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Financial & Estate Planning

Avoiding Medicare Premium Shocks

WORTHWHILE CONVERSATIONS

AVOIDING MEDICARE PREMIUM SHOCKS

Q: IS IT COMMON FOR INDIVIDUALS APPROACHING AGE 65 TO FEEL INTIMIDATED BY MEDICARE?

Yes. In our 46-year history of advising clients, we’ve consistently received questions about this milestone. People worry a good deal about their health insurance, so it’s often a key item for them as they approach age 65. However, you might be surprised to know that we actually receive more questions after clients have enrolled. Medicare premiums are not one size fits all, so it’s often a shock to someone when their premiums increase, sometimes, significantly.

Q: CAN YOU ELABORATE MORE ON WHAT YOU MEAN BY “SIGNIFICANTLY?”

Depending on an individual’s total income, Medicare premiums can jump by more than 200%.  This jump can be triggered by a bump in your income, including retirement payments, selling property at a capital gain or receiving Required Minimum Distributions (RMDs) from IRAs. We recently met with a retired power company executive who had sold a few shares of company stock to pay off his daughter’s student loans. This one-time sale generated a relatively small, $6,000 capital gain. However, this sale also had the unintended consequence of increasing the retiree’s Medicare premiums by $2,100. That’s a 42% adjustment!

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