The Real Cost of Medicare Increases
December 31, 2020
This article is courtesy of our sister company, Smith & Howard Wealth Management.
Each October, the Social Security Administration announces an increase in benefits for the following year. And every November, Americans find out how much their Medicare premiums will increase the next year. On January 1, 2021, Social Security benefits will increase by 1.3% while the standard Medicare Part B premiums will increase by 2.7%. Part B premiums could have gone up by almost 11% if not for the Continuing Appropriations Act H.R. 8337, passed by Congress in September 2020. That piece of legislation capped the increase for 2021 at 25% of the real cost of Part B premiums.
An important point to note is that the Medicare system is already strained. Having it absorb most of the increase in premiums, instead of passing that cost on to the American people, adds pressure to the program. In all likelihood, Medicare recipients will see prices continue to rise substantially in the future. To make sure you plan for these future price increases, it is important to speak with your financial advisor to ensure your financial plan can withstand the rising cost of Medicare expenses.
Let’s break down the Medicare premium numbers for 2021. (These figures are based on 2019 Modified Adjusted Gross Income/MAGI numbers.)[table id=50 /]
As you can see from the above chart, increased income will also raise your Medicare premiums. A financial advisor can give you a comprehensive look at your financial plan – or help you develop one – so that you can work in tandem to address any increased Medicare premiums that could otherwise be avoided. Some important topics to discuss with your advisor are:
Understanding Medicare doesn’t have to be a confusing, burdensome process. Getting help from the right advisor, who understands the process and can help you optimize your retirement planning together with your Medicare planning, can be paramount for the longevity of your retirement funds. If you have any questions, please contact Michael Mueller, CFP® or Jeff Brandon, CFP® or call Smith & Howard Wealth Management at 404-874-6244.
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