Medicare Deducted From SS Taxable?

[Route246]

Simple question. Regarding SS my wife is currently paying $590 (approx) for Part B due to our income. She has been approved for spousal benefit $1749 (approx) and the Medicare will be taken out of her SS check. Is the entire $1749 taxable or only net of Medicare payment? If she switches to private (i.e. AARP Secure Horizons PPO, etc.) is it any different or are we just getting taxed on everything? Not really complaining, just trying to plan how much to set aside for withholding.

 

[SevenUp]

Given a very high income, 85% of the gross SS will be taxable.

 

[audreyh1]

Tax on SS is before any Medicare deduction. As SevenUp mentions up to 85% of SS is subject to federal income tax and this is regardless of the Medicare amount paid. If you are paying IRMAA you are likely in that 85% of your SS subject to tax group. No, Medicare payments/deductions do not reduce taxes owed on SS.

 

[jldavid47]

Medical insurance payments in retirement are all after tax. There is no scenario in your bracket where you can avoid the entire $1749 (times 85%) being taxable.

 

[DrRoy]

Given a very high income, 85% of the gross SS will be taxable.

+1

 

[MissMolly]

Regarding switching to something like AARP Secure Horizons PPO sounds like it's a Medicare Advantage plan so you would still be paying the $590 for the Part B in addition to the cost of the MA plan.

 

[pb4uski]

Simple question. Regarding SS my wife is currently paying $590 (approx) for Part B due to our income. She has been approved for spousal benefit $1749 (approx) and the Medicare will be taken out of her SS check. Is the entire $1749 taxable or only net of Medicare payment? If she switches to private (i.e. AARP Secure Horizons PPO, etc.) is it any different or are we just getting taxed on everything? Not really complaining, just trying to plan how much to set aside for withholding.

Taxed on $1,749 but 85% at most... so $1,487, so switching isn't going to save you anything.

 

[CRLLS]

Tax on SS is before any Medicare deduction. As SevenUp mentions up to 85% of SS is subject to federal income tax and this is regardless of the Medicare amount paid. If you are paying IRMAA you are likely in that 85% of your SS subject to tax group. No, Medicare payments/deductions do not reduce taxes owed on SS.

I agree. What I find odd is that I have instructed SS to withhold 10% for taxes. For years, that withholding amount has been less than 10% of the gross SS amount. It worked out as: tax withheld = (SS gross - MC premium - part D) *10%. The left hand not knowing the right hand applies here I guess.

 

[audreyh1]

Oh, that is odd!

 

[Midpack]

I agree. What I find odd is that I have instructed SS to withhold 10% for taxes. For years, that withholding amount has been less than 10% of the gross SS amount. It worked out as: tax withheld = (SS gross - MC premium - part D) *10%. The left hand not knowing the right hand applies here I guess.

That's how I understood it to work (probably read it here in an earlier thread), so that's what I've planned. I expect my withholding to be = (SS gross - MC premium - IRMAA Part B&D penalties) * 22%. I wish they would withhold more.

 

[Gotadimple]

Simple question. Regarding SS my wife is currently paying $590 (approx) for Part B due to our income. She has been approved for spousal benefit $1749 (approx) and the Medicare will be taken out of her SS check. Is the entire $1749 taxable or only net of Medicare payment? If she switches to private (i.e. AARP Secure Horizons PPO, etc.) is it any different or are we just getting taxed on everything? Not really complaining, just trying to plan how much to set aside for withholding.

As others have said, the entire gross payment is taxable.

If you itemize deductions you may be able to deduct the Part B and any premium for Medicare Advantage or Medigap (Supplement) premium if your Medical expenses exceed the 7.5% of AGI cap on Schedule A of the federal income tax.

But you still have to pay income tax on the gross amount. Itemizing may reduce the total tax expense. As you know she can also set up withholding of Federal tax - but only in set percentages. That is it's not your usual W-4 form.