MICHELLE SMALENBERGER, CFP®
As you near age 65 it’s very common you may be thinking about retiring. And something that comes with that is your health insurance because it was provided, usually by your employer. And now you are thinking, “How am I going to pay for health, health costs, and health insurance?” This is where Medicare Part B and Part A comes in.
What Is Medicare Part A & B?
One part of this is Medicare. Medicare Part A, which is for hospital visits. Medicare Part B, which is for day to day care and doctor visits.
I want to walk you through the Medicare Part B monthly premiums because this is based on your income. It is not just one flat amount that you pay for your month regardless how much you make.
Medicare Part B Premiums Chart
Let’s look at this together. At age 65, you are usually thinking about retirement. And this is where Medicare Part B is based on your annual income. So let’s look at how this is calculated. Notice, right now it is 2019 and I have here on my table 2017 yearly income.
2017, we are taking your income from two years ago, that’s what they look at. So in 2020, they’d be looking at 2018 income. So they use that amount for tax return.
Wherever you are following these tables of income – whether it is $85k or less, or $170k or less depending on if you are filing individually or jointly, you’ll see over here on the far side where your monthly premiums are.
You can tell that pretty quickly, if you keep working after age 65, you can see that if you are earning your annual income, maybe plus employee benefits, when you are near the end of your career, or a switch to another career, you could be earning the highest you’ve been making your whole life. So these amounts and these premiums can jump significantly.
Time Your Retirement Smartly With Medicare Part B
This is why it’s important to time out what your income is going to be when you are nearing 65, at 65, or even at 63, because that is where your income comes into play for future years.
Just want to help you understand how these Medicare Part B premiums are calculated. These numbers can change every year. You can go to their website to see what those numbers are, but it is something you want to plan ahead for because it will change, but it will affect you at some point.
Interested in learning how this affects your future finances? Contact Financial Design Studio, Financial Advisors in Deer Park.