Municipal Bond Forum
Medicare Part B and tax-exempt income
Q
I can sign up for Medicare soon and just learned that my rate for Part B could be double the minimum most others pay because the government will go back and refigure my taxes and add my tax-exempt interest to my income. This is very unfair. Has your company, and others that sell bonds, been contacting our representatives and trying to get this changed?
A
James A. Klotz responds:
There is no question that your Medicare Part B premium will be higher if your income exceeds a certain threshold. This encompasses your adjusted gross income plus other forms of income, including tax-exempt income.
Because tax-exempt income is indeed income, this is not the same issue as imposing a tax on municipal bonds. We don’t find this Medicare treatment to be a violation of the spirit of the law.
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