This year, Medicare introduced a new income scale that will make paying for certain coverage options such as Medicare Parts B and D more expensive once they take take effect in 2018. However, a reverse mortgage might be able to help seniors maximize their savings against these new Medicare surcharges, according to a recent Investment News article.
Officially known as the income-related monthly adjustment amount (IRMAA), these surcharges create higher Medicare out-of-pocket costs for beneficiaries without providing any additional health coverage benefits, says the article written by Katy Votava, Ph.D., RN, and president of Goodcare.com, a consulting firm that works with financial advisers and consumers on health care coverage.
Specifically, the new law updated the scale used by Social Security to determine Medicare surcharges, essentially lowering the top three modified adjusted gross income (MAGI) tier thresholds. This means more beneficiaries will be exposed to paying top levels sooner than is currently the case, said Votava.
“The good news is that there are several retirement-income planning options for advises to consider that can help people move down a bracket or two and save their hard-earned nest egg dollars,” Votava writes.
The basic strategy is to structure retirement income to maximize cash flow sources that are not included in Medicare’s MAGI calculation. One method to achieve this goal, she says, is by using a reverse mortgage, as the tax-free loan proceeds are not included in the calculation of Medicare IRMAA surcharges.
“Consider whether a HECM line of credit can be used instead to supplement taxable distributions to keep a person from going over into the next Medicare surcharge bracket,” Votava writes.
Read the full Investment News article.
Written by Jason Oliva