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Medicare Part B: Why Higher Income May Mean Higher Premiums

Written by Evens Stevenson

Medicare provides health care to millions of people across the United States. Its great for giving health care resources to people that wouldn’t be able to afford it without Medicare. The older that we get, the more money we spend at the doctors or on medical expenses. This is why Medicare is so important, it protects seniors from having their savings emptied because of hospital bills and medical costs.

When it comes to enrolling in Original Medicare (Medicare Part A and Part B), most people have historically received Medicare Part A premium free. As long as you worked for 10 years with a job that takes out Medicare taxes, you won’t have to pay anything for your Part A coverage. Medicare Part B has traditionally come with a momedicare part b premiumsnthly premium – yet for most of history, this monthly premium has been the same for everyone, until recently.

When you enroll into Medicare, you’ll start paying premiums. A lot of enrollees wonder why they are paying the amount that they are. There are a small number of enrollees that are paying more than others.

It seems as if every year, there is talk of raising Medicare Part B premiums. It can be difficult to keep up with all of the different changes in Medicare, but how much you pay is one of the most important changes. In the year 2016, most people pay a monthly amount of $121.80 for their Medicare Part B coverage. This amount is anticipated to remain the same for 2017. However, for those who fall into the higher income category, the premium that they are required to pay for this coverage could be higher than most other enrollees.

Who Must Pay More for Medicare Part B Coverage?

Ever since 2007, as a result of the Medicare Modernization Act of 2003, people who have incomes that are above a certain level have been required to pay higher premium amounts for Medicare Part B. And today, due to the 2010 Affordable Care Act – also known as health care reform – these same individuals must also pay more in premium for their Medicare Part D prescription drug coverage as well. While it’s unfortunate for those higher-income earners that have to pay more every month, there is only a very small portion of enrollees that fall under these provisions.

In order to determine if an individual will need to pay more in Part B premium, Social Security uses the most recent Federal income tax return that is provided to it by the IRS (Internal Revenue Service). In most cases, the most recent tax return that is provided to Social Security is that of two years prior. Therefore, for the 2016 Medicare premium amount, Social Security would use an individual’s 2014 tax return figures. If it is determined that a person must pay more in premium for Part B of Medicare, a sliding scale is then used for making the premium adjustments.

Here is how the figure was determined for 2016’s Medicare Part B premium:

If a person files his or her federal income tax return as Married, Filing Jointly, and their modified adjusted gross income is more than $171,000, they will pay a higher premium for Part B, as well as for Part D coverage.

If a person files their taxes using a different type of status and their modified adjusted gross income is higher than $85,000, then they will be required to pay a higher amount of premium for their coverage.

How Much Premium Will You Need To Pay?

The amount of premium that an individual will need to pay will depend on certain factors. For 2016, the standard monthly premium is $121.80. If you are single and you filed an individual tax return, or if you are married and you filed a joint tax return, the following chart outlines the amount of premium that you would be required to pay in 2016:

 

Modified Adjusted Gross Income (MAGI) Part B monthly premium amount Prescription drug coverage monthly premium amount
Individuals with a MAGI of $85,000 or less

 

Married couples with a MAGI of $171,000 or less

 

2016 standard premium = $121.80

 

 

Your plan premium

Individuals with a MAGI above $85,000 up to $107,000

 

Married couples with a MAGI above $170,000 up to $214,000

 

 

Standard premium + $42.00

 

 

Your plan premium + $12.10

Individuals with a MAGI above $107,000 up to $160,000

 

Married couples with a MAGI above $214,000 up to $320,000

 

 

Standard premium + $104.90

 

 

Your plan premium + $31.10

Individuals with a MAGI above $160,000 up to $214,000

 

Married couples with a MAGI above $320,000 up to $428,000

 

 

Standard premium + $167.80

 

 

Your plan premium + $50.20

Individuals with a MAGI above $214,000

 

Married couples with a MAGI above $428,000

 

 

Standard premium + $230.80

 

 

Your plan premium + $69.30

Source: Social Security Administration

What If Your Income Changes?

Over time, it is possible that due to changes in your marital situation, your job, or other life changes, your income may be adjusted downward. If this is the case, it may be possible that you will no longer fall into the category of having to pay a higher Medicare Part B and / or Medicare Part D premium.

Should this be the case, it is suggested that the individual contact the Social Security Administration directly in order to advise the Administration of their current situation. After you contact the office, the professionals at the office should handle the process of lowering your monthly premiums. In addition, documentation verifying certain events will be required, such as that for:

  • Marriage, divorce, becoming a widow(er)
  • Stoppage of work, or a reduction in work hours
  • You or your spouse losing income-producing property due to a disaster or other event that was beyond your control
  • You or your spouse experiencing a scheduled cessation, termination, or reorganization of an employer’s pension plan
  • You or your spouse receiving a settlement from an employer or a former employer due to the employer’s closing, bankruptcy, or reorganization.

 

If you have any questions about the income brackets or about having your premiums reduced, the Social Security office administration should be able to answer those questions and clear up any confusion. There are several different factors that go into calculating which bracket you fall under.

All of these are different examples of how your income could experience a drastic change. It’s important that you pay the correct amount for your Part B premiums. If you’re paying either too much or too little every month, it could lead to several problems.

If you have any questions about your Medicare Part B premiums or your Medicare coverage, feel free to contact us at any time. We want to ensure that you’re getting the best coverage possible without paying too much. Additionally, if you have any other questions about your Part A, Part B, or supplemental coverage such as Medigap plan Fdon’t hesitate to contact us today.

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