By Patricia L. Burris, CFP®, Vice President, Corporate & Retirement Plan Services

Provided by Meld University

Upcoming Event:

Click here for details and to register for our next Meld University event: Retirement Planning – From Growth to Income The class will be held on Tuesday, November 13th at Birmingham Botanical Gardens. There is no cost to register, but seating is limited.

Social Security Monthly Benefit Increase

On October 11th the Social Security Administration announced a 2019 increase of 2.8% in the Social Security and Supplemental Security Income benefits recipients will receive beginning in January. This is 0.8% more than the increase received for 2018 which was 2.0%. Since 1975, automatic cost-of-living adjustments (COLA) for Social Security recipients occur when there is an increase in inflation as measured by the Consumer Price Index for Wage Earners and Clerical Workers (CPI-W). Increases in Social Security benefits occur when there is an increase in the average CPI-W for the third quarter when compared to the third quarter of the last year in which a COLA was made.

Social Security Taxable Wage Base COLA

The maximum amount of earnings subject to the Social Security tax for workers who pay FICA tax will increase to $132,900 in 2019 from $128,400 in 2018. This increase is based on the national average wage index which rose 3.45%.

New Social Security Earnings Test Limit

Individuals who receive Social Security benefits prior to their Full Retirement Age (age 66 for people born between 1943 and 1954), are subject to what is known as the Earnings Test. If these individuals earn more than the earnings limit of $17,640 in 2019 (increased from $17,040 in 2018), the Social Security Administration (SSA) will deduct $1 from benefits for every $2 earned over $17,640. People turning Full Retirement Age (FRA) in 2019 are subject to a higher earnings limit of $46,920 in 2019 (increased from $45,360 in 2018) up until the month they turn FRA. If these individuals earn more than $46,920 prior to the month they turn FRA in 2019, the SSA will deduct $1 from benefits for every $3 earned over the limit. Once they reach FRA, they can earn as much as they want with no deduction in benefits. For more details on the earnings limit and how it’s computed, see the August 29, 2018 article, Social Security and the Earnings Test, in the Meld University tab of our website or by clicking here.

Medicare Premium Increase

The Centers for Medicare & Medicaid Services (CMS) announced the 2019 premiums on October 12th, which is about a month earlier than their usual annual announcement. The Part B (covers physician and related services) premium will increase by $1.50 from $134 in 2018 to $135.50 in 2019. Note that some Medicare recipients are currently paying $130 (instead of $134) in Part B premiums and will more than likely see their Part B premium increase to $135.50, assuming their 2.8% increase in Social Security will result in an increase of at least $5.50 ($135.50 less $130). This is because a hold harmless provision prevented Medicare premiums increasing more than the SS COLA in 2018 limiting their 2018 Part B premium to $130.

Medicare Deductibles for 2019

The Medicare Part A (hospitalization) deductible for “spell of illness” increases to $1,364 from $1,340 in 2018. A “spell of illness” means that the recipient did not return to the hospital for the same illness for a period of 60 days. The annual Part B deductible for 2019 will be $185, an increase of $2 from 2018.

Medicare Premiums & IRMAA

The Medicare Part B and D (prescription drugs) premiums you pay are based on your Modified Adjusted Gross Income (MAGI) as reported on your tax return two years ago. Therefore, your 2019 premiums will be based on your 2017 tax return. Single taxpayers whose MAGI is over $85,000 and married filing joint taxpayers with MAGI over $170,000 will pay an additional premium known as Income Related Monthly Adjusted Amount (IRMAA). The Part B and D IRMAAs have also increased for 2019.

The table below lists the Part B premiums and D income adjustments for 2019.

2017 MAGI Single

Taxpayers

2017 MAGI Married Filing Joint TaxpayerPart B PremiumPart D IRMAA
$85,000 or less$170,000 or less$135.50$0
$ 85,001 – $107,000$170,001 – $214,000$189.60$12.40
$107,001 – $133,500$214,001 – $267,000$270.90$31.90
$133,501 – $160,000$267,001 – $320,000$352.20$51.40
$160,001 – $500,000$320,001 – $750,000$433.40$70.90
Above $500,000Above 750,000$460.50$77.40

 

To Determine Your 2019 Social Security Benefit and Medicare Premiums

In December you will be able to find out what your 2019 Social Benefit and related Medicare premiums will be by logging on the Social Security website at www.ssa.gov/myaccount. If you haven’t already established an account on the ssa.gov website, I strongly encourage you to do so. Establishing an account will not only let you see your Social Security and Medicare related benefit information, but it will also help keep your Social Security number and related information secure. When you establish a “myaccount”, you will also establish several security questions and an option for the SSA to text or email you a security code each time you try to enter the site. If you have not already established an SS account, simply follow the steps in the SSA publication “My Social Security, How to Create an Online Account” to get yours set up.

You will also receive a Social Security and Medicare COLA notice by mail sometime in December. Unless you are subject to paying higher Medicare premiums due to IRMAA, or have a foreign mailing address, you will be able to choose if you want to receive future notices by mail or online.

Meld Financial, Inc. may be reached at:

205-967-4200

meld@meldfinancial.com

P. O. Box 43626

Birmingham, AL 35243

www.meldfinancial.com

Securities offered through Triad Advisors, LLC . Member FINRA/SIPC.

Advisory services offered through Meld Financial, Inc.

Triad Advisors and Meld Financial are not affiliated.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – fool.com/retirement/2018/01/02/lifetime-income-retirees-need-it-and-heres-how-to.aspx [1/2/18]

2 – ssa.gov/planners/retire/r&m6.html [1/25/18]

3 – cbsnews.com/news/the-top-retirement-decisions-facing-older-workers/ [1/25/18]

4 – nber.org/papers/w24226.pdf [1/18]

5 – ssa.gov/planners/taxes.html [1/25/18]