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I just heard from SS that my Medicare Part B premium for next year will be $146.90, as opposed to $104.90. This is due to the fact that I exceeded the $170K MAGI by $400 on my 2011 joing tax return. The reason was my wife inherited an IRA from her Dad, but since it was only $50K, we decided to just take the distribution so we wouldn't have to do RMDs for it each year. The problem is that the amount upped us from around $120K to $170K+$500 in AGI, which has now resulted in me paying $504 more for Medicare Part B. The only good news is that it should drop back down the the minimum level once the 2012 tax year is passed along by the IRS to the SS Administration. For now, though, I gain $400 only to lose $504.
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It sounds as if you would have been better off to have contributed say $500 to a charity of your choice last year.

Did your tax adviser do a good job for you?

Of course when you made the decision to take the distribution, did you adviser consider all aspects? You probably could have spread distributions over as many as five years to avoid these problems.

I know, many of us seem to find out this stuff the hard way. The rules are so complex. And there are many aspects to it all.

And by the way, they talk about "means testing" for medicare and then you find out you get penalized by quite a bit already if you have a high income year. What is this means testing stuff all about? News reports seem never to mention the penalties already in place.
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Well, you are RICH, so you deserve to be punished!



Seattle Pioneer


Expect to see lots more methods to means test benefits in different ways, and there are plenty already.



Seattle Pioneer
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<<And by the way, they talk about "means testing" for medicare and then you find out you get penalized by quite a bit already if you have a high income year. What is this means testing stuff all about? News reports seem never to mention the penalties already in place.>>


It's all about preventing a hugely underfunded program from failing.

The WWII generation got a sweet deal from Medicare and Social Security, but those days are long gone.



Seattle Pioneer
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Well, you are RICH, so you deserve to be punished!

No, I was STUPID because I didn't ask my tax person about it. It never crossed my mind that I would screw up my Medicare premiums. It's my fault, and I guess I deserve it. I'm really pissed about it because I wanted to stay as low as possible in case the politicians further means test, only start with the highest premium a person has ever paid. My dumb, stupid self is the only person I have to blame.
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The WWII generation got a sweet deal from Medicare and Social Security, but those days are long gone.

My wife and I were talking about something similar just last night. Most folks who go on Medicare have never had to pay much of their health insurance over their adult lives, having received it as a tax-free benefit from their employer, so they are very surprised at how much Medicare actually costs after you throw in drug and medigap coverage. We've always paid for our health coverage via private-pay policies with Blue Cross, since we were both self-employed. Anyway, even at higher preminum levels, Medicare is still a fraction of what we used to pay. My premiums for last year with BC were $10K, with a $2.5 dedutible and a $2.5K co-insurance, plus co-pays. I spent over $17K last year just on me, what with my heart issues, and my wife spent another about $11K...for a grand total of about $28K. So, Medicare is nothing compared to that. Unfortunately, my wife still has a couple more years of BC to go, so her premiums and overall health costs will remain very high. I agree that the days of the truly sweet deal with Medicare and SS are gone, but I doubt it will cost more than BC, at least for the near term.
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If I spent $28,000 on my health care in one year, I wouldn't think $504 the next year was any kind of bummer, but rather a huge relief. But I guess handing $504 over to our government bothers you more than handing $28,000 over to businesses. I occasionally find the conservative view hard to understand, and this makes it more clear, so thanks. Also for the heads-up on tax implications of inheritance in case we ever receive one.
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If I spent $28,000 on my health care in one year, I wouldn't think $504 the next year was any kind of bummer, but rather a huge relief. But I guess handing $504 over to our government bothers you more than handing $28,000 over to businesses. I occasionally find the conservative view hard to understand, and this makes it more clear, so thanks. Also for the heads-up on tax implications of inheritance in case we ever receive one.

Golly, why does everything have to be political. You forget one thing: When I was paying the huge premiums, I had earned income. I'm retired now. I have SS and whatever I choose to take from my portfolio. There's a big difference.
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I guess handing $504 over to our government bothers you more than handing $28,000 over to businesses. I occasionally find the conservative view hard to understand,

You must have a lot of trouble understanding Warren Buffet, then. He's handing his tens of billions over to private organizations to avoid paying taxes to the government because he thinks private organizations run by well-paid executives will do more good with his money than the government.

--fleg
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Of course when you made the decision to take the distribution, did you adviser consider all aspects? You probably could have spread distributions over as many as five years to avoid these problems.

Actually, a non-spouse IRA beneficiary can usuallly spread the payments over the beneficiary's lifetime.

I remember doing my parents' taxes for the year my father had to spend 78 days in a nursing home. Without speaking to anyone about it they'd cashed out his IRA, the result being that 85% of their SS benefit was taxable and, just to pour salt in the wound, an estimated tax penalty.

In the ensuing years things have gotten more complicated with the tiered Medicare B premiums and will get worse next year with the already in place additional taxes on incomes above $250,000 for married filers and $200,000 for others.

This has definitely gotten to be a "measure twice, cut once" operation. Always feel free to stop by the Tax Strategies board when you're contemplating something out of the ordinary. Lots of good people monitor that board and can point out potential problems and possibly alternatives.

