Medicare Part B and D: Make More= Pay More
It’s true. The premiums for your Part B and D coverage for Medicare are adjusted for income.
I get it. It’s a little infuriating. You’ve spent all of these working years paying more in Social Security than everyone else, and now you find out they might come back for seconds.
But before any public pickets or private fist-shaking takes place, I want to grant you a little bit of comfort: according to Social Security, less than 5% of Medicare beneficiaries pay higher premiums due to income. And out of our clients, we’ve only come across a handful of affected people.
But to make sure, I recommend checking out the following chart. NOTE: There are separate numbers for filing individually, jointly, and filing individually when married, so make sure you are looking at the right one.
|If your yearly income (modified adjusted gross income) in 2015 (for what you pay in 2017) was|
|File individual tax return||File joint tax return||File married & separate tax return||You pay each month in 2017 for Part B||
You pay each month in 2017 for Part D
|$85,000 or less||$170,000 or less||$85,000 or less||$134||
Your plan premium
|Above $85,000 up to $107,000||Above $170,000 up to $214,000||Not applicable||$187.50||
$13.30 + your plan premium
|Above $107,000 up to $160,000||Above $214,000 up to $320,000||Not applicable||$267.90||
$34.20 + your plan premium
|Above $160,000 up to $214,000||Above $320,000 up to $428,000||Above $85,000 and up to $129,000||$348.30||
$55.20 + your plan premium
|Above $214,000||Above $428,000||Above $129,000||$428.60||
$76.20 + your plan premium
So there you have it. Did you make the cut? And now…
4 Things You Need To Know
Premium increases are based on your MAGI
MAGI (Modified Adjusted Gross Income) is the magic number. It is calculated by taking your Adjusted Gross Income (all the income you’ve earned minus deductions) and adding some of those deductions back in such as IRA contributions. It is a little hairy, but for most people their Adjusted Gross Income is so similar to their MAGI, it is irrelevant.
It is based on the tax return you filed last year
So, in 2017, whether or not you are cursed with higher premiums is determined by the tax return you filed in 2016 based on your 2015 income.
Being married but filing separately can have costly effects
Pay close attention to those numbers. You’ll notice that the premium increases are much higher for comparable amounts of income. So file jointly unless you have a really good reason for doing otherwise.
You can appeal to have the increase removed
This is a big one. The government has been known to make mistakes. So, if you notice that you were wrongly charged, you can fill out an appeal, and they will double check (I’ll keep my fingers crossed for you). This is especially helpful in the case of a “life changing” event that drops your income. The Medicare approved “life changing” events include but are not limited to:
- Death of spouse
- Work Stoppage
- Loss of Pension
If you believe your IRMAA is incorrect, you can request that the Social Security Administration make a new decision. You can contact them on the national helpline at 800-772-1213.
For those of higher income, it does seem like the government is doing a double dip. But I sincerely hope that you are not one of those affected individuals. Thankfully, the measure excludes most!
Confused about Medicare and not sure what to do next? Download our free E-book to get you started. If you still have questions, call our office at 937-492-8800.