Will My Assets Affect Medicare Premiums?

In many ways, Medicare doesn’t work the same as other types of healthcare insurance. Adding to the confusion, the rules for Medicare and Medicaid are quite different, making it challenging to know what you will have to pay for Medicare.

As you approach the age of 65 or discover you have a disability or condition that qualifies you for Medicare, it helps to start getting acquainted with the Medicare rules, so you don’t end up paying more for the program than you need to. Assets in the form of income will affect Medicare premiums, and other assets don’t affect it at all.

As you sort through these factors, you’ll also want to keep your cost-sharing amounts in mind as well. You can learn more about certain Medigap copays at boomerbenefits.com/plan-n-copays . Although your assets don’t affect your cost-sharing amounts, it’s important to consider all costs related to Medicare.

Can I Qualify for Medicare If I Have Assets?

Medicare is a health plan that you earned after paying into the program during all the years you worked. Your efforts have entitled you to participate in the program regardless of how many assets you have or what kind of assets they are.

The good news about Medicare is your assets matter less with the Medicare program and more with Medicaid. You don’t have to give up your home to qualify for Medicare and doing so will not get you the lowest premiums. You can also keep income from your employment, retirement funds, and other sources and still qualify for Medicare.

The caveat is your Medicare premium can change depending on how much income you make after age 65.

How Your Income Impacts your Monthly Medicare Premiums

While you can rest assured that you can keep your financial assets, your income does have an impact on your monthly Medicare premiums.

The Medicare program will consider the figures on your most recent tax return. The federal government calculates Medicare premiums based on MAGI (your modified adjusted gross income). MAGI is calculated by taking your total adjusted gross income along with tax-exempt interest.

Each year, the Centers for Medicare and Medicaid (CMS) releases a table of the deductibles, premiums, and coinsurance amounts for Medicare Part A and Part B. The rates are determined by the Social Security Act, and because of this, the premiums can go up or down every year.

The threshold for paying a higher premium depends on how much your income was and whether you filed a joint tax return or you filed as married and filing separately. High-income earners may pay several hundred dollars more per month than people with low or average incomes.

You will find the current rates on the Medicare website.

Most people pay nothing at all for Part A. That’s because they paid into the program long enough while they were working. Everyone pays for Parts B, and D. Medicare beneficiaries can opt to purchase Part C, which is a Medicare Advantage Plan if they wish. Parts B (which pays for physician care and outpatient services) and D (prescription coverage) may increase if your income is above the threshold for low or average income.

Higher-income beneficiaries pay a higher percentage of the total cost of Part B based on the amount of income they reported to the IRS.

Paying the Extra Amount

The Social Security website lists the current rules for people with higher incomes. Another thing to note is that the Social Security program will deduct the extra premiums for high-income beneficiaries directly from your Social Security payments. If you owe more than your social security payment, you could get a bill from a different federal agency such as CMS or the Railroad Retirement Board.

What Happens If My Income or Other Assets Change?

While you may have a steady income for many years, the federal government also realizes that life- changing events can impact your income. If you experience a qualifying life event, you can ask Social Security to adjust your premium accordingly.

You will find a specific list of qualifying life events at HealthCare.gov. Generally speaking, qualifying life events are:

• Losing health insurance
• Losing an income-producing property
• Experiencing a major change in the household (death, divorce, etc.)
• Moving to a different geographical location

While you can keep your home and still qualify for Medicare, the premium could change if you sell your home. The proceeds from a real estate sale are taxable. If you make a large profit after closing on your home, the Medicare premiums for Part B or Part D could increase.

Overall, your financial assets are only a factor in your Medicare premiums as they relate to your income. As your income changes, your Medicare premiums could change with it. By understanding how the federal government calculates Medicare premiums, you may be able to adjust your income to put you in an income bracket with a lower premium.