Phil
Rule Your Retirement Home Fool
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Rus one option, if the letter has not changed from the 2008 version, is to call the Medicare folks. They even provided me the phone number. Under the rules of the game if you can show this event is a one time deal, you get a chance to change/avoid the increase.

See this:
http://www.socialsecurity.gov/pubs/10536.html#a0=4

Check out the Question "What is my income has gone down?" In 2012 your income did go down, if I understand your post.

My wife also had a one time event. When I asked, they agreed and lowered my Part-B premium.

Gordon
Atltanta
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<< I agree that the days of the truly sweet deal with Medicare and SS are gone, but I doubt it will cost more than BC, at least for the near term.>>


That is true. At age 62 my individual health insurance is $1271/month.

I'm expecting another rate increase any time.



Seattle Pioneer
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At age 62 my individual health insurance is $1271/month.

Has Washington decided yet what it's going to do about the marketplace exchanges under Obamacare? I believe those provisions go into effect in 2014, so there should be some sort of shopping mechanism available to you before you're eligible for Medicare, albeit for just a year or two. Whether that might actually save you any money is a different question, of course.

Phil
Rule Your Retirement Home Fool
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At age 62 my individual health insurance is $1271/month.

Just before I got on Medicare this month, insurance for both of us (spouse aged 64) was $1177. I hope you've got really small copays and deductibles for what you're paying.

--fleg
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Rus one option, if the letter has not changed from the 2008 version, is to call the Medicare folks. They even provided me the phone number. Under the rules of the game if you can show this event is a one time deal, you get a chance to change/avoid the increase.

Gordon, thanks for the info. I already checked out the info on the Medicare site, and what happend to us is not one of the listed issue. The letter I got today is even more specific, and it states that the listed reasons are the only reasons that they will consider. Should I bother calling them anyway? Just wondering what to do.
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Just before I got on Medicare this month, insurance for both of us (spouse aged 64) was $1177. I hope you've got really small copays and deductibles for what you're paying.

It's amazing to me how different things are from state to state. In NC, my wife and I each pay about $10K in basic premiums to Blue Cross, and we each have a $2.5K deductible and a $2K co-insurance. With my current heart issues, I covered the deductible and co-insurance within the first few months of the year, then I had co-pays for drugs and office visits. My wife had a good year, so she only paid her base premium plus some drug and office visit co-pays. Bottom line: Regardless of the Part B premiums, I'm happy as a clam about being on Medicare, so long as they continue to cover treatment for my heart issues, which could include a transplant at some point in time. If they exclude these types of expensive procedures, then I hope they at least allow private insurance to fill in the gap. As it is, Medigap only pays if the underlying procedure is an authorized Medicare procedure. Times are a changing, so I guess we'll all have to learn on the fly.
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Rus these people have the authority to change things. The phone call is free. If somebody takes pity at the death of your deal mother in law, they know what to put on forms. In these situations I play dumb and sometimes it helps - not that it is hard for me to play ignorant of tax rules.

Gordon
Atlanta
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The WWII generation got a sweet deal from Medicare and Social Security, but those days are long gone.


How so? I was having a conversation with someone who lives in my apartment building and he had nothing but good things to say about Medicare which he was eligible for when he turned 65.
My husband and I met with a "medicare consultant" who is in her 70's and she advised us to get the basic medicare which costs about $100 a month and then to pay as you go. She said this works well for her. Of course she is slim and energetic and in reasonable good health.
As far as SS is concerned, a good portion of the population is retiring on social security alone which is pretty scary when you think about it.
Would like to hear your thoughts on what you know about Medicare and social security as I will be looking at both next year.
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I think the plans vary a bit from state to state. Medicare gives you a booklet every year that summarizes the standardized Medicare supplemental plans. You then get quotes for the plans from insurance companies.

Plan F is the most complete plan. It covers everything with no additional payments. It has the highest premiums. There are also less costly plans that give you a copay or deductible.

AARP has group meetings in signup season where their salesman explains their plans and answers questions. You can also have a salesman come to your home.

Humana offer free gym membership with their plans in this area.

Medicare advantage is the low cost plan. Premiums are zero after your basic medicare cost. But they have co-pays on most services, and you can only go to some hospitals. The best hospitals in my area are not included. So this plan is inexpensive for minor situations, but if a major medical event comes up, you could be in for thousands in copays.

Part D drug coverage is available, but a bit complicated because each plan has its own tiered drug list. Humana/Walmart has low costs. AARP advertizes, but many common generics are tier 2 making them more expensive. There are quite a few to choose from, but much depends on what meds you want covered.
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b1948:"The WWII generation got a sweet deal from Medicare and Social Security, but those days are long gone."

They also got a sweet deal in that at least half of them got company, state, or federal pensions, and lots got Veterans benefits as well.

That was the deal back then.

BUt don't whine too much. Food used to consume much more of the family budget. Most WW2 folks could not afford two cars and each car ate up a lot more in maintenance per year. Two tune ups a year. A car lasted 60K miles and 100K was almost unheard of. Tires lasted 20K miles. You needed a new muffler every 18 months. You had to change the 'points' in the car.

