Medicare Premium News

There have been recent changes to Medicare premiums for 2016 and 2017.  Medicare premiums are determined for 2016 by your adjusted gross income from the 2014 tax return. Likewise 2017 premiums are determined from your 2015 tax return.  If you are filing as married and your adjusted gross income is less than $170,000 or single and have income less than $85,000, then the rest of this note will not pertain to you.

If your income is higher than the above numbers, as you might expect, it isn’t good news.  You can expect to see your premiums increase by about 50% for 2016.  The final verdict of the exact numbers will not be published until the end of October 2015.  For 2017, they are making the brackets even lower than 2016.  In other words, your premiums could increase even more for 2017.

Granted that an increase from $209.80 to $318.00 per month is only $108.20 per month ($1,298.40 annually).  But when you multiply it by 2 (2 spouses), it equals $2,596 per year.  Now it starts to add up to be real money.  We see this change as a PHANTOM tax.  They didn’t change the tax schedules, but it impacts the amount of money you end up leaving in the government’s hands.  By the way, the income brackets do not increase with inflation every year; however, the premiums most likely will increase with inflation.  By not increasing the income brackets with inflation, it is another way of gradually getting people into a higher bracket as their Social Security and other income increase with inflation.

We at NorthWest Financial continue to take these subtle changes into consideration as we make recommendations.  For additional information please ask your advisor.

Bill Reno CFP®