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1) Social Security recipients get 2.8% more in retirement benefits.

This is a COLA in response to inflation and represents the largest annual increase to Social Security payments in seven years. It means that the average monthly Social Security payment will be $1,461 during 2019. The maximum possible payment for those retiring at what the Social Security Administration deems Full Retirement Age (FRA) is now $2,861.1,19

 

2) The earnings limits for Social Security withholding have increased.

Before and during the year you reach Full Retirement Age (FRA), Social Security withholds some of your benefits when your earned income surpasses certain thresholds. If you were born during 1943-1954, your FRA is 66.

If you receive Social Security retirement benefits and have yet to reach your FRA, you may earn up to $17,640 in 2019 before having $1 in benefits withheld for each additional $2 in earned income above that level. (That is a $600 increase from 2018.)

If you reach your FRA in 2019, you may earn as much as $46,920 before having $1 in benefits withheld for each additional $3 in earned income above that level. (That is a $1,560 increase from 2018.)18

3) 2019 brings higher Medicare Part B premiums.

The standard monthly premium is $1.50 higher, at $135.50. All but about 3.5% of Medicare recipients are expected to pay that amount per month for Part B coverage this year. That contrasts with 2018, when most Medicare recipients paid about $130 per month for Part B rather than the standard premium of $134, thanks to Medicare’s “hold harmless” provision.22

4) New income brackets determine the Part B premiums for high earners who receive Medicare.

Last year, monthly Part B premiums ran anywhere from $187.50 to $428.60 for individual Medicare enrollees who earned more than $85,000 and married Medicare enrollees who earned more than $170,000. A new income bracket has been added this year to define who pays the most for Part B (this new bracket complements those already added in 2018). Individual Medicare recipients who earn $500,000 or more in 2019 and married Medicare recipients who earn $750,000 or more in 2019 will pay $460.50 per month for Part B this year. Last year, the top bracket had a much lower threshold: $160,000 for an individual; $320,000 for a married couple.22

5) Medicare’s Part A and B deductibles have risen.

The Part A deductible (for hospital stays) has grown by another $24, to $1,364. (Many Medicare enrollees do not have to pay it, thanks to supplemental insurance coverage.) That deductible covers inpatient days 1 – 60 in a benefit period. During inpatient days 61 – 90, Medicare enrollees face a coinsurance charge; in 2019, that is $341 per day, $6 more than in 2018.

The Part B deductible, which stayed at $183 in both 2017 and 2018, is $185 this year.22

6) Part C plans have become cheaper and more numerous.

Back in September, the Centers for Medicare & Medicaid Services stated that the average monthly Part C plan premium would be roughly $28 in 2019. This is about $1.80 less than in 2018 and furthers a trend of decreasing Part C premiums that started in 2015. At the same time, there are notably more Medicare Advantage plans to choose from this year: the Center puts the number of Part C plans at about 3,700, compared to around 3,100 in 2018.22

7) You might pay a little less for Part D coverage in 2019.

Do you have a standalone Part D plan? The Centers for Medicare & Medicaid Services project that the average basic monthly premium for this type of Part D plan will be about $1.10 lower in 2019 (circa $32.50). If you have an “enhanced” prescription drug plan, however, your premium may be substantially more than that. The annual Part D plan deductible limit rises $10 this year, to $415.22

8) The Part D “donut hole” closes this year, but only for brand-name medications.

Medicare enrollees are paying just 25% of the cost of the brand-name drugs covered by their Part D plans this year. Next year, the donut hole closes for generic drugs; in the interim (that is, this year), enrollees will pay 37% of the cost of generics listed on their Part D plan’s formulary.22

This Special Report is not intended as a guide for the preparation of tax returns. The information contained herein is general in nature and is not intended to be, and should not be construed as, legal, accounting or tax advice or opinion. No information herein was intended or written to be used by readers for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions. Readers are cautioned that this material may not be applicable to, or suitable for, their specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. Readers are encouraged to consult with professional advisors for advice concerning specific matters before making any decision. Both Scarlet Oak Financial Services/ Faye Sykes and MarketingPro, Inc. disclaim any responsibility for positions taken by taxpayers in their individual cases or for any misunderstanding on the part of readers. Neither Scarlet Oak Financial Services, Faye Sykes, nor MarketingPro, Inc. assume any obligation to inform readers of any changes in tax laws or other factors that could affect the information contained herein.

This material was prepared by MarketingPro, Inc. for use by Scarlet Oak Financial Services and Faye Sykes.

 

Citations.

1 – cnbc.com/2019/01/08/irs-confirms-tax-season-to-start-jan-28-despite-government-shutdown.html [1/8/19]

2 – blog.indinero.com/2019-business-tax-deadlines [6/1/18]

3 – thebalancesmb.com/payroll-tax-deadlines-for-january-and-february-3974577 [1/4/19]

4 – taxact.com/support/24459/2018/irs-filing-deadlines [1/10/19]

5 – trustetc.com/resources/investor-awareness/contribution-limits [11/1/18]

6 – shrm.org/resourcesandtools/hr-topics/benefits/pages/agencies-preview-form-5500-for-2019-filings-while-revamp-delayed.aspx [11/26/18]

7 – forbes.com/sites/kellyphillipserb/2018/11/15/irs-announces-2019-tax-rates-standard-deduction-amounts-and-more [11/15/18]

8 – fool.com/taxes/2018/12/15/your-2019-guide-to-the-alternative-minimum-tax.aspx [12/15/18]

9 – paychex.com/articles/compliance/aca-individual-mandate-penalty-reduced-2019 [12/21/18]

10 – foxbusiness.com/business-leaders/amazon-ceo-jeff-bezos-divorce-subject-to-these-tax-changes [1/10/19]

11 – forbes.com/sites/ashleaebeling/2018/11/01/irs-announces-2019-retirement-plan-contribution-limits-for-401ks-and-more/ [11/1/18]

12 – irs.gov/newsroom/401k-contribution-limit-increases-to-19000-for-2019-ira-limit-increases-to-6000 [11/27/18]

13 – forbes.com/sites/ashleaebeling/2018/11/15/irs-announces-higher-2019-estate-and-gift-tax-limits [11/15/18]

14 – taxfoundation.org/2019-tax-brackets [11/28/18]

15 – thebalance.com/lifetime-learning-tax-credit-3192933 [1/11/19]

16 – tinyurl.com/ycdgvpr5 [1/14/19]

17 – investrustwealthmanagement.com/2018/09/27/what-are-the-new-rules-for-401k-hardship-withdrawals/ [9/27/18]

18 – tax.thomsonreuters.com/news/moves-that-will-maximize-the-new-deduction-for-pass-through-income [12/12/18]

19 – shrm.org/resourcesandtools/hr-topics/compensation/pages/fica-social-security-tax-2019.aspx [12/19/18]

20 – irs.gov/pub/irs-pdf/p334.pdf [2019]

21 – tinyurl.com/ycd6bl8q [12/14/18]

22 – medicareresources.org/faqs/what-kind-of-medicare-benefit-changes-can-i-expect-this-year/ [10/15/18]

23 – forbes.com/sites/howardgleckman/2019/01/15/the-new-1040-will-fit-on-a-big-postcard-but-it-wont-make-tax-filing-any-simpler [1/15/19]