Most people who are eligible to receive Medicare benefits pay no premium for Medicare Part A. However, upon enrolling in Medicare, you will need to factor premium costs into your budget for benefits available under Parts B, C, D, and Medigap, based on your needs and preferences. Medicare Parts B and D premiums are determined by your modified adjusted gross income (MAGI), which is adjusted gross income plus tax-exempt municipal bond interest, calculated for two years prior. If your MAGI is even one dollar over a premium threshold, you’ll be subject to the higher premium.
That’s where a little planning can help. Many people can avoid entering a higher premium bracket just by managing their income. One way is to take a higher percentage of income in retirement from sources not subject to the MAGI calculation, which can be determined based on your specific circumstance and best suited for your situation. And once you reach age 70 ½, qualified charitable distributions (QCDs) offer another alternative for reducing MAGI.
If you’d like to learn more about managing Medicare premiums or other expenses in retirement, including long-term care costs not covered under Medicare, please don’t hesitate to contact us at 912.384.0030 for a consultation.
This communication is designed to provide accurate and authoritative information on the subjects covered. It is not, however, intended to provide specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought.