Plan for Big Medicare Premiums After Big Income Years

ifr170922–250
Plan for Big Medicare Premiums After Big Income Years
Bob Rhea, University of Illinois Tax School Lecturer | FBFM

If you’re on Medicare and happen to have an unusually high taxable income year it will raise your premiums, but not right away. Todd Gleason has more from the University of Illinois Tax School.

Two years after a big income year the Federal…
1:06 radio
1:17 radio self-contained

Two years after a big income year the Federal government takes some of that money back by increasing Medicare premiums says Bob Rhea (ray), a presenter for the U of I Tax School.

Rhea :20 …had high income two years prior.

Quote Summary - For people who are drawing Medicare and paying Medicare premiums the IRS has a rule that says if you have a large income in one year, we wait two years and then look back and determine if you need to pay a higher Medicare premium because you had high income two years prior.

Rhea says a typical Medicare Part B and Part D prescription drug plan runs about $150 per month or about $3,600 per year for a married couple. He says it is possible for that to balloon to as much as $12,000 for a single year event because of the sale of a business or other asset.

Rhea :08 …planning for large incomes at the time of retirement.

Quote Summary - And we don’t find that out until two years later. So, it is something important to keep in mind when planning for large incomes at the time of retirement.

Rhea made his comments during a September University of Illinois Tax School event in East Peoria.