“hold harmless provision” of Medicare says that if cola payments do not go up for social security (like 2016), the Medicare rates cannot be increased for most medicare people. How are they going to pay for this. The provision says that the cost to cover all the base line medicare people will be paid for by the people on medicare that fall into the higher income categories.
How much are we talking? How about over $1,000 per month for the over $214,000 income category. Some would say if you had over $214,000 in income you should be able to pony up $12,000 a year to help those who can not afford it. Well, we leave the political discussion out of this now.
What is particularly onerous is that because medicare uses line 37 on the 1040, this means they include gambling winnings prior to the offset from schedule A which gets subtracted after line 37. If you have $50,000 in income from SS and a pension, w-2g’s for $200,000, you have a line 37 income of $250,000. This is your medicare income basis. If on schedule A you have $200,000 in loses, your net income you pay taxes on is $50,000.
If I am right, someone with a $50,000 income will be paying over $12,000 for medicare, which will come directly out of their SS check.
This will be a shock and a disaster for many.
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