Your Medicare Premiums Are Higher Than You Expected
Seniors are eligible to enroll in Medicare in the year they turn 65. If you sign up for Medicare Part B, your premiums are deducted from your Social Security benefits. For 2018, the standard monthly premium is set at $134.
However, it’s entirely possible that you could end up paying more if you fall into a higher tax bracket.
For certain high-income earners, premiums are equivalent to 30, 50, 65 or 80% of the total cost of coverage. If you file an individual return, for example, and your income is higher than $85,000 and up to $107,000, you will pay $187.50; if it’s above $160,000 up to $214,000 it’s $348.30.
“Most retirees have Medicare Part B premiums of $134 per month deducted from their Social Security check. However, some high-income retirees are shocked to find that their premiums can be as high as $428.60 per month,” says James B. Twining, CFP, CEO of Financial Plan, Inc., Bellingham, Wash. “If your income has recently dropped, you may appeal to the SSA for a lower premium. The IRS may be providing the SSA with older data that needs to be updated.”
If you expect your income to go up instead of down in retirement because you sell off a high-value asset or you decide to start a business, that could substantially impact what you get from Social Security. Your benefits could dwindle even further if you have Medicare Parts A and B and you’re also paying a separate premium for a supplemental policy, also called a Medigap plan.