How Medicare is changing in 2018

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The Centers for Medicare and Medicare Services have recently announced how Medicare is going to change in 2018. While there are little changes, and most of the changes will be absorbed by enrollees Medicare Supplement coverage, it is still important to stay informed and understand what that supplement is paying for.

Original Medicare Part A

Part A of Original Medicare, which covers hospital expenses, will have some increases. The inpatient hospital deductible is increasing, to $1,340 from $1,316. This benefit covers the first 60 days in the hospital. The daily coinsurance for days 61-90 in the hospital is increasing from $329 to $335, and the daily coinsurance for lifetime reserve days, which starts on day 91, is increasing from $658 to $670.

Part A is also increasing for beneficiaries in skilled nursing facilities. For days 21 through 100, the daily coinsurance will increase to $167.50 from $164.50.

Most consumers with a Medicare Supplement will have these charges covered for them by the supplement.

Original Medicare Part B

Part B, which covers outpatient and doctors services, will not have a premium increase; it will be staying the same at $134 monthly for 2018. Some enrollees will have a Part B premium increase due to the fact that they were not paying this $134 because of the “hold harmless” provision. The “hold harmless” provision requires that if Social Security benefits were not increased in the past, Part B premiums cannot be increased either. Social Security benefits are increasing 2% in 2018 due to the Cost of Living adjustment, therefore, most enrollees Part B premium will now be $134.

Some people will pay a higher Part B premium due to IRMAA, or income-related monthly adjustment amounts.  Since 2007, beneficiaries with higher incomes have paid a higher Part B premium. IRMAA affects about 5% of Medicare beneficiaries.  If you are single and make over $85,000 a year or you are filing a joint return and make more than $170,000, you could pay as much as $428.60 a month for your Part B premium because of IRMAA.  This is based on a scale, so the more you make, the more your IRMAA surcharges will be, but premium payments are capped at $428.60 a month right now.

The Part B deductible is also staying the same, remaining at $183. If you have a Medicare Supplement Plan G, you pay this out of pocket, and this amount is unchanged. If you have a Medicare Supplement Plan F, this deductible is paid for you. If you would like to learn more about Medicare Supplement plans, go to CardinalGuide.com/Medicare or read chapter 3 in “The Complete Cardinal Guide to Planning for and Living in Retirement”. To see premium comparisons of different Medicare Supplement plans, pick up “The Complete Cardinal Guide to Planning for and Living in Retirement Workbook”.  Medicare Supplements can be switched any time during the year.

These changes will not have a huge impact on most Medicare beneficiaries due to the fact that Medicare Supplements are going to pay these increases.  For more information on Medicare, how it works, IRMAA, supplement options, and to get a personalized Medicare Supplement rate quote,  visit CardinalGuide.com/Medicare.

Hans Scheil is the author of “The Complete Cardinal Guide to Planning for and Living in Retirement” and the accompanying workbook. He can be reached at Hans@CardinalGuide.com.

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How Medicare is changing in 2018

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Understanding the Upcoming 2026 Income Tax Increase: What You Need to Know

A Brief History of the Tax Cuts and Jobs Act (TCJA)

In today’s Cardinal lesson, we’re discussing the significant changes coming to income tax rates in 2026. This isn’t a proposal but a law already set in motion. The Tax Cuts and Jobs Act (TCJA), passed in 2017 and effective from January 1, 2018, brought about substantial reductions in income taxes. However, these reductions were only funded for eight years, meaning they will expire at the end of 2025.

What Changes to Expect in 2026

As of January 1, 2026, the tax rates will revert to their 2017 levels, adjusted for inflation. Key changes include:

  • The 12% bracket will increase to 15%.
  • The 22% bracket will rise to 25%.
  • The top rate of 37% will revert to 39.6%.

Not Just a Proposal

It’s crucial to understand that this change is already the law. Many people mistakenly believe that the tax rate increases are still under discussion. However, unless Congress enacts new legislation, these higher rates will take effect as scheduled.

Implications for Your Financial Planning

Impact on IRAs and 401(k)s

With the current lower tax rates, now is the time to consider strategies like Roth conversions. By converting funds from a traditional IRA to a Roth IRA now, you can potentially save a significant amount in taxes over the long term.

Why Planning Ahead is Crucial

For individuals with substantial retirement savings, understanding these changes is vital for effective tax planning. The window to take advantage of the current lower tax rates is closing, and planning ahead can make a significant difference.

Case Studies and Planning Opportunities

Hans Scheil and Tom Griffith discuss specific case studies and planning strategies in our latest video. These examples illustrate how different scenarios can be managed effectively:

  • Case Study 1: A married couple with an adjusted gross income of $150,000 in 2024 can convert part of their IRA to a Roth IRA, taking advantage of the lower current tax rates.
  • Case Study 2: High-net-worth individuals with large IRAs can save substantial amounts in taxes by planning conversions over the next two years.

Estate Tax Considerations

The TCJA also doubled the estate tax exemption, which will revert in 2026. This change can significantly impact high-net-worth individuals, making estate planning more crucial than ever.

Action Steps to Take Now

  • Review Your Current Tax Situation: Analyze how the upcoming changes will affect your finances.
  • Consider Roth Conversions: Take advantage of the lower tax rates before they expire.
  • Plan for Estate Taxes: Assess your estate plans in light of the changing exemptions.

Conclusion

The changes coming in 2026 are significant, but with proper planning and informed decision-making, you can navigate these changes effectively. Watch our video for more detailed insights and personalized advice.

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