Dear Tom and Alan:
My husband and I both work. A few years ago we received a nice inheritance. It was very good to get some extra money at our age, but it sure caused some tax problems!
Anyway, my husband is going to turn 65 in September and wants to retire. He has health insurance at his work and his boss pays for half of the monthly expense.
I’m worried he’ll leave his job and not have very good coverage.
We’re getting tons of mail and robo-calls about Medicare and that stuff.
What to do?
Tom: Very timely question, Nadine. There are a lot of people turning 65.
Since your husband is definitely leaving his job and presumably not collecting Social Security, our usual recommendation is that he contact the local Social Security Office and sign up for Medicare A & B.
Once he has his Medicare claim number, the world is his oyster.
Al: Well, not exactly, but whatever Medicare Supplement or Medicare Advantage Plan he applies for, they have to take him.
The reason we show Medicare Supplement Plan F to our customers is that, combined with Medicare A & B, medical coverage is basically 100 percent.
Very few health plans cover this thoroughly and the Anthem Blue Cross Innovative F plan is only $122.62 per month.
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Tom: Where you may run into an unexpected expense is paying for Medicare Part B (Part A is free).
For most people, the monthly premium for B is $135.50. The government looks back at your tax returns from two years ago.
If your Modified Adjusted Gross Income (MAGI) is less than $170,000 on your joint return, then you pay the $135.50.
However, the $135.50 can jump all the way up to $460.50 if your MAGI is $750,000.
The benign sounding IRMAA (Income Related Monthly Adjustment Amount) can make your monthly medical payment look very much like retail.
Al: Of course if you’re bringing in 750K per year you won’t get much sympathy even if you do have to pay three times what the majority pays.
Tom: By the way, good ole IRMAA will also appear on the Part D drug plans.
For example, if you are on one of the less expensive Humana plans, paying $29.90 per month, the $29.90 is all you pay if your MAGI is less than $170,000 on your joint return.
However, if your MAGI is above $750,000, you add $77.40 to your monthly premium of $29.90.
Al: And, again, no sympathy.
Tom: For those filing an individual return, there is no IRMAA for either B or D for an MAGI below $85,000. Over $500,000 does result in the maximum IRMAA.
So, for our reader, Nadine, you can expect additional payments for your husband’s Part B and Part D, at least until your annual income goes down.
Al: You can find all these numbers for the various amounts on Medicare.gov. You can also look up prescription drug plans.