Medicare Part B

[Snaggletooth]

Thomas, Age 66, begins to draw Social Security. He is covered by his wife's (age 57) medical insurance.

Medicare Part A is not optional, and is withdrawn out of his monthly Social Security benefits. Part B is optional, and he declines coverage because of his coverage under his wife's insurance. The insurance essentially covers practically everything that would be covered under Part B, and he thus saves this extra $90/mo by declining it.

However, wife will work only 5 more years. We are told if Tom later decides to be covered by Part B, he is still eligible, but will be penalized for every year he was eligible but declined coverage.

For all practical purposes, Social Security telephone help is inaccessible for this question. Can anyone tell us how much of a penalty (if any) will be assessed?

This is not a tax question, but tax practitioners are approached many times about retirement-related questions. This site also is used by financial-planners, and thought it would be an appropriate subject for the forum.

Thanks, Snag

[ChEAr$]

The answer to your question

Thomas, Age 66, begins to draw Social Security. He is covered by his wife's (age 57) medical insurance.

Medicare Part A is not optional, and is withdrawn out of his monthly Social Security benefits. Part B is optional, and he declines coverage because of his coverage under his wife's insurance. The insurance essentially covers practically everything that would be covered under Part B, and he thus saves this extra $90/mo by declining it.

However, wife will work only 5 more years. We are told if Tom later decides to be covered by Part B, he is still eligible, but will be penalized for every year he was eligible but declined coverage.

For all practical purposes, Social Security telephone help is inaccessible for this question. Can anyone tell us how much of a penalty (if any) will be assessed?

This is not a tax question, but tax practitioners are approached many times about retirement-related questions. This site also is used by financial-planners, and thought it would be an appropriate subject for the forum.

Thanks, Snag

MUST be on SSA's web site. But really I've never looked it up.

Call me Thomas, for like him, I also declined part B since I'm covered under my
US civil service wife's excellent Blue Cross policy, for which the gobment picks up about
70% of the cost. No requirement for either of us to have part B.

Maybe Thomas should look to the terms of wife's policy, or maybe he already has.

[Gretel]

I just found this info. It seems that there will be no penalty involved in your case.

http://www.medicare.gov/Publications/Pubs/pdf/11038.pdf

[JohnH]

It looks as though you got your question answered, so I'll throw in another twist on the subject of Medicare Part B & piggyback on your title.

Had a client call me last week complaining that their Part B premium was going up in 2009 because they had about $ 240K in AGI. FIrst time I've seen this, but it looks like they are means-testing the premium for high earners. The SocSec web site says only about 5% of recipients are affected, but I imagine there's going to be some complaining from those folks. The client asked me what they could do about it, and the only answer I could come up with was "make less money".

[Black Bart]

John,

Had a client...complaining...Part B premium was going up...because they had...$ 240K in AGI...

There's a pitiful case that truly plucks at the heartstrings. What's he gonna be out -- another twenty bucks?

Your cheapskate clients sound like mine.

[erchess]

The reason

Social Security enjoys widespread public support at all income levels is that it is perceived as a good value for everyone and in particular has not in the past means tested. I think that this step they have taken is a step down a very slippery slope that may one day cost the program the support of middle and upper class people. I think if I had the kind of AGI in question I would opt out of B just to thumb my nose at the system and would be fully aware that I was choosing to increase my medical costs and decrease my protection from financial catastrophe due to illness.

[Burke]

Frankly, I think it is a great idea. Just to give you an example, I have a (now) retired client whose gross AGI last year was $17,248. He paid $1,122 for Part B of Medicare (none of his SS ret benefit was taxed.)

I have another retired client whose AGI was $201,429. He paid $1,269.60 for his Part B benefit (and 85% of his SS bene was taxed, of course.) That was a difference of $147.60 in premiums for the entire year, or $12.30 per month, for the higher income client.

I don't see anything inherently unfair about that. I would not be surprised if the whole system doesn't become means-based in the next 50 years.