New York Estate Planning & Elder Law Blog
High income retirees could see some of their Medicare premiums skyrocket up to 203 percent in 2018 due to shifts in the income brackets that are used to determine how much older Americans will pay for their Medicare Part B and Part D coverage. Those predictions come from an analysis by HealthView Services, a provider of health-care cost projection software used to prepare current and future retirees for the impact of health care costs which includes Medicare costs, long-term care expenses, and Social Security optimization strategies.
The additional surcharges for Medicare Part B, which covers preventive services, and Medicare Part D, which covers doctor visits, could end up diverting larger portions of the income seniors and future retirees expected to put towards their retirements. For example, a 55-year old couple earning a combined $140,000 could anticipate their lifetime Medicare surcharges rise by over $120,000 due to the changes to how the health-care program charges its beneficiaries, according to the Health View Services analysis.
The factors driving up the cost of Medicare for seniors comes from a 2015 bill known as the Medicare Access and CHIP Reauthorization Act or “DocFix” law which adjusted the way premiums are calculated for high-income individuals. The bill also lowered the range for the third, fourth and fifth-income brackets, which moved some retirees into the next higher bracket thus increasing their Medicare costs. Those changes began to take effect in 2108.
The amount seniors will pay for their Medicare Part B and Part D premiums for this year will be determined by the individual’s 2016 modified adjusted gross income. In 2018, premiums for Medicare Part B are $134 per month for singles with a modified adjusted gross income of $85,000 or less in 2016 which equals to $170,000 for married joint filers. At the same time, Part D beneficiaries will also pay additional expenses on top of their plan premiums if their 2016 modified adjusted gross income exceeded $85,000 for singles and $170,000 married couples.
Other changes to Medicare will take place in 2019 due to the Bipartisan Budget Act of 2018. According to the consumer advocacy group Medicare Right Center, individuals with incomes over $500,000 and couples earning more than $750,000 will pay higher Medicare surcharges, which account for 85 percent of their program costs, up from 80 percent under current law starting in 2019.