January 9, 2019
Medicare Changes in 2019
By Sylvia Salguero, Financial Advisor

Since the enactment of the Medicare Modernization Act in 2003, high income individuals have been subjected to IRMAA, which stands for income related monthly adjustment amount. (In the vernacular this is referred to as means-testing.)  Medicare beneficiaries whose income exceeds $85,000 for individuals and $170,000 for married couples have been paying IRMAA increases since 2007.

The standard part B premium is $135.50 per month per person in 2019; this will be paid by 60 million Medicare beneficiaries. About 3 million high income retirees will pay an addition to the standard, ranging from $54.10 to $325 per month per person. These individuals are also subject to surcharges for Medicare part D plans. Here the amounts vary considerably as the plans are run by private insurers.

According to Mary Beth Franklin of Investment News, in 2019 a new top surcharge tier will be added for very high income beneficiaries, defined as individuals with modified adjusted gross income of $500,000 or more and married couples with MAGI of $750,000 or more.  The surcharges apply to both Medicare Part B premiums along with Part D drug plans.

As an example a married couple in the new top income bracket who are both enrolled in Medicare would add $11,000 to the Part B premiums and surcharges , and more than $2,600 for prescription drug coverage.  They also need to add a Medigap policy to cover annual deductibles and co-payments, which could add up to $7,800 for two spouses, according to Franklin.  The surcharges can be appealed when a life changing event takes place, such as death of a spouse, divorce , retirement or reduced work hours, etc.  However, a one-time rise in income (such as sale of rental property, a Roth IRA conversion or a portfolio distribution) does not qualify as a life changing event and would boost the Medicare premiums for at least a year.

Here are the Medicare Part B premiums for 2019:

Data source: Medicare.gov.