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how to reduce medicare premiums

Clients can do this by submitting Form SSA-44, “Medicare Income-Related Monthly Adjustment Amount Life-Changing Event” to their Social Security office. While Medicare does allow you to appeal your IRMAA rates based on certain “life changing events,” such as death, divorce, retirement, etc., there is no exception for one-time income events, such as large capital gains, a large Roth IRA conversion, or even winning the lottery. For each 12-month period you go without Part B coverage upon being eligible, you'll be charged a 10% penalty on your Part B premiums that will remain in effect permanently. In that case, you get a special eight-month enrollment period to sign up for Medicare that begins once you separate from your employer, or once your group coverage goes away -- whichever happens sooner. As such, it really pays to sign up on time. You can visit www.medicare.gov to get more information on the IRMAA rates for 2018. If you’re a high-income taxpayer, you pay more. You can download it on line at www.SSA.gov, or you may request a copy by calling 1-800-772-1213. The following are some strategies to reduce the impact of these surcharges that may especially be interesting to those that are recently retired or soon to retire with large Individual Retirement Account (IRA) or qualified plan balances. As soon as your Part B coverage starts, you have a one-time opportunity to enroll in a Medigap plan without having to answer questions about your health. Our agents are happy to answer questions and help you compare your options. Medicare Advantage plans tend to have significantly lower premiums than comparable Medigap plans, in part because the Advantage plans typically require you to shell out more for deductibles and co-pays. Keep in mind that the rules are different if, come age 65, you still have access to a group health insurance plan through an employer (yours or your spouse's). Almost everyone pays a premium for Part B, Part D, Medigap, vision, dental, and hearing. Gene Osofsky Individuals with “high income” pay more. This distribution can be used to satisfy your RMD. You’ll continue to pay the penalty each month for the rest of your life. A Roth IRA conversion strategy, properly planned out, can help minimize this impact. Medicare is managed by the government, covers a portion of doctor & hospital coverage. As long as you have enough liquidity to cover living expenses, investing for long-term appreciation and tax-deferred income, rather than current income, can help. For 2018, the standard premium for Part B is $134 per month, while the premium for Part D depends on the plan elected. Learn about this increasingly popular tax-advantaged investment vehicle and educate your clients. Sponsored by John Hancock Investment Management, Why Mid Caps May Lead The Way Out Of Recession. The IRMAA surcharge is determined annually based on your MAGI for the second prior year. So you'll need to add the premium for the Part D plan of your choice when determining whether or not an MSA plan will be a better deal for you premium-wise. This effect is particularly startling with Medigap plans; each Medigap plan is required to offer coverage based on a specific template, so a particular Medigap Plan A (for example) will be identical to every other Medigap Plan A... yet the premiums charged by two different Plan A providers can be radically different. Select which Medicare plans you would like to compare in your area. Of course, you should always consult with your own tax advisor before considering any of the strategies. Consider Medicare Advantage. Medicare premiums for 2017 are linked to your “Modified Adjusted Gross Income” (“MAG I”) as shown on your income tax return. If you find yourself close to the income level of one of the IRMAA rates, but need liquidity for living expenses, consider tapping into a tax-free source. Here are some options to better pace client withdrawals, according to Michael Kitces. For example, someone in the highest tier for income above $160,001 (single) and $320,001 (joint), will pay a combined $369.40 monthly surcharge for Part B and D (or $738.80 per couple per month). Workplace retirement accounts allow you to make contributions while working and then use them to pay for needs after retirement. As such, if you go 15 months without coverage, you'll face a penalty of $4.90 per month in 2020. We are here at Ancora to help with the conversation. If you are younger and participate in a high deductible medical plan, you should always fund your HSA to the maximum degree possible, even if it means not funding an IRA or 401k plan, but take advantage of a company match first. The SSA can use this information to potentially reduce or remove the surcharge. There’s a financial motive to enroll during that time. It looks back two years. First, a bit of background for our readers. These include Roth IRA withdrawals, or HSA withdrawals, which you can actually use to pay for those premiums. Because the Medicare Advantage plan associated with these accounts is always a high-deductible plan, you'll typically pay quite a low premium compared to other Medicare Advantage plans. Make theSe moves to lower your premium costs, and you'll have one less thing to stress about at a time when money might be tight. However, it's important to look at all your cost factors when making this decision -- if you expect to have a lot of medical expenses in the near future, a Medigap plan may work out to be the cheaper option overall because the lower deductibles mean the plan will pay more of your expenses than a Medicare Advantage plan would. Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com. Form SSA – 44 [”Medicare Income -Related Monthly Adjustment Amount – Life-Changing Event”], Medicare Premiums: Rules for Higher-Income Beneficiaries”, KDIA 1640 - Financing The Cost Of Long Term Care, Special Planning for an Incapacitated Spouse, Giving Your Home to Your Children Can Have Tax Consequences, The ‘CARES ACT’ Allows You To Skip IRA MRD’s This Year, Evictions Halted Nationwide For Remainder of Year, Dealing With the Visitation Ban in Nursing Homes Due to COVID, New ‘Secure Act’ Makes Big Changes To IRA’s and Other Retirement Plans, The New CA Decanting Statute: Some Advisory Cautions *, USING ‘UNAVAILABILITY’ TO REDUCE SPEND DOWN AND/OR SECURE RETROACTIVE MEDI-CAL ELIGIBILITY. The good news, however, is that there are steps you can take to lower your Medicare premium costs, thereby stretching your retirement income even further.

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