Falling Off a Cliff with Medicare Costs
Income testing for Medicare B and D premiums
Upper income retirees are already painfully aware that Part B costs more -- but starting in 2011, Part D premiums are also higher. If your "medicare" adjusted income was over $85,000/individuals or $170,000/married, you will pay higher premiums. These are often referred to as Cliff Brackets:
|Medicare Adjusted Gross Income||Additional Annual Cost|
|Single||Married Filing Joint||Part B||Part D|
|< $85,000||< $170,000||$0||$0|
|$85,001 < $107,000||$170,001 < $214,000||$546||$144|
|$107,001 < $160,000||$214,001 < $320,000||$1,366||$373|
|$160,001 < $213,000||$320,001 < $428,000||$2,185||$601|
|> $213,001||> $428,001||$3,245||$829|
Mitigating the Cost - Two Ideas
- Manage your income when you get close to a cliff. For example, if you are going to be just over $170,000 in MAGI, try realizing investment or business losses to pull the income down.
- Use the open enrollment starting Oct 15th, to reduce your total prescription costs. Instead of focusing on just Part D premiums, consider the total cost by using tool which considers the all important out of pocket costs (including the "doughnut hole"), as well as premiums. This has a step by step guide on this tool.
Any Good News?
Starting in 2011, the doughnut hole -- a gap in drug coverage -- will start to disappear, finally closing in 2020. You will begin getting a discount on drugs where you once had to pay the full cost out of pocket.