Reducing 2011 Taxes Reduces 2013 Medicare Premiums

Your 2011 income taxes can affect the level of your 2013 Medicare Part B and Part D premiums, even if you’re not currently a Medicare beneficiary. Higher-income beneficiaries pay higher premiums, with the premiums rising as income rises. Modified adjusted gross income of a Medicare Beneficiary from two years earlier determine their premiums. There are some exceptions, which are detailed in my book Personal Finance for Seniors for Dummies (with Eric Tyson) and in articles in the Health Watch section in the Archive on the members’ web site. Modified AGI is regular AGI plus tax-exempt bond interest and a few other items.

Remember this when planning 2012 transactions. One-time events, such as taking a large capital gains distribution or converting a traditional IRA to a Roth IRA, could increase your Medicare premiums in two years.

Medicare 2012 Means-Tested Premiums Married filing jointly Single When your 2010 2012 2012 2012 2012 modified AGI was monthly monthly When your 2010 monthly monthly Part B Part D modified AGI iwas Part B Part D More than But not over premium is surcharge is More than But not over premium is surcharge is $170,000 $214,000 $139.90 $11.60 $85,000 $107,000 $139.90 $11.60 $214,000 $320,000 $199.80 $29.90 $107,000 $160,000 $199.80 $29.90 $320,000 $428,000 $259.70 $48.10 $160,000 $214,000 $259.70 $48.10 $428,000 $319.70 $66.40 $214,000 $319.70 $66.40

RW February 2012