premiums

13Oct

2023 Means Savings on Medicare

BlogOctober 13, 2022

Medicare beneficiaries will pay lower Part B premiums for coverage come 2023. Those who are paying these premiums need to be aware of two major changes.

For this upcoming year, the premium for Part B will decrease by 3% to $164.90. The annual deductible will also decrease from $233 to $226 for 2023.

Sometimes people do not know they are paying their Part B premiums because when you elect to enroll in Medicare, your premiums come directly out of your Social Security benefits.

Moreover, since CMS regulates Medicare Part D, even though the prescription coverage is sold by private insurances, there is a good chance that many will see a general decrease in Part D premiums, too. Unfortunately, since the private insurers set the terms and limits of these policies, there is not set amount for the decrease like Part B has. CMS is predicted that an almost 2% decrease may happen for Part D. If there is a change to your plan, you will receive a statement in the mail notifying you. If you do not receive any statement, please call your insurance directly or check online.

Lastly, another major change CMS announced were changes to income brackets and rates for the premium surtax for Medicare. This surtax is known as income-related monthly adjustment amount (IRMAA). This is in addition for higher income beneficiaries to the Part B base premium of $164.90 everyone pays. This also is an addition to Part D premiums for higher income beneficiaries.

This surtax is imposed on modified adjusted gross incomes starting at $97,000 for a single person and $194,000 for married couples who file a joint return and maxes out at $500,000 of MAGI for a single person and $750,000 for a married couple fling a joint return. The maximum Part B premium if you hit the top income limits would be $560.50. For Part D the imposed surtax would be an additional maximum of $76.40. It is important to note that the highest bracket ($500,000/$750,000) discussed here is not adjusted for inflation, but the lower brackets are. So over time, more and more people will be moved into the top bracket and will pay the higher Medicare Part B premiums due to inflation.

underestimated retirement risk: medical costs

01Sep

Do Not Forget Healthcare Costs When Retirement Planning

BlogSeptember 1, 2022

How are you to account for health care costs while retirement planning? Oftentimes, these expenses are underestimated. Even though Medicare Part A is free and covers hospitalization, the remainder of Medicare comes with premiums and the rest of health care and drug costs are out-of-pocket even with supplemental insurance.

Why are health care costs underestimated?

CPAs transitioning into retirement often do not consider that what they were paying in premiums is not the full amount. Thinking they need the same “take-home pay” folks forget that their employer was paying a good chunk of the premium costs when budgeting and the rest was coming directly out of their paychecks. Now, facing retirement, CPAs are responsible for out-of-pocket costs and the full premium.

Familiarization with Health Care Premiums

Having Medicare Part A helps immensely when it comes to health care costs, especially since it is free. However, you will be responsible for other premiums to help cover medical expenses.

Medicare Part B: In 2022, premiums increased to $170.10 monthly. Note in the future this will increase.
Medicare Supplemental Insurance: For coverage not offered through Part A or Part B of Medicare, supplemental insurance is available. This will help with medical expenses, but does not cover dental, hearing, or vision.
Medicare Part C: Known as Medicare Advantage, these policies vary in coverage and price, but offer options including Part A, Part B, hearing, dental, and even vision. Furthermore, Part D (prescription drug coverage) is also included.
Medicare Part D: As coverage for self-administrated prescription drugs, Part D requires a co-pay per prescription. Unfortunately, some drugs are not covered.
Long-term care insurance premiums: Medicare only covers so much of long-term care costs after a certain amount of time, and even then, it will add up quickly daily. To make sure you are covered, building a LTC policy to your wants and needs is best. This is an important factor to consider for retirement planning because 70% of retirees experience a long-term care event.

How much could coverage and any out-of-pocket costs be then?

Knowing Total Health Care Costs

Adjusted for inflation, in 2021 multiple studies found that retirees were spending about $6200 on premiums and approximately $6500 on out-of-pocket costs for health care. For 2022, the projected amount for out-of-pocket costs is $7000. And with rising health care costs and inflation, the average expenses are predicted to increase by a minimum of $3500 by 2030.