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Medicare Part B and tax-exempt income


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?

R.L., Missouri


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.

Sep 30, 2016

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