111886 of 121327
Subject: Re: Medicare Part B Means Testing Date: 1/6/2011 3:03 PM
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When I was working, DH paid the higher Medicare B premium. When I retired Nov. 2008, I also paid it, but was able to get the premium back to the $96.40 by presenting my letter of retirement that stated what my pensiom is. Retirement is a "life-changing event". In calculatin my income in retirement they did add in my tax-free bond income. Sorry.

Best wishes, Chris

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Author: thomasr0 One star, 50 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 111887 of 121327
Subject: Re: Medicare Part B Means Testing Date: 1/6/2011 7:41 PM
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Thank you all fro the responses; especially Phil for the link.

I see that this began in 2007. It will also begin affecting my father in 2012 when he files his 2011 tax return. Mom passed away this past July; so dad will no longer be filing a joint return but as a single person for the 2011 and his modified adjusted gross income (MAGI)is above $85K. It seems that this fixed $85K starting point will include more and more people than the 5% of Medicare recipients as time goes by. Not unlike the fixed AMT limit does or could do.

If I start taking SS when I start Medicare in 2011 at age 65, I would immediately begin exceeding the $85K annual MAGI limit. One more item for me to to factor in when considering whether or not I should delay taking SS till age 66 or 70.

Tom

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Author: Donna405 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 111888 of 121327
Subject: Re: Medicare Part B Means Testing Date: 1/6/2011 10:41 PM
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Tom you have me greatly confused. First you state "Those who started paying Part B in 2010 will pay $110.50 per month because there was a second year of no CPI increases in 2010." Then you state: "My twin brother & sister were born in November, 1944 and so they are paying Part B premiums of $96.40."

I, too, was born in November, 1944, and I pay $110.50, since I started paying in 2010.

I believe there is a mistake somewhere regarding your twin siblings' premium for Medicare.

Donna

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Author: lorenzo2 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 111889 of 121327
Subject: Re: Medicare Part B Means Testing Date: 1/7/2011 6:01 AM
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I believe there is a mistake somewhere regarding your twin siblings' premium for Medicare.

Not necessarily. It's kind of complicated. The basic premium for Part B was $96.40 in 2009, $110.50 in 2010, and is $115.40 in 2011.

And there's a twist. There have been no SS COLAs for two years, and there's a provision that Medicare premiums for SS recipients can't increase by more than the SS COLA - so if your Medicare premium is paid from your SS benefit, it's frozen at the current rate. If you don't pay via SS, you get the hike. So while my wife and I were born just a month apart, and started on Part B at pretty much the same time, I'm paying $110.50 (the 2010 rate) and she's now at the 2011 rate of $115.40. That's because my premium is paid through my SS (and thus is frozen at last year's level), while my wife gets the new, higher rate (she doesn't have SS, and pays her premium through withholding from an annuity).

So my guess is that the twins signed up for Part B in late 2009, getting the 2009 rate of $96.40. And their premiums are paid through their SS benefit, and so remain frozen at $96.40. On the other hand, if you signed up in early 2010, you'd be at $110.50. (There's yet another twist relating to high-income individuals, but that doesn't seem to apply here.)

Lorenzo

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Author: lorenzo2 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 111890 of 121327
Subject: Re: Medicare Part B Means Testing Date: 1/7/2011 6:14 AM
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Adding to my own post (I know, bad form!), your Medicare Part B premium isn't based on your birthday, it's based on when you starting taking Part B. So suppose you have two individuals with the same November birthday. One person signs up in Nov 2009 and pays the 2009 premium. The other person waits until January of 2010 and pays the 2010 premium. If there had been a COLA, the first person's premium would have gone up to the 2010 rate. But there wasn't, and the rates remain fixed - one paying $96.40, the other paying $110.50, even though they share a birthday.

And, as noted elsewhere in this thread, eventually there will be a COLA, at which time everyone will go up to the same rate. (Actually, it depends on the size of the COLA, since the Medicare increase is limited to the COLA rate. So with smaller COLAs, it might take a couple of years to get everyone on the same base rate.)

Lorenzo

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Author: thomasr0 One star, 50 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 111892 of 121327
Subject: Re: Medicare Part B Means Testing Date: 1/7/2011 8:06 PM
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In reply, yes the twins both filed for Medicare in 2009 and pay their Part B premiums via their SS. Tom

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Author: Donna405 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 111894 of 121327
Subject: Re: Medicare Part B Means Testing Date: 1/7/2011 10:53 PM
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Ah, gotcha'.

I did not pay my SS premiums from my SS check. When I did start collecting SS about 3 months later, my SS benefit increased by $100.00 per month. So, it was well worth it.

Donna

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