65 is the New 45

October 19, 2016

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Recently, we’ve had a few Medicare recipients call our office because they were confused about why their Medicare part B benefits cost more than they thought.  While we have nothing to do with Medicare itself, we do sell supplemental products and are happy to help with all things Medicare if we can.  So here goes…

Let’s face it.  65 is not old.  About 1/3 of Americans 65 years of age and older are still in the workforce.  Some of them work harder than people their kids’ age and don’t appear to be slowing down anytime soon.  As a result, Medicare utilizes an income related monthly adjustment amount (IRMAA).  That’s a fancy way of saying “If you’re still pulling in a nice, fat paycheck, we’re going to charge you more for coverage.”

Here’s where it gets tricky.  Medicare uses your modified adjusted gross income on your most recent IRS tax return to make their calculations.  For example, to determine your 2016 income-related monthly adjustment amounts, generally, this information comes from a tax return filed in 2015 for tax year 2014.   Two years can really make a difference in income.  A beneficiary might be below the income threshold today, but is still liable for the increased premium because of their income a couple years ago.

Luckily, there is an appeals process.  If your income has gone down, you can contact the Social Security Administration with documentation verifying the reduction in income.  The thresholds for IRMAA for 2017 haven’t been published as of this post, but for 2016 if your yearly MAGI as an individual was $85,000+, you’d pay an IRMAA.  Same goes for a MAGI of $170,000+ for a couple filing jointly.

The thresholds are pretty high, and 95% of recipients will fall below those figures based on annual wages.  But one of our customers sold her house and the income showed up on her tax return.  It’s not long term, annual income but it affected her premium all the same.  She is now working to have her premium adjusted.  Another person’s premium was affected by a one-time severance package.

So, if you’re the new 45 (or if you know somebody who is), don’t hesitate to contact us.  If we can’t help you we can still offer information and point you in the right direction!