TV was black and white with dozens of tubes in them - and they burned out regularly costing you to get them repaired. Then color TV came along and it cost a lot of money and had lots of tubes.

If you had heart problems, you probably were 'just managed'. There was no bypass surgery......that came later..maybe you lasted long enough to benefit from it and all the medicines developed.

You had a good chance of getting polio...the vaccine didn't arrive until the mid 50s.....even the early baby boomers had risk of getting it and dying or the after effects for life.

Microwaves? Not until the 70s....cable TV...not until the 80s and 90s for most.....

Internet? Gimme a break..not until the 90s....

You realize the average 'poor family' has better health care than a millionaire 100 years ago? Likely lives longer, eats a lot better, doesn't need false teeth at 50........

If you've been alive for the past 40 years, you've had it a lot better than 99.9999% of all people who have ever lived....
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B1948: " I was having a conversation with someone who lives in my apartment building and he had nothing but good things to say about Medicare which he was eligible for when he turned 65."


Yeah..it's a deal....you pay 25% of the cost of it..and the taxpayers pay the rest.

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B1948:"My husband and I met with a "medicare consultant" who is in her 70's and she advised us to get the basic medicare which costs about $100 a month and then to pay as you go."


That works unless you need to go to a hospital which part B provides. If you don't have it....and you suddenly are in an accident....or you develop an immediate need for hospitalization like a sudden illness, food poisoning, a slip and fall, or whatever...you are up a creek with maybe tens of thousands in bills YOU GOT TO PAY....or they come after you.

Unless you are going to have to live on dog food, peanut butter and jelly sandwiches, and food stamps....I would not go without Part B. It's another 100 bucks a month.

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B1948:" She said this works well for her. Of course she is slim and energetic and in reasonable good health."

Until she slips on an icy sidewalk, a tree falls on her, she gets food poisoning, breaks a bone, her doctor tells her she needs immediate surgery....

Being in good health is not a guarantee you won't need hospitalization tomorrow ....

and you can't get Medicare Part B for the rest of the year if you don't sign up for it.

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b1948"As far as SS is concerned, a good portion of the population is retiring on social security alone which is pretty scary when you think about it."

Yes it is, but whose fault is that? They spent, spend, spend, spend and never saved for retirement.

Are we supposed to take from those who saved and 'redistribute' it to those who didn't? Or strip all benefits from those who saved....didn't spend all they had along the way........so the welfare weenies who spent and spent and spent can DEMAND that they need to be 'taken care of' by 'the rest of us'?

Depending where you live, you can manage to get by on SS. You might live in a trailer park or inexpensive place in FL, where at least 1/3rd of all retirees (millions of them) live only on SS......

It is scary since most of them 'think' they are 'entitled' to much better and will demand it.....

t
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"Part D drug coverage is available, but a bit complicated because each plan has its own tiered drug list. Humana/Walmart has low costs. AARP advertizes, but many common generics are tier 2 making them more expensive. There are quite a few to choose from, but much depends on what meds you want covered. "


I signed up for the Humana/Walmart plan. 10 bucks a month or so. I only use generics and they cost me only 8 bucks each under the plan...or 10 bucks even if i didn't have a plan.

IF you don't sign up for it, it goes up like 2% a month penalty forever for every month you don't have it to sign up later.

So if you develop an expensive ailment.....you are screwed....if you don't get it from age 65 on. .you can always change to a new plan at the end of the year if you want coverage of more expensive stuff with less co-pays..but higher monthly.

I got the el cheapo plan...just so the rate isn't dinged....and hopefully I'll never even have to think about changing it with more meds...just take one generic now......

You can list your meds and you'll get good answers.....


t.
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To all who responded, thank you! We will of course be taking Part A and Part B. We live in NY but will be moving to MA in about 3-4 months. I checked out their plans and most of them have 4 stars. I will look into the drug coverage also. I have just recently had a medical emergency and if I had not had really good insurance from my husband's job, I would have had to spend thousands for the drugs that I was taking.
This could be a chronic condition so I will check out Medicare and add the drugs that I am currently taking to see how much it would cost for those drugs.
Another one of my neighbors gets his drugs from a Canadian Drug Company and he said it's cheaper that way.
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Another one of my neighbors gets his drugs from a Canadian Drug Company and he said it's cheaper that way.

Personally, I would not purchase drugs from a foreign country, even Canada. You just never know what you're getting, particularly if you order over the internet.
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Personally, I would not purchase drugs from a foreign country, even Canada. You just never know what you're getting, particularly if you order over the internet.

Didn't alot of people die recently from drugs that were manufactured in Massachusetts?
Also, Canada doesn't seem to me to be a foreign country even though you are technically right on that.
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Some folks in the US got bogus drugs ordered through a online Med place in Canada...which got duped into bogus drugs from india.


less controls on the chain of possession of the drugs and more chances for bogus drugs to enter the system.

I think it was Avastin..a cancer drug......


t.
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