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Old 12-15-2015, 08:54 PM
 
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Thought some people might find this article interesting.

Medicare surcharge letters dampen holiday spirits

We have received three letters so far regarding our surcharges for 2016 Medicare--
All 3 with different amounts

In fairness to Medicare, one was likely composed prior new law, one was likely prepared after new law was passed which reduced some penalties, and one was after we finally filed our completed 2014 tax return.
We have income requiring K1 forms and always get them just before the final deadline.

There might be people who are new to the higher income penalty cstegories or new to Medicare period.
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Old 12-16-2015, 02:50 AM
 
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we got one that showed if my wife wasn't already collecting her social security her medicare would be 389.50 a month up from 104.50 .

they go off 2014 taxes since 2015 is not filed yet , we were both working as well as had a whopper of an income since we sold some commercial lease rights before retiring .

we could file a form that few even no about , requesting them to use 2015 when filed instead since 2014 had the sale of an income property which will no longer produce income . they have this form you can send in requesting a reduction because of what they call event changes .
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Old 12-16-2015, 07:59 AM
 
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I know there is an appeal process--
The form lists several options for why you are asking to have your ongoing income used for calculating Medicare premiums vs the tax filing MAGI from 2 yrs prior---

But you can only use one reason for the appeal--not a multiple-check list even if you have multiple reasons.
And I have read (although there aren't that many articles about filing an appeal) that lump sum event is not always going to qualify as reason to adjust surcharge amount.

Factoring that penalty surcharge on Medicare is something our financial advisor has never been too excited about investigating as whether it would have been better to have BOTH of us file at FRA--just to be eligible to fall into the hold harmless category---and then file appeal to see if we could use much lower ongoing income for 2015 or even 2016 premiums...Initially when we were Medicare eligible, we had that lump sum event but also ongoing employment income for my husband from two separate sources--which meant some penalty level. After he retired from one employer, he still had S-Corp income. We had last lump sum in 2014 and husband stopped paying salary out of S-Corp in 2015--only 30K.
BUT neither of us is going to fall into the "hold-harmless" category--husband like you is still deferring SS.

Our best outcome would be if we file the appeal to use 2015 income or ongoing income 2016--for calculation of 2016 Medicare and while we don't fall into the "hold harmless" to use 2014 rate for Part B, we only have to pay the higher Part B premium w/o any surcharge penalties...
I don't know if Medicare would refund any overpayments we made in 2015 if our income was deemed under the penalty level...that is kind of water under the bridge now.

This topic--the penalty surcharge and filing for SS to cap Medicare costs--was something our advisor thought was not that relevant because of overall high earning/taxes when we first started Medicare at 65.
He SHOULD have been more interested in 2015 after we saw the income from husband's S-Corp dropping.

I tried to raise question a couple of times and asked about filing an appeal--they were supposed to ask the tax side of the company (it is local CPA firm we have used for 25+ yrs) but the tax people were busy finishing everyone's delayed 2014 filings and we never heard from them after that was done.

Our financial advisor had suggested we use the next 3-4 yrs to move money from my husband's DB plan with his S-Corp into his Roth---which would mean paying taxes on the conversion amounts--raising overall income level--which might trigger the Medicare surcharge at some level.

I can understand the benefit in moving money that would be taxed in RMDs into his Roth if we can do it at reduced tax level---but this is very complicated math because there is sliding scale of benefits vs penalties---the projected RMDs are going to be 6 figures for the first 5 or so years--maybe more depending on return rate-- so those plus SS and other income seem likely to push us into surcharge territory in future as well...

Takes time and effort to run some comparisons...and I am certainly not capable of doing it...
So I was/am very frustrated about this entire situatuion--but my husband didn't have the same sense of urgency.

Last edited by loves2read; 12-16-2015 at 08:09 AM..
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Old 12-17-2015, 06:27 PM
 
Location: Sierra Nevada Land, CA
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I wish my income was high enough to incur a Medicare surcharge!
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Old 12-17-2015, 06:58 PM
 
Location: Los Angeles area
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Quote:
Originally Posted by Mr5150 View Post
I wish my income was high enough to incur a Medicare surcharge!
Just what I was thinking.
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Old 12-17-2015, 07:25 PM
 
Location: Great State of Texas
86,093 posts, read 72,479,637 times
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Get it all moved over to the Roth by 62.
Then pray no new laws happen from 62 to 65
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Old 12-18-2015, 03:52 AM
 
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many times it can be so costly to move things it may not pay . we are in that situation .

not knowing 25 years ago what i do now about retirement planning i thought i knew all i needed to know .

boy was i wrong and a good financial adviser well versed in the 2nd 1/2 of the game would have been worth every penny .

now it is like telling the guy who built the brooklyn bridge "it's nice but can you move it 1" left .

also roths are usually not the answer in this case . pension buy outs , severance packages , and the sale of assets at a profit usually are the issue for many. in our case it is liquidating real estate holdings .
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Old 12-18-2015, 09:01 AM
 
Location: NC
6,549 posts, read 7,966,327 times
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Quote:
Originally Posted by Mr5150 View Post
I wish my income was high enough to incur a Medicare surcharge!
My situation is that while my retirement income is modest, I had part of my retirement funds "stored" in a piece of property, and needed to sell it. When you do that, whammo, you lose 30% through capital gains taxes, then you have at least a year (if not forever) of higher medicare costs. It's not as if you can sell a few square feet of land every year from the tract you bought, so as to stay in a lower tax bracket. I guess the same would be true if you collected art or classic cars or anything tangible that can only be sold in its entirety, thus throwing you into a high bracket with all of these additional surcharges. This is another example of how retirement planning is hard to do, since the tax processes keep changing. And once you are retired, you might not be on the lookout for this information, so thanks to all the posters with this info.
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Old 01-13-2016, 05:07 PM
 
71,511 posts, read 71,674,131 times
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well the original letter we got that started out there are no changes to your benefit was only partially true .

the benefit didn't change but the medicare payment sure does . it went from 104.50 to 389.50 based on 2014 taxes .

what stinks though is my wife was not on medicare yet in 2014 , we were not retired and had an unusually large income that year from the sale of some commercial lease rights .

now it is 1/4 that amount in 2015 .

so we will try an appeal too but like you i expect it remain unchanged from the 389.50 . i don't see the logic of basing her first year on medicare on a year you were not retired nor had anything to do with medicare yet

Last edited by mathjak107; 01-13-2016 at 06:06 PM..
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Old 01-13-2016, 05:48 PM
 
30,072 posts, read 47,312,423 times
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We havent done appeal
My husband does not seem interested
Cant get him motivated
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