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Medicare

Q&A: Spreading the wealth in health savings accounts

September 23, 2024 By Liz Weston

Dear Liz: I have a family health savings account with a qualifying high-deductible health insurance plan. The HSA will become my individual account when my youngest turns 26 and no longer qualifies for our insurance plan. My husband can’t contribute to an HSA because he’s on Medicare. I have read that if I die before him, he can use my HSA for his own medical expenses. Can I use my HSA to pay his medical expenses now, even though I can’t contribute to it on his behalf?

Answer: Yes. A spouse can use HSA funds for the qualifying medical expenses of a spouse as well as other dependents, according to Mark Luscombe, principal analyst for Wolters Kluwer Tax & Accounting.

If you want to pass the funds to your husband should you die first, you should make him the designated beneficiary of the account. Otherwise, the account could become taxable at your death, as mentioned in last week’s column.

Filed Under: Health Insurance, Medicare, Q&A Tagged With: health savings account, HSA, HSAs, Medicare

Q&A: A retirement catch-22 and health savings accounts

September 23, 2024 By Liz Weston

Dear Liz: My wife and I are withdrawing an unusually large amount from our IRAs in order to make a 20% down payment on the construction of a new retirement home. This withdrawal will, unfortunately, bring our modified adjusted gross income above the limits that will cause increases in our Medicare premiums in 2026. Is there any way to avoid this increase?

Answer: You have the right to appeal an increase in your premiums, but successful appeals usually require someone to have experienced a drop in income due to retirement, a spouse’s death or divorce, for example. A one-time increase in your income — because of a large IRA withdrawal or capital gains from the sale of a home, for example — usually won’t qualify for relief.

As you know, Medicare’s income-related monthly adjusted amount (IRMAA) adds surcharges to Part B and Part D premiums when incomes exceed certain amounts. In 2024, IRMAA starts when modified adjusted gross income exceeds $103,000 for individuals or $206,000 for married couples filing jointly. There’s a two-year delay between when you report your income and when IRMAA increases your premiums.

The good news is that the increase isn’t permanent. If your income goes back to normal next year, so will your 2027 premiums.

Filed Under: Medicare, Q&A, Retirement, Retirement Savings, Taxes Tagged With: IRA withdrawals, IRMAA, Medicare

This week’s money news

July 29, 2024 By Liz Weston

This week’s top story: How to get into college without applying. In other news: Solar panels in Ohio, project 2025 calls for big changes to Medicare, Medicaid, and 5 ways to practice financial self-care.

Direct Admissions: How to Get Into College Without Applying
If your senior year of high school approaches, direct admissions can help you get into college. A growing number of states are offering this path to college, and companies like Common App and Niche also provide direct admissions to students regardless of where they live.

Solar Panels in Ohio: Costs and Incentives in 2024
Ohio solar panel costs are slightly lower than the national average.

Project 2025 Calls for Big Changes to Medicare, Medicaid
The nearly 900-page conservative policy platform proposes major overhauls for a wide range of government programs and agencies.

5 Ways to Practice Financial Self-Care
Start with reflecting on your past and goals, and then make a customized plan.

Filed Under: Liz's Blog Tagged With: college, direct admissions, Financial self-care, Medicaid, Medicare, Project 2025, solar panels

Q&A: Old inherited IRA is safe from “drain it in 10 years” requirement

July 8, 2024 By Liz Weston

Dear Liz: You have written that non-spouse beneficiaries are now required to drain their inherited IRAs within 10 years. Is this requirement retroactive?

I inherited an IRA from my mother in 2015. I have been taking out the minimum required each year. If I must drain the account within 10 years, will the increase in yearly income affect my Social Security benefits?

Answer: The 10-year requirement applies only to accounts inherited from people who died after Dec. 31, 2019.

IRA distributions don’t affect Social Security benefits, but could affect Medicare premiums if the withdrawal is large enough. Taxable income above certain limits triggers a Medicare surcharge known as an income-related monthly adjustment amount, or IRMAA.

Filed Under: Inheritance, Q&A, Retirement Savings, Social Security Tagged With: inherited IRA, IRMAA, Medicare, Social Security, stretch IRAs

Q&A: How capital gains boost Medicare premiums

March 18, 2024 By Liz Weston

Dear Liz: We are retired and living mainly on a pension, which covers our month-to-month needs. We own our house outright and are considering downsizing. When we do that, will the capital gain cause our Medicare premiums to go up two years later? If so, will it automatically go down again after one year?

Answer: A big-enough capital gain can trigger Medicare’s income-related adjustment amount, which are surcharges on your Part B and Part D premiums. As you note, there’s a two-year delay between the higher income on your tax returns and higher premiums.

If you’ve had a life-changing event — marriage, divorce, a spouse’s death or loss of income, for example — you can appeal the increase by filing form SSA-44. Otherwise, consider saving some of the home sale profits to cover your higher premiums for that one-year period.

Filed Under: Medicare, Q&A Tagged With: capital gains, home sale, IRMAA, Medicare, medicare premiums

This week’s money news

March 11, 2024 By Liz Weston

This week’s top story: When you want to leave your medicare advantage plan but feel stuck. In other news: How the SVB collapse still ripples through banking, 5 financial mistakes to avoid when you are self-employed, and what small-business owners need to know about NIL sponsorships.

When You Want to Leave Your Medicare Advantage Plan — But Feel Stuck
How to get out of your Medicare Advantage plan if it’s not right for you — and what to do if there are no good alternatives.

How the SVB Collapse Still Ripples Through Banking, 1 Year Later
Five banks failed last year, including Silicon Valley Bank. Keeping your money FDIC-insured goes a long way to prepare you for any future bank collapse.

5 Financial Mistakes to Avoid When You Are Self-Employed
Self-employment can be rewarding, but it can also be expensive when you make certain financial mistakes.

What Small-Business Owners Need to Know About NIL Sponsorships
Small-business owners can use name, image, likeness sponsorships, but should be intentional and avoid investing simply as fans.

Filed Under: Liz's Blog Tagged With: Medicare, Medicare Advantage plan, self-employment, Silicon Valley Bank, small business

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