My girlfriend just retired at age 67 1/2. She hasn't yet enrolled in Medicare Part B because her employer's insurance has covered her fully. As part of her seperation package they will continue to cover her for another 12 months. That means beginning June 2014 she will enroll in Medicare Part B. Due to her seperation package her income in 2013 will be unusually high - about $120K. Her 2012 income was about $95K. Both are going to get her hit with high Part B premiums.Her income in 2014 and beyond will consist of social security and some investment income for a total of around $30K to $35K. Beginning in 2016 she'll have to take RMD which will add close to $20. But her future income will be nowhere near enough to trigger higher Part B premiums.Is there any way she can get Medicare to recognize that her current income in 2014 is much lower than when she was working or is she stuck for a year or more paying higher premiums due to past income.
I had a similar, but different, problem with income. After much research and talking with folks, I decided that there's no way to avoid paying higher Part B premiums if your income during the prior tax year goes beyond the limit. You also have to pay a higher Part D (drug plan) rate. The increase only lasts for one year, assuming your income drops below the limit. I had no idea that Part B was means-tested, but there you have it. By the way, Obama wants to make it much worse, and I think the Repubs by and large agree with him on this point, so watch out. Good luck.
By the way, there is a Medicare section on the web that tells you under what circumstances Medicare will disregard a year with higher income, but what you described (like my situation) doesn't qualify. Anyway, good luck, maybe you'll find a way around it.
I have had this problem too. Taxes due for inherited savings bonds (which had been converted to new bonds that deferred income taxes to heirs) that hit in a stock market crash year forcing me to take profits and pay capital gains. Not planned. But stuck with paying extra for Medicare.Medicare Pt B is optional. So she could consider deferring coverage for the high income year. If she is in good health, she can easily compare the costs of her uninsured medical needs vs the extra premiums required to decide.Otherwise, she does have to pay. Medicare is a bit slow in adjusting payments when your income returns to normal, but when they send you your rate for the coming year, usually in December, if your income is now smaller on your last income tax filing, you can take it to the closest Social Security office and they will make the adjustment. (Don't wait on the phone for an appointment. Drive to the closest office, take a number and wait.)
Thanks, sounds like she'll be stuck for a couple years. Good to know the appeal for adjustment can be done at the local SS office when the time comes.
Medicare just takes into account your income as of January 31. But they are a couple years behind for some reason. If you have a big enough 401K or IRA, the double premiums hit when you start taking RMDs if the distributions are large enough to raise your income. Don't know what happens with those who have ROTH IRAs.Birgit
Medicare just takes into account your income as of January 31. But they are a couple years behind for some reason. The reason is that they get the income info from tax returns.Don't know what happens with those who have ROTH IRAs.Tax-free Roth distributions don't affect your AGI, thus they don't affect Medicare Part B premiums. Yet.PhilRule Your Retirement Home Fool
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