The Independent Investor
By Bill Schmick
Medicare premiums and your income
We all know that Medicare is not free. Once we enroll in Parts B and D, we start
paying monthly premiums. What many consumers fail to realize is that how much
you pay depends upon how much you make.
For most of us, this is a moot point. We assume that we will be retiring at 65
years of ^ge (at the same time Medicare kicks in), but that assumption is no longer
accurate. The reality is that Social Security, retirement, and Medicare can happen
at different times in your life.
Take, for example. Social Security benefits. Every year the target date for full
retirement creeps higher. It used to be 65, but'for many it will edge up to almost
67 over .the next few years. When that occurs, a worker will usually sign up for
Medicare A, but delay enrolling in Parts B and D until after fie or she retires and is
no longer covered by his/her company’s health insurance program.
What most applicants don’t know until it is too late is that your monthly
Medicare premiums will be based on your last two years’ annual income—but the
actual logistics of that can be confusing. Here’s why.
Your reported income follows a governmental processing chain where once the
IRS processes your tax returns, they pass that information on to Social Security,
which, in turn, feeds the data to Medicare, which then determines your premiums
based on those numbers.
Let’s say you are applying for Medicare Parts B and D right now. It will take
months before the IRS gives Social Security your 2017 tax returns, and even
more time before that data gets to Medicare. Bottom line: there is a big-time lag
between your current income and when it shows up in your Medicare premiums.
That means if you are retiring now and made less than $85,000 (as a single
taxpayer, or $170,000 filing jointly) in the calendar year 2016, your premiums
would qualify at the base rate of $ 134/month for Part B and $13/month for Part D.
Above that income level, your premiums increase to $267.90 and $33.60, if you
make over $85,000-$107,000 ($170,000-$214,000 jointly). They juitip again above
$133,500 or $267,000 jointly. And again, and again, until you can be paying as
much as $428.60 and $74.80 per month when your income exceeds $160,000 or
$320,000 jointly. If your spouse is also retired and on Medicare, then double that,
premium amount. Those couples making above $320,000/year, for example, will
pay $503.40 per month or $6,040.80 a year.
Social Security determines what you pay each year, based on your modified
adjusted gross income (MAGI) as reported to the IRS. MAGI would include
things like wages, dividends, rental income, capital gains and ndn-taxable Social
Security benefits. If you earn more (or less) the following year. Social Security will
adjust your monthly premiums. They call it your income-related monthly adjusted
amount. That premium will be deducted from your Social Security income check
or, if you are not taking Social Security yet, it will be billed to you.
Theoretically, your premiums should be adjusted every year, with a lag. So, if
you report a high-income number to the IRS for-the two years prior to retirement,
you can expect to pay a lot in Medicare premiums. What happens when your
income drops, as it usually does once you retire?
You can petition for a Request for Reconsideration to reduce your Part B
premium if you feel there is a compelling reason why you should not be paying
a higher premium. The most common reason most petition is that income has
dropped dramatically in retirement. Other reasons might include marriage,
divorce or being widowed. The loss of income-producing property and changes or
termination of a pension would also count.
Appeals work some of the time, but not all the time. It is a lengthy process
and you still must pay your premiums while the petition makes its tortuous way
through this process. It costs nothing to petition, however, and you might win in
the end.
A much better approach, if you can manage it, is to reduce your income as much
as possible two years prior to signing up for Medicare B and D. That is not always
easy to pull off. You might reduce your hours and compensation, for example, if
your employer is flexible; or, if your spouse works and has family health coverage,
you could retire, delay Medicare coverage for two years and then apply. It comes
down to what you can afford to give up now for future benefits in the years ahead
Bill Schmick is registered as an investment advisor representative and portfolio
manager with Berkshire Money Management (BMM), managing over $200 million
for investors in the Berkshires. Bill’s forecasts and opinions are purely, his own and do
not necessarily represent the views of BMM, and none of his commentary is or should
be considered investment advice. Direct your inquiries to Bill at 1-888-232-6072 or
Bill@afewdollarsmore.com. Visit www.afewdollarsmore.com for more of Bill’s insights.
ON THE GRILL
Smoked Whole Chicken
By John Clarke
One of our favorite meals is a smoked whole chicken. Food Lion and our other
area grocers.offer several choices, including the larger, plumper Perdue brand,
an Oven Stuffer Roaster, but a whole chicken of about six pounds will offer you
several wonderful meals and if you are a little more industrious, chicken salad to
boot.
As you will recall from some of the earlier articles, we use a ceramic grill known
as a Big Green Egg. This type of grill really allows you to control the temperature
and smoky goodness. But all grills work and if you own a gas grill, you can prepare
yours for indirect cooking by lighting the burners on only one side. A Weber style
grill can work quite well, too, if you use a reverse sear insert or take the time to
stack your briquettes around only one side.
Cooking enthusiasts and experts are having a little debate about the science of
brining a bird, but it still is pretty useful and renders a chicken that has a nice,
moist taste. You will need a container large enough to hold the bird so you can
brine it for at least four hours, but overnight is optimal (a clean cooler will work
as well). An internet search will yield a good brine recipe, but you can opt for salt
(the key ingredient), broth, brown sugar, peppercorns, thyme, sage and rosemary
to keep it simple. Biggreenegg.com has some good brining and injection recipes as
well.
Following a soak of at least 4 hours, you will want to pull the bird and pat it
down to dry it off My wife, Anne, uses a food processor to make a mixture of
softened butter, parsley, sage, rosemary and thyme to slide under the skin. Gently
run your index finger under the skin to push in the butter and herbs as far down
the body of the bird as you can, taking care not to break the skin. Sometimes with a
whole chicken, the internal parts either get omitted or are incomplete. If you enjoy
chicken livers, toss those parts in a pan on the stove and cook in Worcestershire
sauce-seasoned water over low heat for a nice snack.
Absent a brine, salt and pepper the bird thoroughly as that will also be sufficient.
I like to use silicone cooking bands to tie down the legs and hold the wings in
tightly to the bird’s carcass. You can find these at Ginny Gordon’s in Morehead
City or online at amazon.com. If you enjoy a rub, make one with olive oil and your
favorite rub flavor—but take care that you don’t end up with too much salt.
By now, you have worked with your grill and you are a team. You know more or
less about where you need to set your dampers so that you can reach and hold 325
degrees (the perfect baking temperature for your bird). You will need a plate setter
or deflector (disposable pans work, too, if you have a Weber style charcoal grill) to
avoid having the heat directly under the chicken. Add water and some spices to the
pan (include any butter and herb mix that may be left over), and position it under
the bird to catch the drippings.
(Continued on page 26)
June 2018
The Shoreline