Income-related adjustments Archives - Medicare Life Health

Roth IRA Contribution Limits

Carly H. Cummings — Sun, 15 Dec 2019 16:47:09 +0000

Roth IRA Contribution Limits 2019 / 2020

In BOTH 2019 and 2020, your Roth IRA contribution limits are:

$6,000 for the year.
If you are older than 50, the limit is $7,000

Introduction

The government changes Roth IRA contribution limits year to year.
In this article, you will find Roth IRA contribution rules for 2019 and 2020.
First, let’s start with a few definitions to make sure we are all on the same page.

What is a Roth IRA?

A Roth IRA is an investment account that allows you to invest after-tax money now, and then withdraw it tax-free later. Moreover, both your initial investments and your interest grow tax-free, and are taken out tax-free, if all the Roth Rules are followed.

In other words, you cannot deduct the money you put into a Roth IRA from your tax base the year you put it in. However, if you follow all the rules, you can take all the money (principal and interest) out of a Roth tax-free.

To learn more about why you want a tax-free source of income in retirement, please read these articles:

You can find the official IRS webpage for Roth IRA’s here.

What are the 2019 & 2020 Roth IRA Contribution Limits?

In BOTH 2019 and 2020, your contribution limits are:

$6,000 for the year.
If you are older than 50, the limit is $7,000

In addition, if you make less than that amount of money in the year, then you can only contribute the amount of taxable income you had for the year. However, this rule includes your spouse, if you file a joint tax return. In other words, if you don’t make money (or just make a little), but your spouse does, then you can still contribute up to the max levels for both of you. Assuming your spouse makes more than the limits.
The IRA contributions do not apply to rollovers.
Finally, contribution limits apply to both of your traditional and Roth IRAs combined. (This is separate from your 401ks held with employers.)

Who can Contribute to a Roth IRA?

You can contribute at any age, as long as you or your spouse earn income that is taxable, and your adjusted income levels are under a certain amount. (Click here to learn what the IRS considers your “Adjusted” income amount.)

2019 Annual Income Roth IRA Contribution Limits

You can contribute the max limit to a Roth if your income is:
- Single = Under $122,000
- Joint-Filed Married = $193,000
You can contribute a reduced amount if your income is between:
- Single = > $122,000 but < $137,000
- Joint-Filed Married = > $193,000 but < $203,000
You cannot contribute if you make over:
- Single = $137,000
- Joint-Filed Married = $203,000

2020 Annual Income Roth IRA Contribution Limits

You can contribute the max limit to a Roth if your income is:
- Single = Under $124,000
- Joint-Filed Married =$196,000
You can contribute a reduced amount if your income is between:
- Single = > $124,000 but < $139,000
- Joint-Filed Married = > $196,000 but < $206,000
You cannot contribute if you make over:
- Single = $139,000
- Joint-Filed Married = $206,000

These are numbers for Married Filling-Jointly, For married filing separately (living with spouse at any time in the year), then you have to make less than $10,000 to contribute in both 2019 and 2020.

According to the IRS, here is how to find your adjusted contribution limit, if you are in the middle income contribution levels:

Start with your modified AGI (adjusted tax base) and subtract (-) lowest limit for either married or single.
Divide (/) that number by $15,000 if single or $10,000 married.
Multiply (*) that result by the maximum contribution limit (before reduction by this adjustment and before reduction for any contributions to traditional IRAs).
Subtract (-) the result from the max contribution limit before the reduction.
That equals (=) your reduced contribution limit.

Are there Roth IRA Contribution Limits on Age?

Finally, there is no age limit on when you can contribute to a Roth. This is different than a traditional IRA where the age limit is 70.5 years old.

When can I take Money out?

You can start taking your money out of a Roth IRA without any penalties anytime after you turn 59 1/2 years old. Good news for people who want to retire early!

However, you are allowed to withdraw your money at any time. Just be aware of any penalties or taxes you might have to pay if you are withdrawing it early.

But, do I have to take money out?

Unlike Traditional IRAs, you do not have to take money out until after the death of the owner. This is because you have already paid your taxes on this money.

There are required minimum distributions on all other IRAs after 70 1/2 years old. This is because you have not yet paid taxes on this money, and the government wants its taxes!

