Supplemental Security Income Benefits
SSI is a cash benefit paid by Social Security to people with limited income and resources who are blind, 65 or older, or have a disability. SSI benefits arent the same as Social Security retirement benefits. You may be able to get both SSI benefits and Social Security benefits at the same time if your Social Security benefit is less than the SSI benefit amount, due to a limited work history, a history of low-wage work, or both. If youre eligible for SSI, you automatically qualify for Extra Help, and are usually eligible for Medicaid.
How Do I Qualify For The Giveback
You may qualify for a premium reduction if you:
- Are enrolled in Part A and Part B
- Do not rely on government or other assistance for your Part B premium
- Live in the zip code service area of a plan that offers this program
- Enroll in an MA plan that provides a giveback benefit
Because not all plans offer this benefit, it’s important to do your research and compare plans, benefits, and costs to ensure you’re making the best decision for you.
See If Your State Has A State Pharmaceutical Assistance Program
Some states may have a State Pharmaceutical Assistance Program . These programs can help with the cost of prescription drugs and may also help cover Part D premiums. Not all states have SPAPs. Additionally, coverage and eligibility requirements can vary by state. Medicare has a useful search tool both to see if your state has an SPAP and what that program covers.
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Research Additional State Programs
In addition to all of the cost-saving methods weve mentioned above, certain states may have further programs that can help you save on your Medicare premiums. To find out more, contact your State Health Insurance Assistance Program . You can get the information for your state through the SHIP website.
Your Medicare Part B Premiums Are Based On Your Income From 2 Years Back
What I am referring to is how Medicare Part B premiums are determined. Part B is often referred to as Medical Insurance. These premiums are determined by your modified adjusted gross income or MAGI from two years ago. Your modified adjusted gross income is determined from data on your tax return. In this case, MAGI is your adjusted gross income plus your tax-exempt interest.
These premiums are determined by your modified adjusted gross income from two years ago.
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What You Pay For Part B Coverage Is Based On Your 2006 Income If It’s Dropped Since Then You May Be Able To Get Lower Rates
I’ve been paying extra for Medicare Part B because of my income. But I’m about to retire in August. Can I get my Part B premiums reduced after my income goes down, or do I need to wait until 2009 for the premiums to be readjusted?
You can get your Part B premiums reduced after you retire, and you don’t need to wait until 2009.
First, some background: In 2007, Medicare started to base Part B premiums on the beneficiary’s income – with higher-income people paying more. The premiums and income limits rose moderately in 2008.
Now, joint filers who earned $164,000 or less in 2006, or single filers who earned $82,200 or less pay the base rate of $96.40 per month for the year. But everyone earning more pays higher premiums. Joint filers earning up to $204,000, or single filers earning up to $102,000, pay $122.20 per month. The premiums gradually increase up to a top premium of $238.40 per month for joint filers who earned more than $410,000 or single filers who earned more than $205,000.
For a full list of the premiums by income, see my Medicare Premiums to Increase column.
The premiums for 2008 are based on 2006 income because those are the last tax returns the IRS has on record. But you may be able to get your premiums reduced if your income has dropped since then under certain circumstances — and retirement is one of those reasons.
For Those Who Qualify There Are Multiple Ways To Have Your Medicare Part B Premium Paid
In 2022, the standard Medicare Part B monthly premium is $170.10. Beneficiaries also have a $233 deductible, and once they meet the deductible, must typically pay 20% of the Medicare-approved amount for any medical services and supplies.
These Part B costs can add up quickly, which is why many beneficiaries search for a way to lower or be reimbursed for these expenses. The good news is they have options that can help maximize their savings while on Medicare.
The Medicare giveback benefit, or Part B premium reduction plan, is becoming more available and popular among beneficiaries. Medicaid also offers programs that pay your Part B premium if you meet certain qualifications, and some retiree health plans may offer reimbursement benefits.
Read on to learn about Part B savings options that you may be able to take advantage of.
How Will You Know If You Qualify
Whether you qualify and exactly how much help you will receive will depend on your income and assets. You can use benefitscheckup.org to see if you might qualify. Benefitscheckup.org is a free, online benefits calculator provided by the National Council on Aging.
Keep in mind that assets include things like cash, savings and checking accounts, certificates of deposit, or U.S. savings bonds. When calculating your assets you should not count: 1) a home you live in, 2) your car , 3) any burial space you may have purchased, 4) your personal belongings and household goods, or 5) life insurance if the face value of all policies is $1,500 or less.
Want To Pay Less For Medicare Here’s How
Seniors on Medicare know all too well that the costs associated with it can be burdensome. While Medicare Part A, which covers hospital care, is usually free for enrollees, Parts B and D, which cover preventive/outpatient care and prescriptions, respectively, and comprise the remainder of seniors’ coverage under original Medicare, charge enrollees a premium. The good news, however, is that there are steps you can take to lower your Medicare premium costs, thereby stretching your retirement income even further.
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Qualifying Reasons For A Medicare Part B Premium Appeal
There are a number of reasons that you might qualify for a lower premium. Social Security calls these Life-Changing Events.
The most common reason is that youve stopped working or are working less hours as you move into retirement. In that case, your monthly income is likely quite a bit less than when you were working. For example, lets say you are single and your income was $90,000 when you retired in 2016. After retirement, your income is only $40,000 from Social Security and IRA distributions. This gives you a pretty good case as to why you should not have to pay a higher Part B premium based on your former income.
Can I Use My Hsa Funds To Pay My Medicare Premiums
If you have money in a health savings account, you can use it to pay your Part B, Part D, or Medicare Advantage premiums. You cannot use an HSA to pay Medigap premiums.
