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Medicare premiums are MEANS-TESTED! Let me state that again…Medicare premiums are MEANS-Tested!
What does that mean? Well, simple. You pay higher premiums the more income you have.
“Oh, that’s only for rich people!” You might be thinking. Uh huh. Think again.
In this video I show you how a single taxpayer, let’s say a widow, can have her Medicare Part B and D premiums increase by 100% with only a 20% increase in income.
Think it can’t happen to you?
Well, your Medicare premiums are based on your Modified Adjusted Gross Income (MAGI).
MAGI is ALL the income you receive PLUS your tax-exempt interest.
MAGI is before you use your Standard Deductions or itemized deductions you may claim.
Remember, there is a huge difference between TAXABLE income and Gross Income.
And there is another difference between Gross Income and Modified Adjusted Gross Income too.
If you are ignorant of how this works, you can easily be paying Medicare Premiums well above what you anticipated when you first went into retirement.
Don’t let this be you. Plan accordingly. In fact, start planning in your 50s so you can avoid leaving your surviving spouse a huge tax bill. Because by then it’s too late to change tactics.
At that point, it’s just pay the tax man and hope he or she will be okay.