An Overview of the Medicare Surtaxes

Posted by:  :  Category: Medicare

DAMN!! -- I THINK WE'RE F*%KED by SS&SSThis .9% surtax applies to wages and income from self-employment in excess of $250,000 for married taxpayers filing a joint return ($200,000 for single taxpayers). Employers are required to withhold the surtax tax once an employee’s wages exceed $200,000 (regardless of whether or not the spouse is also a wage earner.) Any additional surtax liability must be taken into account by quarterly estimated tax payments or by the original due date of the return.

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Ask The Experts: Retirement

Q.  I will be 68 next year when I retire as a CSRS annuitant.  Like all feds, I currently pay into Medicare. Will I continue to pay into Medicare from my annuity check?  I currently receive a small Social Security payment because, when I reached 66, I had sufficient credits to qualify because of prior years of  nonfederal work.  I am eligible now (at no cost) for Medicare Part A, although I have federally sponsored medical insurance. So will I continue to pay into Medicare when I retire?

Vigilant Counsel News Blog

Can an employer reduce or eliminate benefits for a current employee when the employee becomes eligible for Medicare? No, because doing so is probably a violation of the federal Age Discrimination in Employment Act (ADEA) and also a violation of the Medicare rules, according to a recently released informal discussion letter from the federal Equal Employment Opportunity Commission (EEOC) (ADEA: Coordinating Medicare with Current Employees’ Benefits, August 2, 2011). In the discussion letter, the EEOC reminds employers that the ADEA exemption that allows employers to drop employer-sponsored health coverage upon Medicare eligibility applies only to retiree coverage, not to current employees. And, because dropping coverage for current employees upon Medicare eligibility is an age-based action, the employer must meet the ADEA’s “equal benefit or equal cost” defense to pass muster under the ADEA, meaning that the employer must provide older employees the same benefits as are provided to younger employees, or else they must incur the same cost to provide benefits, even if the benefits that may be purchased for that cost are less than what may be purchased for younger employees. Finally, the EEOC noted, the Medicare program itself requires employers to offer current employees, who are Medicare-eligible the same benefits under the same conditions as those employees who are not Medicare-eligible.

Get Medicare Advantage Plans Until December 7

You only have until December 7 to decide whether you want one of the Medicare Advantage Plans to provide your Medicare benefits. This year the open enrollment period is earlier than last year. This way, they can make certain that those who sign up will have benefits in place by January 1. If you find that your new plan doesn’t work as well as the Medicare coverage you left, you can switch back to traditional Medicare between January 1 and February 14 next year. You can add a stand-alone prescription drug plan at the same time to get your prescriptions covered.

Thinking about terminating employee health insurance benefits based on Medicare eligibility to save money? Not so fast!

(e) Benefits provided by the Government. An employer does not violate the Act by permitting certain benefits to be provided by the Government, even though the availability of such benefits may be based on age. For example, it is not necessary for an employer to provide health benefits which are otherwise provided to certain employees by Medicare. However, the availability of benefits from the government will not justify a reduction in employer-provided benefits if the result is that, taking the employer-provided and Government-provided benefits together, an older employee is entitled to a lesser benefit of any type (including coverage for family and/or dependents) than a similarly situated younger employee. For example, the availability of certain benefits to an older employee under Medicare will not justify denying an older employee a benefit which is provided to younger employees and is not provided to the older employee by Medicare. (EEOC’s emphasis)

Doeren Mayhew Blog Spot: The tricky distinction between employees and independent contractors

