In 2011, most Medicare participants pay $96.40 a month for Medicare Part B, which covers doctors bills. However, some seniors pay more, perhaps much more. With a high income, Medicare participants will pay anywhere from $161.50 to $369.10 a month for Part D: the higher your income, the more you ll pay.
Starting this year, the same high-income seniors also will pay more for Medicare Part D plans covering prescription drugs. The extra Part D premiums range from $12 to $69.10 a month. For married couples, if both spouses are on Medicare, both will have to pay higher premiums if their joint income is over certain levels.
To be affected, your income (including tax-exempt income) must be at least $85,000, or at least $170,000 on a joint return. There is a two-year time lag because income-based Medicare premiums rely on income tax data. If you have high income in 2011 and file your tax return in 2012, you ll owe steep Medicare premium in 2013.
Therefore, you need to be careful about capital gains and Roth IRA conversions if you are age 63 or older. Taking such gains and converting those IRAs will raise your income and may boost your Medicare premiums for the year that comes two years after the event.
