Medicare's
high-income surcharges
by Phil Moeller | May 7, 2019
In this week’s
column, Phil Moeller, the author of Get What’s Yours for Medicare: Maximize Your Coverage, Minimize Your
Costs and co-author of the updated edition of How to Get What’s Yours: The Revised
Secrets to Maxing Out Your Social Security, helps a reader
understand the effects of tax returns on Medicare premiums, and whether or not
you can get an employer to cover your Medicare premiums.
Got a question of
your own about Medicare or
Social Security? Send it to askphil@considerable.com.
How do Medicare’s
high-income surcharges work?
Louise – South
Carolina: My
Medicare premium payment went up from $134 to $189 this year, due to the fact
that calculated into my 2017 taxes was a one-time lump sum retirement payment.
Therefore, our
adjusted gross income was above $170,000 for just one year — 2017.
We just completed our
2018 taxes and our adjusted gross income is $125,000. Can I get our Medicare
premiums adjusted back to $134 for the rest of the year?
Phil Moeller: Medicare’s
high-income surcharges apply to an entire calendar year. Your 2018 tax returns
would be the basis for reduced premiums in 2020, but the premiums would not
decline before then.
Social Security makes
this adjustment automatically, and it should be reflected on the statement you
receive later this year that includes the benefits withdrawals planned in 2020
for Medicare premiums.
Marissa: Thank you for
all you do! If you sell your house but the bank gets all the money due to the
mortgage, is there anything you can do to negate the IRMAA charges? I know it
shows higher income, but the reality is there is no extra income. What do you
suggest?
Phil Moeller: I am not a tax
accountant, but my understanding is that only the net gain on the sale of your
home would show up as taxable income on your tax return.
So, if the proceeds
on your home are going to pay off the mortgage, I don’t see how the gross sale
price would flow through to you as taxable income.
You should confirm
this with a tax professional, but if that’s the case, your home sale wouldn’t
necessarily trigger Medicare’s premium surcharges.
Help with an aging
parent
Sarah: My mother is
62. She has severe rheumatoid arthritis and hasn’t worked in 25 years. My
sister currently lives with my mother.
Her house is a mess,
dishes are piled up, trash is overflowing, her house reeks of cat urine and she
spends most of her days sleeping. She doesn’t schedule or keep doctors’
appointments and my sister is afraid if she moves out, my mother will die.
We’re afraid she
really won’t take care of herself if no one is there. I need to know what kind
of care she may qualify for. She doesn’t drive, or have a car for that matter.
She has Medicaid — or maybe it’s Medicare now that she’s over 55?
I’m desperate for
help. Short of leaving my boyfriend, job and home in Oregon, I don’t know what
to do. Please, I’ll take any advice you have.
Phil Moeller: I feel for you
and all the other adult children struggling with how to help their aging
parents. It’s hard enough to deal with these issues, as your sister is doing,
and nearly impossible when you’re a continent away and have your own life to
lead.
Your mother is too
young to qualify for Medicare based on her age, but it’s always possible she
has qualified because she applied for Social Security disability payments. When
a person gets disability payments, they also are offered the opportunity to get
Medicare.
Medicare by itself
doesn’t help pay for the kind of care your mother requires.
However, Medicaid
would cover that kind of care, and it’s possible she may already be on
Medicaid. If so, she may qualify for placement in an assisted-living facility.
I won’t kid you and
tell you that care in such places is always great, but from what you say, it
most likely would be an improvement for your mom and would also take a lot of
caregiving stress off of your sister.
The State Health Insurance Assistance Program provides
free Medicare counseling and should have someone in a Florida office who can
help you understand the state’s Medicaid eligibility rules.
Spousal benefits
Sharon – Virginia: I have your
updated Social Security book, but I’m still confused about something. I’m 62
and my husband will turn 62 later this year. He has had cancer for two years
and is doing well at the present time.
Can I claim Social
Security now on my record without lowering what I will get if he does not
survive his cancer? Can I file for a spousal benefit without him having filed
for his own benefit?
We are trying to have
him wait until 66 and a half since his benefits are about twice mine.
Phil Moeller: I’m sorry to
hear about your husband’s cancer. Good luck to both of you.
If you file for your
own benefit now, it will be locked in for the rest of your life and will not
increase (except for annual cost of living adjustments). You are not eligible
for a spousal benefit until he files for his own benefit.
If he passes away
before filing for his own benefit, you would be entitled to a survivor benefit
that would equal the benefit he would have received had he filed for Social
Security on the day of his death.
I know this is a bit
macabre, but that’s how the agency determines survivor benefits for people who
die before they have filed.
If he does file for
his own benefit and you then file for a spousal benefit, you would
automatically trigger the filing of your own retirement benefit. Social Security
would pay you an
amount equal to the larger of the two benefits.
If your husband died
before you reached your own full retirement
age, you could file for your own retirement benefit right away and
then file for your survivor benefit, which would reach its maximum amount if
you waited until your FRA to file for it. I hope this helps.
Can my employer pay
my Medicare premiums?
Jacqueline –
California: I
will turn 65 soon. I have received news from Medicare that I will have to pay
its IRMAA
high-income surcharges. My company only has six employees, and
I have been told that my Medicare premiums will be paid by the company.
Can I make them pay
for the high-income surcharges as well? Is it customary to make them pay?
Phil Moeller: I do not
believe you have any legal right to force them to pay IRMAA surcharges. In
fact, they have no legal requirement to help pay for any Medicare premiums. I
am assuming they do so because they value you as an employee and want to keep
you happy.
The question with
IRMAA surcharges is how far your company is willing to go to keep you happy.
Karen – New York: I am working
full-time, and my husband is retired. I am 75 years old. The medical plan my
company offers is pathetic and inadequate for our needs. Therefore, we are both
on Medicare.
Can my employer pay,
in lieu of paying for the company plan, our Medicare part B charges? If I am
entitled as a full-time employee to medical benefits, why can’t my company pay
the cost?
Phil Moeller: If you work for
a company with more than 20 employees, it is legally barred from helping to pay
for Medicare.
Here’s a story I
wrote that explains the rules. If your employer is sympathetic, I suppose it’s
possible it could give you a raise to help pay for Medicare. If not, and if the
employer permits it, perhaps you’d be better off just dropping the employer
plan.
I’m sorry I don’t
have better news for you.
These questions
previously appeared on the PBS NewsHour
Making Sen$e website.
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