Medicare

No sympathy wanted, sought or deserved … but, don’t lecture me about fair share

I started work in 1961 right out of high school. I was a union mail boy in a large corporation earning just above minimum wage. Forty-eight years later I retired from the same company where I achieved Vice President during my final two years working.

Like everyone else I paid my Social Security and Medicare taxes (for Medicare on all earnings since the law changed in 1993). So, I paid more in Medicare taxes than the vast majority of Americans.

When I retired, because the tax code limits earnings that can be used in a qualified pension plan, a portion of my earned pension must come from a plan that is not guaranteed. The IRS calls that deferred compensation. As a result, before I could receive that portion of my pension I had to pay Medicare taxes on the total expected value of that pension whether I actually receive it or not. I was required to write a check to Medicare for $16,000.

During my working years I also ran a small side business to help pay college costs and then I paid both the employer and worker portion of payroll taxes.

Boo hoo don’t cry for me

Now that my wife and I are on Medicare, we pay our Medicare premiums just like everyone else. Premiums are income based for anyone with an income of $85,000 or more and as a result of Medicare Access and CHIP Reauthorization Act of 2015, effective 1/1/2018 the income amounts for paying up to 80% of the Part B and D premium are lowered and not adjusted for inflation so more and more people will be affected in the future. The normal premium is 25% of the Medicare premiums.

I just received my Social Security letter for 2018 and as in the past my net benefit is lower because my premium deductions are considerably higher. Premiums are based on what is known a MAGI. That is, they use your adjusted gross income plus income that is excluded from federal taxes. For example, years ago I began investing in a municipal bond mutual fund, an investment with low-interest to help local government financing and in return the interest is tax-free … but not for income based Medicare premiums. That interest jumped my Medicare premium even higher.

So here’s the bottom line, starting in 2018 my wife and I will be paying over $1,000 a month for Medicare plus the cost of supplemental coverage. While I don’t like what I am paying, it’s hard to claim it’s not fair and that’s the point …

Many Americans who worked and saved and achieved a measure of success, people far from multi-millionaires and billionaires, do, in fact, pay their fair share in many ways … despite what politicians and pundits claim.

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Categories: Medicare, My Opinion, Politics

2 replies »

  1. I agree it is what it is but what’s unfair is the changing of the rules after you retire and your ability to make adjustments or save more or in different investment vehicles is limited at this point. It does not give much hope to a 20 year old on doing the right thing knowing that the government will change the rules on them.

    Medicare is 10 years away and I don’t understand how all this will affect me and my retirement medical plans and what exactly I am buy through my company’s retirement medical insurance plans once I reach 65.

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  2. Something has to give.

    Draconian government is evil. I try my best NOT to “feed the beast.”

    This is why before I retired I paid off my house and was totally out of debt, so my income now [and taxes that feed the beast] could be kept as low as possible while still living in modest comfort.

    But I realize that is easier for one person to accomplish than for a couple who might not agree with that lifestyle.

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