Ask Bob: Why Does My Medicare Premium Take My Entire Social Security Check?

A reader took a withdrawal from her Thrift Savings Plan and now her Medicare premium is so high she has no Social Security benefit. Adviser Jim Shagawat explains how this happens.
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Question

A withdrawal from my traditional TSP (Thrift Savings Plan) after retirement has caused Medicare to take my Social Security check because they said I wasn’t paying enough for Medicare. SSA in the past told me that that would not cause IRMAA (income-related monthly adjusted amount) but later changed their mind.

Answer

A TSP withdrawal can impact Medicare premiums, depending on how much money the person makes, says Jim Shagawat, CFP®, a partner advisor at AdvicePeriod.

“Medicare premiums are based on modified adjusted gross income, (MAGI),” he explains. This is total adjusted gross income (AGI) plus tax-exempt interest. To set Medicare premiums for 2021, Social Security will look at the tax return filed by April 2020 (that shows 2019 earnings).

He adds that if MAGI (modified adjusted gross income) for 2019 was less than or equal to the “higher-income” threshold — $88,000 for an individual taxpayer, $176,000 for a married couple filing jointly — the “standard” Medicare Part B rate for 2021 applies, which is $148.50 a month. “At higher incomes,” says Shagawat, “premiums rise, to a maximum of $504.90 a month if MAGI exceeds $500,000 for an individual, $750,000 for a couple.”

Assistant editor Kim McSheridan assisted with this report.

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Email Robert.Powell@maven.io


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Question

A withdrawal from my traditional TSP (Thrift Savings Plan) after retirement has caused Medicare to take my Social Security check because they said I wasn’t paying enough for Medicare. SSA in the past told me that that would not cause IRMAA (income-related monthly adjusted amount) but later changed their mind.

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