For new holders of Medicare, these premiums can be jarring, all along taxes have been deducted from your pay but you are still left having to pay a premium. In some cases a hefty premium. These taxes form part of your contributions toward your Medicare Part A, as well as Social security. What you might not expect is that those taxes do not go anywhere near your Medicare Part B or Part D. This extra is met by you, the beneficiary.
If this surprising shortfall has you struggling to pay your premiums for Medicare, there could be ways to either reduce those payments or receive Medicare assistance. If you are facing difficulties, then you might be eligible for an IRMAA Appeal!
The IRMAA Appeal
Having a higher income could result in you paying higher premiums for you Medicare Part B and Part D. This shouldn’t automatically be accepted because you’ve been told this is the cost of the premiums.
Medicare Part B and D premiums are based on your household income.
This is calculated as a gross figure from the previous two years to the date the premiums are calculated. This figure is taken from your previous two years of tax returns with the IRS; however, your income two years or even one year ago might not be reflective of your current financial position but you will still be liable for higher premiums because of your income from the last two years.
As people retire, one of the biggest changes for many is a mass reduction in income in a drastic way. You might have been earning over the threshold of $87k individually or even over $174k as a joint household; however, that was then and now you’ve retired you aren’t earning this figure, and so, the higher premiums for Medicare are now unaffordable or at least placing a strain on your finances.
The IRMAA appeal might be able to help you in this situation and you can file a request for reconsideration based on your current financial situation. If you are able to prove that your income is significantly lower now than the figure used to access your premiums, you could be eligible for reduced payments or even a cancellation of your IRMAA.
Make your HSA work for you
People entering retirement often have saved money throughout their working lives; saving into a Health Savings Account. This money is yours, all your contributions are made tax-free and this applies to use this HSA for medical expenses such as Medicare Premiums, but not Medigap.
How to find help with Medicare premiums
Medicare Savings Programs exist to provide assistance with meeting the costs of Medicare Premiums and could help toward paying Part B and Part D. To apply you must go through the Medicaid Office at your local state offices. If after applying for the assistance you are eligible then you may be able to receive federal government help in paying your Medicare Premiums.
Not all cases qualify for the same level of help, however, if you are advised that your income isn’t low enough then you could still qualify to receive some help. You might be eligible for a reduction in the premiums for your Medicare Part D via low-income programs available. Sadly, so many Americans are eligible for this assistance but are not aware of this and continue to struggle, making budgetary sacrifices they should never have to make.
Tax deductible Medicare Premiums
Believe it or not, Medicare premiums are actually tax-deductible; in the right circumstances. Including Medicare Premiums, most healthcare premiums qualify for Schedule A deductions on your Form 1040 if your medical spending rises about a predetermined threshold over that year (exceeding 10% of your gross income) so definitely check this when preparing to file your IRS tax return.
Working to pay Medicare premiums
If none of the previous subjects apply to you there is still something that you can do. The monthly Part B premiums are $144.60 per month and in today’s digital economy, this cost is fairly easy to meet. This can be done by working online by freelancing if you have a particular skill or even driving for a local delivery company will pay enough to meet this monthly cost, for only a few hours of your time per week.
Thomas M. Brzezinski is one of the founding partners of WMAG William & Michael Advisor Group LLC and Jersey Insurance Solutions. He has been involved in the insurance industry for over ten years and specializes in developing client relationships that last a lifetime.