Doeren Mayhew The tricky distinction between employees and independent contractors In light of the IRS’s new Voluntary Worker Classification Settlement Program (VCSP), which it announced this fall, the distinction between independent contractors and employees has become a “hot issue” for many businesses. The IRS has devoted considerable effort to rectifying worker misclassification in the past, and continues the trend with this new program. It is available to employers that have misclassified employees as independent contractors and wish to voluntarily rectify the situation before the IRS or Department of Labor initiates an examination. The distinction between independent contractors and employees is significant for employers, especially when they file their federal tax returns. While employers owe only the payment to independent contractors, employers owe employees a series of federal payroll taxes, including Social Security, Medicare, Unemployment, and federal tax withholding. Thus, it is often tempting for employers to avoid these taxes by classifying their workers as independent contractors rather than employees. If, however, the IRS discovers this misclassification, the consequences might include not only the requirement that the employer pay all owed payroll taxes, but also hefty penalties. It is important that employers be aware of the risk they take by classifying a worker who should or could be an employee as an independent contractor. “All the facts and circumstances” The IRS considers all the facts and circumstances of the parties in determining whether a worker is an employee or an independent contractor. These are numerous and sometimes confusing, but in short summary, the IRS traditionally considers 20 factors, which can be categorized according to three aspects: (1) behavioral control; (2) financial control; (3) and the relationship of the parties. Examples of behavioral and financial factors that tend to indicate a worker is an employee include: The worker is required to comply with instructions about when, where, and how to work; The worker is trained by an experienced employee, indicating the employer wants services performed in a particular manner; The worker’s hours are set by the employer; The worker must submit regular oral or written reports to the employer; The worker is paid by the hour, week, or month; The worker receives payment or reimbursement from the employer for his or her business and traveling expenses; and The worker has the right to end the employment relationship at any time without incurring liability. In other words, any existing facts or circumstances that point to an employer’s having more behavioral and/or financial control over the worker tip the balance towards classifying that worker as an employee rather than a contractor. The IRS’s factors do not always apply, however; and if one or several factors indicate independent contractor status, but more indicate the worker is an employee, the IRS may still determine the worker is an employee. Finally, in examining the relationship of the parties, benefits, permanency of the employment term, and issuance of a Form W-2 rather than a Form 1099 are some indicators that the relationship is that of an employer-employee. Conclusion Worker classification is fact-sensitive, and the IRS may see a worker you may label an independent contractor in a very different light. One key point to remember is that the IRS generally frowns on independent contractors and actively looks for factors that indicate employee status. Please do not hesitate to call our offices if you would like a reassessment of how you are currently classifying workers in your business, as well as an evaluation of whether IRS’s new Voluntary Classification Program may be worth investigating. Contact Doeren Mayhew for more information. If and only to the extent that this publication contains contributions from tax professionals who are subject to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, the publisher, on behalf of those contributors, hereby states that any U.S. federal tax advice that is contained in such contributions was not intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.

Medicare and Jobs: Not Mutually Exclusive!

Continuing to tie health insurance to employment only continues a system that COSTS jobs. It creates a disincentive for employers to hire.  It creates an incentive for the new employment reality:  Freelance, contract work, part-time, whatever you want to call the newly underemployed who do not have benefits and for whom employers do not pay into Medicare, Social Security, Unemployment, or Workers Comp.  This is a big problem for everyone involved, including individual workers, their families, AND the solvency of important programs that Americans value and that have lifted generations out of poverty and provided fair access to health care. 

Medicare Premiums and Deductibles for 2012 Mostly Sweet

However, some enrollees age 65 and over and certain persons with disabilities who have fewer than 30 “quarters of coverage” obtain Part A coverage by paying a monthly premium set according to a statutory formula. This premium will be $451 for 2012, an increase of $1 from 2011. Those who have between 30 and 39 “quarters of coverage” may buy into Part A at a reduced monthly premium rate which is $248 for 2012, the same amount as in 2011. The Part A deductible paid by a beneficiary when admitted as a hospital inpatient will be $1,156 in 2012, an increase of $24 from this year’s $1,132 deductible. The Part A deductible is the beneficiary’s cost for up to 60 days of Medicare covered inpatient hospital care in a benefit period. Beneficiaries must pay an additional $289 per day for days 61 through 90 in 2012, and $578 per day for hospital stays beyond the 90th day in a benefit period. For 2011, per day payment for days 61 through 90 was $283, and $566 for beyond 90 days.

Medicare Primer for the “New Boomers”

 Starting in 1997, Medicare beneficiaries were offered the option of signing up for care provided by certain private insurers that are approved and under contract to Medicare. Best known as the Medicare Advantage Plan,  Part C is designed to close some of the “gaps” in Medicare coverage. By combining parts A and B (and possibly D) under a private wrapper, it effectively becomes Part C. It can include HMO, PPO, fee-for-service and special needs plans. These policies provide extra benefits, helping to pay certain fees such as co-pays and deductibles and a portion of your doctor bills that Medicare may not cover. Premiums for Medicare Advantage plans can vary considerably.

Related posts:

  1. Earlier deadline for changing 2012 Medicare coverage?
  2. Overview of Medicare Appeal, Claim, Disclosure and Application Forms
  3. Overview of Medicare Appeal, Claim, Disclosure and Application Forms
  4. Overview of Medicare Appeal, Claim, Disclosure and Application Forms

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