After several years of being retired, I had a big bump-up in income in 2009 when I exercised stock options. That triggered a high-income surcharge for my Part B and Part D Medicare premiums this year. Does this mean I will have to pay the high-income surcharge next year, too?
Not necessarily. The 2012 high-income surcharge for both Medicare Part B, which covers doctor visits and outpatient services, and Medicare Part D, which covers prescription drug costs, is based on your 2010 income. That’s the latest tax return the IRS has on file. If the increase in your income in 2009 was due to a one-time event and your adjusted gross income in 2010 dropped below the threshold that triggers the high-income surcharge, you won’t have to pay the extra charges next year.
The surcharges for Medicare Parts B and D kick in when you annual adjusted gross income (plus tax-exempt interest income) tops $85,000 if you are single or $170,000 if you are married filing jointly. If your 2010 income is below those thresholds, your Medicare Part B premiums will drop to the standard $99.90 monthly level in 2012 and you will pay no surcharge for Part D prescription drug coverage.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
In 2012, high earners will pay from $139.90 to $319.90 per month per person, depending on their income level, for Medicare Part B coverage. They will also pay extra for Medicare Part D prescription drug coverage, ranging from $11.60 to $66.40 per month, on top of their regular premiums. See Medicare Premiums to Decrease for Some for details about the 2012 premiums.
Incomes only slightly higher than the threshold at which surcharges kick in can trigger a significant premium boost -- costing you an extra $40 per month above the standard premium for Part B if your income falls in the $85,001 to $107,000 category if you are single or in the $170,001 to $214,000 category if you are married filing jointly. That adds up to an extra $480 per year in premiums per person, or $960 per year for a married couple, just for Part B. Add an extra $139 per person for Part D for the year. So reducing your modified adjusted gross income below those thresholds could save you a lot of money. In my next column, I’ll outline some strategies for reducing your current income to prevent high-income surcharges.
-
Stocks Hit Fresh Highs Ahead of the Fed As Earnings Pump Optimism: Stock Market TodaySHW and UNH were two of the best Dow Jones stocks Tuesday, thanks to solid earnings reports, and MSFT closed with a $4 trillion market cap.
-
Selling Your Haunted House? What You Have to Tell Buyers (and What You Don’t)You don’t need ghosts to spook buyers, sometimes a home’s past is enough. Here’s what sellers should know about disclosure laws, pricing and perception when a property has a haunted history.
-
Credit Report Error? They All Mattercredit & debt Don't dismiss a minor error. It could be the sign of something more serious.
-
Insurance for a Learning Driverinsurance Adding a teen driver to your plan will raise premiums, but there are things you can do to help reduce them.
-
529 Plans Aren’t Just for Kids529 Plans You don’t have to be college-age to use the money tax-free, but there are stipulations.
-
When to Transfer Ownership of a Custodial Accountsavings Before your child turns 18, you should check with your broker about the account's age of majority and termination.
-
Borrowers Get More Time to Repay 401(k) Loans
retirement If you leave your job while you have an outstanding 401(k) loan, Uncle Sam now gives you extra time to repay it -- thanks to the new tax law.
-
When It Pays to Buy Travel Insurance
Travel Investing in travel insurance can help recover some costs when your vacation gets ruined by a natural disaster, medical emergency or other catastrophe.
-
What Travel Insurance Covers When Planes Are Grounded
Travel Your travel insurance might help with some costs if your trip was delayed because of the recent grounding of Boeing 737 Max planes.
-
Ways to Spend Your Flexible Spending Account Money by March 15 Deadline
spending Many workers will be hitting the drugstore in the next few days to use up leftover flexible spending account money from 2018 so they don’t lose it.