2020 Part B Deductible / 2021 Part B Deductible

Carly H. Cummings — Tue, 19 Nov 2019 19:59:54 +0000

2020 Part B Deductible / 2021 Part B Deductible for Medicare

The 2021 changes for Medicare were released this month. The 2021 Part B Deductible is just one of the increases you will see.

The Centers for Medicare & Medicaid Services (CMS) released their updates for the coming year in a press release. Let’s look at what is changing.

Part B Deductible for 2020

In 2021, the Medicare Part B Deductible will be $203.
In contrast, the deductible was 198 for 2020.
This is an increase of $5.

Part B Premiums for 2021

In 2021, the Medicare Part B Monthly Premium will be $148.50
In 2020, the Medicare Part B Monthly Premium was $144.60.
The premium was 135.50 for 2019.

Why are the Part B Deductible and Premiums Increasing in 2021?

The CMS adjusts the deductibles yearly, in accordance to the Social Security Act. Moreover, the increase reflects national healthcare trends.

In addition, the CMS has stated that the rate hike is mostly due to the increased use and cost of physician- administered drugs. Part B covers Physician-administered drugs.

What Part B Covers

As a reminder, Medicare Part B covers:

Physician and Provider Services
Outpatient Services
Home Health Services
Durable Medical Equipment
Other non-hospital health services

To learn even more about the parts of Medicare and what they cover, you can see our infographic and discussion here.

Who Pays the Part B Deductible?

If you have Original Medicare only, you will pay the Part B Deductible.
In addition, if you have a Medicare Supplement that does not cover the Part B Deductible, you will pay it.
Some Medicare Advantage Plans have you cover the Part B deductible. This will be stated in your Summary of Benefits. However, 2020 plans have already been released, so deductibles are already set for the new year and will not be affected by this increase.

As of 2020, new beneficiaries to Medicare will not be able to choose a Medicare Supplement Letter Plan that covers the Part B Deductible. For example, Plan F covers the deductible, so seniors new to Medicare in 2020 and beyond will not be able to pick Plan F. Seniors that are already on these letter plans can keep them. Read more about this topic here.

Will the Changes Affect Part C or Part D costs?

No, these deductible and premium increases will not affect Part D Drug Plans or Part C Medicare Advantage Plans. The premium costs and the deductibles have already been set for the coming year. As a result, they are not affected.

According to the CMS press release,

As previously announced, as a result of CMS actions to drive competition, on average for 2020, Medicare Advantage premiums are expected to decline by 23 percent from 2018, and will be the lowest in the last thirteen years while plan choices, benefits and enrollment continue to increase. Premiums and deductibles for Medicare Advantage and Medicare Part D Prescription Drug plans are already finalized and are unaffected by this announcement.
CMS Press Release, Nov 2019

That is extra good news for those on Medicare Advantage Plans that have their deductibles satisfied with their plan. Some Medicare Advantage plans have a zero dollar deductible for their whole plan. These plans bundle Parts A & B and have the option of including the Part B Original Medicare deductible or covering it themselves.

Income Adjustments to Part B Premiums

There are no income related adjustments to the Part B Medicare Deductible. However, there are income related adjustments to your Part B Premiums.

First, the standard 2020 Part B premium of $144.60 applies to those with income less than or equal to $87,000 a year ($174,000 joint income).
Second, if you claim income between $87,000 and $109,000 ($174k-$218k joint), you will pay $202.40 a month.
Third, if you claim income between $109,000 and $136,000 ($218k – $272k joint), you pay $289.20.
Fourth, if you claim income between $136,000 and $163,000 ($272k – $326k joint), you pay $376.00.
Fifth, if you claim income between $163,000 and $500,000 ($326k – $750k joint), you pay $462.70.
Finally, if you have income greather than or equal to $500,000 ($750k+ joint), then you pay 491.60.
Click here if you need to see a table for premiums for spouses that file separate returns.

Are there Changes to Part A?

Yes, there are also changes to Medicare Part A. If you have a Medicare Supplement Plan, depending on which Letter plan you have, your supplement will continue to pick up these costs.

If you have a Medicare Advantage Plan, your plans benefits will still apply to you instead of the Original Medicare benefit structure. 2020 plans have already been released, so you will not be affected by these changes.

However, if you have Original Medicare only, you will want to take a look at the Part A changes that affect you here.