Have you ever wondered why your monthly health insurance charges seem to increase out of nowhere? It could be due to your yearly income. This is especially true if you have Medicare since they pull data from your tax return in order to determine your monthly charges. Don’t let yourself be surprised by these increases! The helpful financial advisors at Maggi Tax are here to show you how your tax return affects your Medicare premiums.
Dissecting The Varying Costs Of Medicare
Did you know that Medicare coverage is actually split into different parts? Depending on the medical services that you need, you may need to opt for more than the base plan. The two most common parts include medical services and prescription drugs.
Medicare Part B
While Medicare Part A is primarily focused on hospital visits, you will most likely be using Part B more for regular doctor’s visits whether they be necessary or preventive. This would include your primary care doctor, chiropractic care, mental health, and so on. This is the plan that comes in handy the most when you need regular doctor’s visits to maintain your health.
Medicare Part D
When your doctor prescribes medication, those prescription drugs may be covered by Medicare Part D. Drugs are usually considered separately from regular care, and that also comes into play when your premium increases since each part will rise in price or require you to pay an additional fee.
How Your Tax Data Affects Your Premiums
This may come as good or bad news depending on who’s inquiring, but increases to your Medicare premiums only occur with those in a higher tax bracket. If you make what is considered high income, then that is when you will start seeing changes to your monthly payments. For example, Medicare Part B typically costs around $164 a month. But if you make over $97,000 a year, that price will jump up to $230 a month or more. And that’s based on individual income. The more individual income you make, the higher your Medicare premium will be. For Medicare Part D, you will need to pay an additional fee on top of your premium. Those fees begin at around $12 extra a month after your individual income reaches over $97,000 and will continue to increase with the more you make a year.
What To Expect After You File
Medicare will look at the previous two tax returns to determine your yearly income and the cost of your premiums. If your individual income was under the $97,000 threshold, then you will likely not have to worry about any increases to your Medicare charges. If you made over that amount, then it’s best to brace yourself for increased and/or additional premiums. You may receive a letter in the mail from Social Security to alert you that you’ve made the higher-income tax bracket. When that happens, it may be time to reevaluate your finances to adjust it around your increased bills.
Consult Maggi Tax For Financial Advice!
If you’re looking at increased charges for your Medicare premiums, call Maggi Tax at (727) 799-1701 to schedule a complimentary consultation for an updated financial plan! We can evaluate your income and expenses to help you come up with a personal plan that works for you. We’re here to help you stay financially stable even when faced with changes in your expenses so you can carry on with less money-related stress.