Falling Off a Cliff with Medicare Costs

Income testing for Medicare B and D premiums

Upper income retirees are already painfully aware that Part B costs more -- but starting in 2011, Part D premiums are also higher. If your "medicare" adjusted income was over $85,000/individuals or $170,000/married, you will pay higher premiums. These are often referred to as Cliff Brackets:

Medicare Adjusted Gross Income		Additional Annual Cost
Single	Married Filing Joint	Part B	Part D
< $85,000	< $170,000	$0	$0
$85,001 < $107,000	$170,001 < $214,000	$546	$144
$107,001 < $160,000	$214,001 < $320,000	$1,366	$373
$160,001 < $213,000	$320,001 < $428,000	$2,185	$601
> $213,001	> $428,001	$3,245	$829

Source: Goodcare.com

Mitigating the Cost - Two Ideas

• Manage your income when you get close to a cliff.  For example, if you are going to be just over $170,000 in MAGI, try realizing investment or business losses to pull the income down.
• Use the open enrollment starting Oct 15th, to reduce your total prescription costs.  Instead of focusing on just Part D premiums, consider the total cost by using tool which considers the all important out of pocket costs (including the "doughnut hole"), as well as premiums.  This has a step by step guide on this tool.

Any Good News?

Starting in 2011, the doughnut hole -- a gap in drug coverage -- will start to disappear, finally closing in 2020.  You will begin getting a discount on drugs where you once had to pay the full cost out of pocket.