How To Appeal A Part B Premium Income Adjustment
You may request an appeal if you disagree with a decision regarding your income-related monthly adjustment amount. Complete a Request for Reconsideration or contact your local Social Security office to file an appeal.
You may be able to skip the formal appeal and simply provide documentation if your income changed due to any of the following:
- You married, divorced or became widowed.
- You or your spouse stopped working or reduced your work hours.
- You or your spouse lost income-producing property due to a disaster or other event beyond your control.
- You or your spouse experienced a scheduled cessation, termination or reorganization of an employers pension plan.
- You or your spouse received a settlement from an employer or former employer because of the employers closure, bankruptcy or reorganization.
These methods apply to the Part B premium. Contact the IRS if you disagree with your adjusted gross income amount, which is provided to Medicare by the IRS.
Pay Your Premiums Directly From Your Social Security Benefits
Seniors who are enrolled in Medicare and Social Security simultaneously have their Part B premiums deducted directly from their Social Security benefits. Doing so isnt just a convenience, though in some cases, it can save you from rising premium costs thanks to Medicares hold-harmless provision.
This provision protects you from losing out on Social Security income when Part B premium increases surpass the cost-of-living adjustments that are applied to benefits each year. This means that if Part B increases by $30 a month in a given year, but your COLA only raises your monthly benefits by $24, you save yourself the extra $6 by not having to pay it.
In recent years, the COLA has been more than adequate to cover the full cost of the standard Part B increases, so the hold harmless provision hasnt been applicable. But its always there, just in case the Part B premium increase is more than a beneficiarys COLA for a given year.
How Do I Apply For Medicare Savings Programs
Eligibility for MSPs is determined by your state Medicaid office, as the funding for MSPs comes from the Medicaid program. Medicaid is jointly run by the federal and state governments. If you think you might be eligible, you can apply for an MSP at your Medicaid or social services office .
Medicare urges beneficiaries to apply for MSP benefits if theres any chance they might be eligible, even if they initially think that their income or resources are too high to qualify. This is particularly important given that states can have more lenient eligibility rules than the federal guidelines. So depending on the state, a person might end up being eligible for an MSP even if they assumed they wouldnt after looking at the federal eligibility rules.
This page explains what documentation is needed for the MSP application process, and what to expect when youre applying for benefits.
Its important to understand that you have to reapply and re-qualify for your MSP benefits each year. You may get a renewal notice in the mail from your state Medicaid office explaining what you need to do. If not, youll need to reach out to your state Medicaid office to see what needs to be done to qualify for ongoing MSP benefits in the coming year.
You can also contact your State Health Insurance Assistance Program with questions related to MSPs.
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Retiree Health Plan Part B Reimbursement Options
If you’re retired and have Medicare and retiree group health plan coverage from a former employer, Medicare typically pays first for your medical bills and your retiree plan would pay the remaining amount.
Some of these retiree plans offer a Part B reimbursement to eligible enrollees. Each retiree plan has different eligibility requirements, so check with your plan to understand your options. However, for most plans you must be a retired employee or already enrolled in the health plan and be enrolled in Medicare Part B.
You may be reimbursed the full premium amount, or it may only be a partial amount. In most cases, you must complete a Part B reimbursement program application and include a copy of your Medicare card or Part B premium information.
Good News Yes You Can Request A Reduction In Medicare Part B Premiums
Now that you are aware that the cost of Part B premiums can increase with your income, lets discuss when you may need to ask for a reduction in your premiums. The time is when you have a life-changing event, and your income is reduced. This commonly happens when someone retires at age sixty-five or later. If your income while working was much higher than your income in retirement will be, you could be paying more for Part B coverage for two years, until your tax returns catches up to your retirement income.
You may need to ask for a reduction in your premiums . . . whenyou have a life-changing event, and your incomeis reduced . . . commonly happenswhen someone retires at age sixty-five or later.
For example, if you file single and retire from working at age sixty-five, and your MAGI from 2019 was $90,000, you will be paying the additional $59.40 per month for the next two years. Assuming your MAGI in retirement will be less than $88,000, you can eliminate the additional premium. That is over $1,400 in savings.
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How Do I Get Medicare Surcharges Reassessed
Most people pay a standard rate for Medicare. If youre a high-income taxpayer, you pay more, by way of an Income Related Monthly Adjustment Amount .In assessing IRMAA, Medicare doesnt look at your current income it looks back two years.
That means your premium is based on your modified adjusted gross income from two years prior. You can ask the Social Security Administration to re-evaluate your premium if your income lowers because of a life-changing event. Examples of life-changing events include retirement, divorce, and the death of your spouse.
Can I Use Social Security Benefits To Pay My Medicare Premiums
Your Social Security benefits can be used to pay some of your Medicare premiums.
