Rising Medicare Premiums Make an Important Point About Retirement Planning

By now, you have probably heard that premiums for Original Medicare Part B, along with deductibles for both Part A and B, were increased just slightly for 2019. This is no surprise, as Medicare premiums and deductibles do change periodically.

For those who didn’t hear the news, let’s review the changes to Original Medicare premiums and deductibles (these figures do not apply to Part C, or Advantage Plans):

• Part B standard premiums were increased from $134 to $135.50
• The Part B annual deductible was raised from $183 to $185
• The Part A inpatient hospital deductible increased from $1,340 to $1,364 per benefit period

Keep in mind that the Part B premiums listed above apply to standard Part B premiums only. Part B premiums are based upon income, and those who earn less than $85,000 annually (for individuals) or $170,000 annually (for married taxpayers) will qualify for the standard premium amounts. If your income falls above those limits, your premium is calculated according to a schedule ($189.60 to $450.60).

Most people don’t pay Part A premiums at all, provided that the length of their career meets requirements. The taxes you paid toward Medicare during your career guarantee your Part A plan in retirement, so there’s no need to worry about premium increases each year unless you didn’t meet the work requirement.

You have probably noticed that these increases are quite small, and you would be correct in assuming that they won’t dramatically impact most retirees budgets. The point to remember, however, is that these increases do happen periodically. Over the course of your retirement years, which could be 20 years or more, you might see a noticeable difference in Medicare premiums over time.

That’s why we always urge retirees to plan for flexibility, and maintain a retirement budget with a bit of room for changes. To discuss methods of establishing retirement income that can adjust to meet your needs over the years, give us a call to schedule an appointment.