Government Benefit Programs

Medicare

Federal Tax of Your Medicare Benefit (Means Testing)

The following information was obtained from a February 4, 2013 Fortune magazine article written by Janice Revell. The article is titled “Cut Your Exposure to Medicare Taxes.”

  • The means testing of Medicare began in 2007, when high-income retirees were required to start paying higher premiums for Medicare Part B.
  • It applies to seniors with incomes above $85,000 a year (or $170,000 for married couples).
  • The income thresholds, which used to be increased for inflation each year, were frozen under the Affordable Care Act through 2019.
  • Currently, the best way to minimize the future impact of means testing is to put more of your retirement savings into a Roth IRA or a Roth 401(k). Another way is to contribute to a 401(k) / 457 plan and do a direct rollover (trustee to trustee) to a traditional IRA upon retirement or termination. Funds in a traditional IRA can be converted to a Roth IRA at a later time.


Social Security

Windfall Elimination Provision (WEP)

If you receive a pension from employment in which you did not pay Social Security taxes and you also qualify for your own Social Security retirement or disability benefit, your Social Security benefit may be reduced, but not eliminated by WEP. The amount of the reduction, if any, depends on your earnings and number of years in jobs in which you paid Social Security taxes, and the year you are age 62 or become disabled. To estimate WEP’s effect on your Social Security benefit, visit www.socialsecurity.gov/WEP-CHART. For more information, please see Windfall Elimination Provision (Publication No. 05-10045).

Government Pension Offset (GPO)

If you receive a pension based on a federal, state or local government work in which you did not pay Social Security taxes and you qualify, now or in the future, for Social Security benefits as a current or former spouse, widow, or widower, you are likely to be affected by GPO. If GPO applies, your Social Security benefit will be reduced by an amount equal to two-thirds of your government pension, and could be reduced to zero. Even if your benefit is reduced to zero, you will be eligible for Medicare at age 65 on your spouse’s record. For more information, please see Government Pension Offset (Publication No. 05-10007).

Federal Tax of Your Social Security Benefit (Means Testing)

In 1984 Social Security’s meaning testing approach began (potentially taxing 50% of you benefit). In 1994 a second layer of Social Security tax was added (potentially taxing 85% of your benefit). The income thresholds were not indexed to inflation. Consequently, an ever increasing number of Social Security recipients will have their Social Security benefit taxed in the future.

The following excerpt is from the Bogleheads Wiki:

The relevant income for Social Security taxation includes all items which are normally part of your adjusted gross income, plus tax-exempt interest income, plus 50% of your Social Security benefits. (Historically, the 50% represents the fact that half of your Social Security contributions were made by your employer and thus not taxed.)

There are two relevant base amounts; unlike most income limits in the tax code, they are not adjusted for inflation. The lower base is $25,000 if you are single and $32,000 if you are married. The upper base is $34,000 if you are single and $44,000 if you are married.

If your relevant income is below the lower base, none of your Social Security benefit is taxable. For every $1 of relevant income between the lower and upper bases, 50 cents of your Social Security benefit is taxable, up to 50% of your total Social Security benefit. For every $1 of relevant income above the upper bases, 85 cents of your Social Security benefit is taxable, up to 85% of your total Social Security benefit.

For example if you are married and filling jointly:

Adjusted gross income of $32,000 to $44,000 – 50% of you SS benefit is taxable.

Adjusted gross income of $44,000 and up – 85% of your SS benefit is taxable.

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When to apply for Social Security


Insurance

Information about City life insurance and death claims

Important Insurance Info

Important Insurance Enrollment Information

GA Life & Health Insurance Guaranty Assoc.

Contact information:
2177 Flintstone Drive, Suite R
Tucker, GA 30084
770 621-9835

Association Web site: www.gaiga.org

State Insurance Department: www.inscomm.state.ga.us

Are all insurance policies fully protected?

“Not always. If your insurance company fails, the maximum amount of protection provided by Georgia guaranty association for each type of policy, no matter how many of that type of policy you bought from your company, is:

Life Insurance Death Benefit: $300,000 per insured life

Life Insurance Cash Surrender: $100,000 per insured life

Health Insurance Claims: $300,000 per insured life

Annuity Cash Value (Present Value): $100,000 per contract owner annuitant

Annuity in benefit payout mode: $300,000 per contract owner”

“The Georgia guaranty association’s liability cannot be greater than the obligation for which the insolvent insurer would have been liable but for its insolvency. The Association cannot be liable for punitive or exemplary damages.”