In this series, our sistersite ThinkAdvisor offers two distinct perspectives on the sametopic — one from an academic, the other from a practicingfinancial advisor. (Check out the previous column here.)QUESTION:How do you plan for health care expenses in retirement?
THE ADVISOR — JOE ELSASSER,CFP, PRESIDENT, COVISUM:
- Medicare Part B premiums: Most people pay abase premium of $134 per month for Medicare Part B doctors andoutpatient coverages. Some people with lower Social Securitybenefits pay less, due to the “hold harmless” provision thatprevents the take-home amount of a Social Security check from beingreduced due to an annual increase in the Medicare Part Bpremium.
- Medicare Part B premiums surcharges: Somepeople pay more for Part B. The higher your modified adjusted grossincome (MAGI) is, which in this case is equal to your adjustedgross income, plus nontaxable interest income, the higher yourpremium will be. For a couple with income over $320,000 in 2016,the surcharge will be $294.60 per month. In other words, a marriedcouple with MAGI over $320,000 would pay over $10,000 for Part Bcosts in total, including the base premium plus the surcharge.
- Medicare Part D premiums and surcharges:Medicare drug plans carry a premium and also have surcharges basedon income. The lowest premiums for 2018 are in the $15 per monthrange and, depending on the client needs, coverage can be as highas $200 per month. For people with incomes over $320,000 for acouple or $160,000 for an individual, the surcharge would be anextra $74.80 per month per person on top of the base plancost.
1(Thanks to medicarebackoffice.com, a related company, for currentpremium estimates).[1] Employee Benefit Research Institute, Savings Neededfor Health Expenses for People Eligible for Medicare: Some RareGood News pg 1, 2012.
THE QUANT — RON PICCININI,PH.D., DIRECTOR OF PRODUCT DEVELOPMENT, COVISUM:
Ipsa senectus morbus est.,th1th2341 Does StayingHealthy Reduce Your Lifetime Health Care Costs? pg 2-3, May2010.2 A Reality Check on Health Care Costs forEarly Retirees. June 2014.3 Health Care Costsfor Retirees Rise to an Estimated $275,000 Fidelity Analysis Shows.August 2017.4 Survey of ConsumerFinances. 2016.
Joe Elsasser, CFP, RHU, REBCdeveloped Social Security Timing software for advisors in 2010.Through Covisum, Joe introduced Tax Clarity in 2016.Basedin Omaha, Nebraska, Joe co-authored “Social Security Essentials:Smart Ways to Help Boost Your RetirementIncome.”
Renaud “Ron” Piccinini,Ph.D., came from France to America, finally settlingin Omaha, Nebraska. He brings extensive experience in buildingworld-class risk systems, supporting tens of billions of dollars inassets to Covisum. Previously, Ron co-founded PrairieSmarts, asoftware business. Ron wrote his dissertation on what are now knownas “Black Swan Events.”Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.
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jelsasser2
Joe Elsasser is a certified financial planner and the founder and president of Covisum, a financial technology company. Under his leadership, Covisum has developed a variety of groundbreaking financial planning tools, including Social Security Timing, which was the first patented Social Security optimizer, Tax Clarity, SmartRisk and Income InSight. Joe co-authored “Social Security Essentials – Smart Ways to Boost Your Retirement Income” and is a regular contributor to USA Today, InvestmentNews, Retirement Daily, CNBC and ThinkAdvisor. Joe also maintains a financial planning practice in Omaha, Nebraska.
