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How Much Will Medicare Cost in 2018

2018 Medicare premiums are determined by 2016 tax returns.

Surcharge for high income are based on next year’s new brackets.

As older clients prepare documents to file 2016’s federal income taxes, note that the bottom line should be paid attention too on their tax return. The 2016’s adjusted gross income and tax exempt interest income will determine the following year’s Medicare premiums.

Numerous beneficiaries for Medicare will find it surprising that some Medicare premiums surcharges will change for high income retirees in 2018. Basically, there will be higher income seniors will have to pay a larger share in 2018 for Medicare costs even if their income stays at its current level.

Higher premiums will be paid for both Medicare Part B and Part D for individuals with modified adjusted gross income “MAGI.” This includes tax exempt interests which tops $85,000.00 as well as married couples with joint incomes tops $170,000.00.

There are 5 income tiers. If your income bracket MAGI exceeds a bracket by only $1.00 then you will be catapulted into the next tier and then pay a higher surcharge. Since Medicare premiums will be based on the latest available tax return which means your 2018 premiums are based on tax returns filed in 2016.

Most enrollees  who are new in 2017 Medicare Part B will pay the standard premium which is $134.00 per month as well as existing beneficiaries not receiving social Security benefits. Yet most of the other retirees whose Medicare Part B premiums are deducted directly from Social Security benefits will pay less.

This is because of a Social Security Act hold harmless provision that protects most of the seniors net declines in benefits if annual cost of living adjustments for Social Security are smaller than any scheduled increase in their Medicare premiums occur.

Higher income retirees do higher premiums. For 2017 Medicare Part B ranges were $187.50 to $428.60 each month. Couples payed twice this amount because rates are per person. So, married couples with incomes topping $428,000 in 2015 will by paying more; Part B premiums alone will be more than $10,000 in 2017.

Next year Medicare premium surcharges will be compress becoming costlier for some retirees in the higher income brackets. The initial and second income tier threshold for individuals and married couples premium surcharges will stay the same in 2018. Tires 3 and 4 will be compressed in 2018 and may be subject to higher surcharges in 2018 over what they are paying today.