How to plan for Medicare surcharges

According to The Wall Street Journal, high-income Americans covered by Medicare should make tax changes now to minimize an increase in premium surcharges.

These surcharges apply because Congress decided the top 5% or so of Medicare recipients should contribute more for their coverage than lower earners. For example, the total annual Part B premium for a single person with income between $133,500 and $160,000 is expected to rise 30% in 2018—from $2,856 to $3,720, according to research by the Kaiser Family Foundation, a nonpartisan health-policy nonprofit based in Menlo Park, Calif.

The key number for planning is “modified adjusted gross income,” which in this case usually means a person’s adjusted gross income (AGI) plus any tax-exempt interest income. Moves that could help people close to a surcharge threshold include donating appreciated assets such as stocks instead of shares to lower AGI and utilizing a Roth IRA, among others.

For more information on how to best plan for these surcharges, contact a ShindelRock tax professional today.