In some cases, your premiums can be automatically deducted If you receive Social Security Disability Insurance or Social Security retirement benefits.
However, this doesnt apply to all Medicare premiums. Each part of Medicare has its own premiums and rules for interacting with Social Security.
Well discuss how this works for each part next.
Medicare Part C And Part D
Medicare Advantage plans cover everything that Medicare parts A and B do and often include coverage for extra services. Medicare Part D plans cover prescription drugs.
Part C and Part D plans are optional. If you do want either part, youll also have multiple options at various price points. You can shop for Part C and Part D plans in your area on the Medicare website.
Some plans will have an additional premium but others will be premium-free.
You can have your Part C or Part D plan premiums deducted from Social Security. Youll need to contact the company that sells your plan to set it up. It might take several months to set up and for automatic payments to begin.
This means your first payment could end up being very large since itll cover multiple months at once. Your plan will walk you through the details and let you know how long it will take.
Your premiums will be deducted once per month after everything is set up.
How To Reduce Medicare Surcharges When Your Income Changes
Q. My wife and I are being charged extra for Medicare Part B and prescription drug coverage premiums, apparently based upon our higher income in years past. Beginning last year, our income dropped significantly. Is there way to get the surcharges removed?
A. Yes, if you can link the reduction in income to a life changing event as defined by Medicare.
First, a bit of background for our readers. Medicare premiums for 2017 are linked to your Modified Adjusted Gross Income as shown on your income tax return. Higher-income Medicare beneficiaries pay higher Part B and Prescription Drug Benefit Premiums then lower income Medicare beneficiaries. The extra amount increases as the beneficiarys income increases. The Social Security Administration uses income reported two years previous to determine a beneficiarys current premiums. Thus, the income reported on a beneficiarys 2015 tax return is used to determine whether the beneficiary must pay a higher monthly premium in 2017. Here are the income brackets used by Medicare to add a surcharge:
Standard Bracket: For Individuals with a MAGI under $85,000 annually, or Married Couples with a MAGI under $170,000 annually, the Standard Premium for Part B is $134 per Month, but you may pay less this year if it is taken directly out of your social security benefits. For Individuals above those numbers, the standard premium increases as follows:
1) You married, divorced, or became widowed
Help Paying Original Medicare Premiums
Most MSPs provide help for Medicare Part A or Part B only. All programs require eligibility for Medicare Part A, but the main difference between each is the income range that those seeking help must be within.
Parts A and B: The Qualified Medicare Beneficiary program is the only Medicare assistance program that pays premiums for both parts of Original Medicare. If youre approved as a QMB, youre the program will help pay for your Medicare costs .4
Part A Only: If you need help with just your Part A premiums, you may get assistance through the Qualified Disabled and Working Individual program. To get full or partial aid, you must:4
- Be employed
- Be disabled
- No longer be eligible for a premium waiver of your Part A benefits because youre working
Part B Only: Both the Specified Low-Income Medicare Beneficiary and Qualifying Individual programs will help pay for Medicare Part B premiums.4
- SLMB program: Must meet low-income limits to get aid.
- QI program: Aid is provided on a first-come-first-served basis, with preference given to previous year QI enrollees. You must apply for this program each year.
Ways To Reduce Your Medicare Premiums
There are many ways you can reduce your Medicare premiums. Almost everyone pays a premium for Part B, Part D, Medigap, vision, dental, and hearing. All those premiums can add up, but there are ways to save money, whether youre already on Medicare or signing up for the first time. Below, well share five ways you can reduce your Medicare premiums.
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Medicare Part A Premiums
Most people will pay nothing for Medicare Part A. Your Part A coverage is free as long as youre eligible for Social Security or Railroad Retirement Board benefits.
You can also get premium-free Part A coverage even if youre not ready to receive Social Security retirement benefits yet. So, if youre 65 years old and not ready to retire, you can still take advantage of Medicare coverage.
Part A does have a yearly deductible. In 2022, the deductible is $1,556. Youll need to spend this amount before your Part A coverage takes over.
Help Paying Medicare Advantage Premiums
You may get help with paying your Part C premiums if youre eligible for the Qualified Medicare Beneficiary program. But its not guaranteed that you will receive premium payment assistance because each state can decide whether to cover premiums for those enrolled in Medicare Advantage plans.
If you have both Medicare and Medicaid and are enrolled in a Medicare Advantage Special Needs Plan, Medicaid will pay for most of your insurance costs. However, the same rules apply with states not being required to pay your plan premiums. Although you may not get help with premiums, states are responsible for paying your Medicare Advantage copayments and coinsurance for services covered under Medicare Parts A and B.
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Sign Up For Part B On Time
Your initial window to enroll in Medicare begins three months before the month of your 65th birthday, and ends three months after that month. If you dont sign up during that seven-month period, you can enroll during Medicares General Enrollment Period each year.
