Lisa Butler, Director of Client Services at HawsGoodwin Financial, is featured as a guest blogger in the Nashville Business Journal along with Frank Cardenas, President of FEDlogic LLC.
We recently learned that the Social Security Administration announced a three-tenths of one percent raise in Social Security Benefits.
Though any increase is welcomed by beneficiaries, the increase is tied to the Consumer Price Index and the rate of inflation. These two have stayed stagnant in the last year which is the reason the increase was slight. However, the price of healthcare has been on the rise and the increase is simply not enough for our Medicare beneficiaries to combat the price of healthcare. This is why it is so important to understand that there are certain policies and laws that individuals should know about regarding their healthcare premiums, especially with Medicare.
Medicare retrieves their information from the latest tax report from the IRS. Since taxes are not due until April of each year, they are not reported onto each individual tax payers’ record until later into the year — making Medicare’s data behind by one to two years. What a lot of families are encountering is that their earnings may be vastly different from two years prior.
For example: Your 2016 Medicare premiums are derived by what the family’s earnings were in 2014, but what if your family’s earnings are considerably lower in 2015 or 2016?
Does a family have to pay inflated premiums when their financial situation has changed? For some families, the answer is “no.” This is called IRMAA (Income Related Monthly Adjustment Amount). There are certain provisions that allow some of these families that have a life qualifying changing event, to have their Medicare premiums adjusted based on the latest tax records available. It is important for families to evaluate their Medicare premiums on a yearly basis to see if they may receive a premium adjustment on their Medicare.
We have seen families paying additional Medicare premiums based on their income but through evaluation we are finding that many of these families are able to take advantage of the IRMAA policy and thus saving them thousands of dollars in premiums each year. It is important that families talk to their advisors on whether they may qualify.
When discussing retirement planning in younger years, many think about spending more time with family, traveling, and/or other leisure activities. We’ve experienced clients in retirement having second careers, volunteering or being caregivers to loved ones. Longer term financial and investment planning are essential to address the benefits and challenges of retirement; including Medicare and Social Security. Coupled with that, it is a necessity for clients to incorporate knowledgeable advisors when retirement actually arrives.
Planning can help guide them through the many factors facing them, including deciphering major governmental programs such as Medicare.
See the article in the Nashville Business Journal What we don’t know about Medicare could cost us.