Boomers who have been the most diligent savers over their careers may be shocked to learn they may be penalized for their efforts.
Medicare uses Modified Adjusted Gross Income (MAGI) to calculate beneficiaries’ premiums.
MAGI is the sum of almost every source of retiree income, including money earned through work in retirement, Social Security, pensions, distributions from self-directed plans, dividends, earned interest and capital gains.
Once MAGI surpasses $85,000 for an individual, or $170,000 for a couple, Medicare surcharges and premium increases are assessed, and automatically withdrawn from monthly Social Security benefits.
In some cases, the reduced payments could have considerable consequences on retirees’ monthly income.
“These thresholds may seem high, but many retirees, including those on traditional pensions, are already crossing them,” explained Ron Mastrogiovanni, CEO of HealthView Services.
Because Medicare income brackets are not indexed to inflation, overtime, more retirees will be affected, as interest rates rise, potentially resulting in higher retirement income.
“Surcharges will not only impact affluent Americans, but practically everyone with a moderate income,” said Mastrogiovanni.
Those premium increases and surcharges could be significant, according to HealthView’s breakdown of Medicare’s assessments.