But for each 12-month period you go without Medicare coverage despite being eligible, youll be hit with a penalty that raises your Part B premium cost by 10 percent. Worse yet, that penalty will remain in effect for the rest of your life. The takeaway? If you want to save money, dont be late.
How Social Security Determines You Have A Higher Premium
We use the most recent federal tax return the IRS provides to us. If you must pay higher premiums, we use a sliding scale to calculate the adjustments, based on your modified adjusted gross income . Your MAGI is your total adjusted gross income and tax-exempt interest income.
If you file your taxes as married, filing jointly and your MAGI is greater than $182,000, youll pay higher premiums for your Part B and Medicare prescription drug coverage. If you file your taxes using a different status, and your MAGI is greater than $91,000, youll pay higher premiums. See the chart below, Modified Adjusted Gross Income , for an idea of what you can expect to pay.
If you must pay higher premiums, well send you a letter with your premium amount and the reason for our determination. If you have both Medicare Part B and Medicare prescription drug coverage, youll pay higher premiums for each. If you have only one Medicare Part B or Medicare prescription drug coverage youll pay an income-related monthly adjustment amount only on the benefit you have. If you decide to enroll in the other program later in the same year, well apply an adjustment automatically to the other program when you enroll. You must already be paying an income-related monthly adjustment amount. In this case, we wont send you another letter explaining how we made this determination.
Remember, if your income isnt greater than the limits described above, this law does not apply to you.
Help Paying Medicare Prescription Drug Premiums
You may be able to get help with Medicare premiums for your prescription drug coverage through the Part D Low-Income Subsidy program, also called Extra Help. This program can lower your copays and coinsurance for generic drugs to no more than $3.70 each . Additionally, you could pay less for your Part D premiums and deductibles.5
In 2021, the income limits for Extra Help are up to $19,320 annually . For resources, qualifying limits are up to $14,790 .5 You are automatically eligible for LIS if you qualify for the QMB, SLMB, or QI program.4
Medicare Part B Premiums
For Part B coverage, youll pay a premium each year. Most people will pay the standard premium amount. In 2022, the standard premium is $170.10. However, if you make more than the preset income limits, youll pay more for your premium.
The added premium amount is known as an income-related monthly adjustment amount . The Social Security Administration determines your IRMAA based on the gross income on your tax return. Medicare uses your tax return from 2 years ago.
For example, when you apply for Medicare coverage for 2022, the IRS will provide Medicare with your income from your 2020 tax return. You may pay more depending on your income.
In 2022, higher premium amounts start when individuals make more than $91,000 per year, and it goes up from there. Youll receive an IRMAA letter in the mail from SSA if it is determined you need to pay a higher premium.
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Medicare Savings Programs Income And Resource Limits
Your income and resources are some of the factors that Medicaid uses to determine if you qualify for help with Medicare premiums. MSPs have different monthly income limits, and most states have the same limits. Alaska and Hawaii are the only two states that have different income limits. Three of the four MSPs have the same resources limits, and these limits are the same for all states including Alaska and Hawaii. If you earn equal to or less than these limits, then you may qualify for assistance.
Defer Income To Avoid A Premium Surcharge
The standard premium for Medicare Part B is $170.10 per month in 2022 but that assumes youre not a higher earner. Those with higher income levels are subject to higher premium costs. For 2022 heres what youre looking at:
|2022 Medicare Part B premium costs by income level|
|Income level: individual tax filer||Income level: joint tax filer||Total monthly premium|
|$750,000 and above||$578.30|
If youre able to defer income strategically to future tax years so that you can report a lower total on your tax return, you might save yourself a higher premium charge for at least a year, since those surcharges are based on previous tax returns. For example, your 2020 tax return will determine whether you pay a surcharge in 2022 .
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Deduct Your Medicare Premiums From Your Taxes
One of the most common questions we get from ourpolicyholders here at Boomer Benefits is: Are Medicare premiums taxdeductible?
Yes, Medicare premiums can be deducted from taxes in theright circumstances. if you have had enough medical expenses to file anitemized deduction for medical expenses on your Form 1040.
In fact, most health insurance premiums, including Medicaresupplement premiums, too, can qualify for a Schedule A deduction on your 1040,but only IF your medical spending in that year is over a certain threshold. Thismeans you have to have had enough total medical expenses to file an itemizeddeduction on your Form 1040.
In 2021, you must have total qualifying expenses that exceed 10% of your adjusted gross income. Keep this in mind during years where you have more medical usage than others, and mention it to your accountant or CPA when preparing to file your IRS tax return.
Self-employed individuals may be able to deduct 100% of their premiums check with your CPA or accountant for more information if you work for yourself or own your own company.