#medicare

Medicare Part B Premium

If you have just recently enrolled in Medicare, you may be wondering how your premiums are calculated. Although Medicare eligibility is not income-based, the income you report on your tax return does play a role on your monthly premiums. As with everything else when it comes to IRS and taxes, things can get complicated and confusing!

As a refresher, Part A (hospital) generally has no premium, but Part B (doctors) has a base premium. To put it simply, the standard Part B premium amount for 2021 is $148.50. Most people end up paying that amount. However, if your modified adjusted gross income1 (MAGI) as reported on your IRS tax return from 2 years ago is above certain thresholds, listed in the below table, the monthly premiums will end up higher.

Keep in mind that if you are already receiving social security benefits, your Part B premium is automatically deducted from your benefit payments.

The rules are not set-in-stone though, so Social Security is able to adjust your premiums if you have experienced a “life-changing event” that caused a significant income reduction. For example, if your marital status changed, or you lost your job or income-producing business or property. You would need to file Form SSA-44 to request a reduction in your income-related monthly adjustment amount.

If you want to learn more, check out our Medicare webinar we recorded last year. If you have any questions or need clarification regarding your Medicare or Social Security benefits, feel free to reach out to us.

  1. Income based on Modified Adjusted Gross Income (MAGI) includes tax-exempt interest income.

Disclosure: BFSG does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to BFSG’s web site or blog or incorporated herein and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please see important disclosure information here.

How President Biden Could Impact Social Security and Medicare

It is no secret that both Social Security and Medicare are underfunded, and changes are needed. This is a common concern that we hear from many clients approaching retirement. These programs are vital to retirees and it is clear that President Biden has some clear plans to help these programs remain solvent and also provide some benefit expansions.

Social Security

During his campaign, President Biden had a clear plan for Social Security. Below are some of the highlights:

  • Add a new tier for payroll tax contributions for incomes over $400,000. The current tax is 6.2% that is paid by both the employee and employer for a total of 12.4% on income up to $142,800.
  • Offer credits for Social Security to caregivers for time spent out of the workforce. This is designed to specifically help women and deal with the current gender gap in benefits.
  • Change the Cost-of-Living Adjustment (COLA) to be linked to CPI-E. This should increase the annual COLA that individuals would receive on their benefits.
  • Currently, the surviving spouse gets the higher of the two Social Security benefits, which can cause a large decrease in the benefits they receive going forward. To help survivors there is a proposal to have the surviving spouse receive 75% of the combined benefits, so long as the new payment does not exceed the benefit received by a two-earner couple with average career earnings.
  • Phase in a bonus equal to 5% of the average benefit to beneficiaries who had collected payments for 20 years.

Medicare

There are many parts to Medicare. The focus on the plan changes is on Part A (covers hospitalizations) as it is the most underfunded and does not have the same revenue streams as the other parts of Medicare.

  • Decrease the age for Medicare to age 60 or lower to expand the benefits.
  • Change Part A funding to general revenue so it would be funded like the other parts of Medicare.

Disclosure: BFSG does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to BFSG’s web site or blog or incorporated herein and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please see important disclosure information here.

Tips for Medicare Open Enrollment

As of October 15th Medicare beneficiaries can make changes to their Medicare benefits. This is the time to review your current benefits and make any changes. If you are unhappy with your current plan or perhaps your health has changed during the past year, now is the time to make any necessary changes like switching Medicare health and prescription drug plans. Each year, Medicare plan costs and coverage typically change so if for no other reason it is important to review your benefits to understand any changes to your current plans.

From October 15 – December 17 you can:

  • Join a Medicare prescription drug plan (Part D);
  • Switch from one Part D plan to another Part D plan;
  • Drop your Part D coverage altogether;
  • Switch from Original Medicare to a Medicare Advantage plan;
  • Switch from a Medicare Advantage plan to Original Medicare;
  • Change from one Medicare Advantage plan to a different Medicare Advantage plan;
  • Change from a Medicare Advantage plan that offers prescription drug coverage to a Medicare Advantage plan that doesn’t offer prescription drug coverage; or
  • Switch from a Medicare Advantage plan that doesn’t offer prescription drug coverage to a Medicare Advantage plan that does offer prescription drug coverage.

Keep in mind any changes do not take effect until January 1st, 2021.

Medicare Part B (hospital insurance) premium and deductible costs capped for 2021

A provision of the recent spending bill passed during COVID limits Medicare Part B premium and deductible increases to 25% of what they would normally be. In April, the Medicare Trustees expected a 6% increase of the Part B premium but we will not know the true numbers until later this month or early November as this is when costs for the next year are announced. 

New and expanded benefits for 2021

  • Medicare Advantage plan will offer expanded telehealth and other virtual services.
  • Medicare-eligible individuals with End-Stage Renal Disease (ESRD) can enroll in a Medicare Advantage plan with benefits starting January 1, 2021.
  • Medicare now covers 12 acupuncture visits in 90 days for lower back pain.
  • Now you can join a drug plan that offers lower costs for insulin. The copay is $35 for a 30 day supply.

If you have any questions, please do not hesitate to speak with your adviser or contact us at financialplanning@bfsg.com.