The money in your HSA is tax-free as long as you use it for medical charges. Its always cheaper to pay for things with pre-tax funds than to use taxed money.
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File A Medicare Irmaa Appeal
If you are one of the beneficiaries who pays more yourMedicare Part B and D premiums due to higher income, you may be able to appealthat. Social Security bases your Medicare premiums on your modified adjustedhousehold gross income from 2 years prior to now.
So how are Medicare premiums calculated? Currently, if your IRS tax return from 2 years ago shows that you earned more than $88,000 as an individual or $176,000 filing jointly, then you will be assessed a higher premium.
This is called an Income-Related Monthly Adjustment Amount and Medicare premiums for high income individuals who are assessed an IRMAA can cost a bundle. You can find an IRMAA Medicare Premium chart on this page.
The most common reason that people get assessed higher Medicare premiums is because they have recently retired. Their income two years ago was higher than it is now that they are retired.
You can file a reconsideration request to appeal your Medicare IRMAA. Social Security will ask for proof of your higher income then versus now. If you can show that your income is lower than before, Social Security may reduce those premiums for you and lower or cancel your IRMAA
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.
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Extra Help To Pay For Medicare Prescription Drug Costs
Extra Help is a Medicare program to help people with limited income and resources pay Medicare prescription drug costs. You may qualify for Extra Help if your yearly income and resources are below these limits in 2021:
- Single person – yearly income less than $19,320 and less than $13,290 in other resources per year
You may qualify even if you have a higher income . Resources include money in a checking or savings account, stocks, bonds, mutual funds, and Individual RetirementAccounts . Resources dont include your home, car, household items, burial plot, up to $1,500 for burial expenses , or life insurance policies.
If you qualify for Extra Help and join a Medicare drug plan, you’ll:
- Get help paying your Medicare drug plan’s costs.
- Have no late enrollment penalty.
You automatically qualify and will receive Extra Help if you have Medicare and meet any of these conditions:
- You have full Medicaid coverage.
- You get help from your state Medicaid program paying your Part B premiums .
- You get Supplemental Security Income benefits.
Drug costs in 2021 for people who qualify for Extra Help will be no more than $3.70 for each generic drug and $9.20 for each brand-name drug.
Delaying Enrollment In Medicare When You’re Eligible For It Could Result In A Penalty That Will Remain In Effect For The Rest Of Your Life
Your initial window to enroll in Medicare begins three months before the month of your 65th birthday, and ends three months after that month.
While Medicare Part A which covers hospital care is free for most enrollees, Part B which covers doctor visits, diagnostics, and preventive care charges participants a premium. Those premiums are a burden for many seniors, but heres how you can pay less for them.
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Plan The Timing Of Your Medicare Enrollment
Social Security automatically adjusts your premium at the start of each new year. You will receive a letter December or January notifying you of your new premium for the year thats about to start. So if your income has gone down, they will eventually catch up to that and automatically lower or discontinue your IRMAA. Thats the light at the end of the tunnel!
If you know ahead of time that you will be subject to higher premiums, you can plan your retirement date accordingly. You should work with your financial planner as to when to begin your distributions from retirement accounts so that hopefully they will affect your Medicare premiums as little as possible.
Request for reconsideration of your Medicare Part B premium are the first step. Once you have your Medicare costs squared away and are ready for your Medicare supplement options, there are additional ways to save. I am truly surprised how many higher income individuals never even hear about these plans! Their agents do them a disservice by not talking to them about these money-saving options.
How Do I Get A Medicare Low
Many people dont realize theres a subsidy available to reduce Part D premiums and out-of-pocket costs for medications. People with Medicaid automatically qualify for the Extra Help subsidy.
However, you can obtain Extra Help, even if you dont qualify for Medicaid. When your income is low, a subsidy can help reduce Medicare premiums and other costs.
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How To Get A Medicare Part B Give Back Plan
To get a Part B premium reduction plan, you must be enrolled in Part A and Part B. You must also not be accepting government assistance that pays part of the Part B premium already. But, if you dont qualify for a give-back plan, there are plenty of plan options on the market.
Its important to compare Medicare Advantage & Medigap before enrolling in either option. Many beneficiaries are unaware of the many limitations that come with Advantage plans. A Part B reduction may not be worth the additional cost-sharing.
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 . . . when you have a life-changing event, and your income is reduced . . . commonly happens when 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.
Do I Qualify For Help With Medicare Premiums
Tips on How to Pay Your Medicare Premiums
- Pay on time to avoid coverage cancellation
- Sign-up for automatic bank payments if your Medicare Part B premiums arent automatically deducted from Social Security
- If you get Medicare Advantage through a private insurance company, contact the company if you think you will miss a paymentcompanies have their own rules on how many payments you can miss before your insurance is cancelled
You may qualify for help with paying your premiums through Medicare Savings Programs if you:
You must contact your state Medicaid office if you think you could qualify for help with paying your Medicare insurance. Even if your income is slightly higher than the limits, you can still be eligible for full or partial premium assistance.
What Are Medicare Savings Programs
Medicare Savings Programs can pay Medicare Part A and Medicare Part B premiums, deductibles, copays, and coinsurance for enrollees with limited income and limited assets. There are four different types of MSPs, and they provide varying benefits. Two of the MSPs only help to pay Medicare Part B premiums , and one MSP helps disabled working individuals pay their Part A premiums.
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Understand What Creditable Coverage Is
You can sign up for Medicare and a prescription plan without a penalty after your Initial Enrollment Period if you have from another source.
Typically, this means you have insurance from your own or your spouses employer-sponsored plan. Some people delay enrolling in Medicare because they have other insurance thats cheaper or has other advantages. Those advantages wont matter if your plan doesnt count as creditable coverage and you have to pay a late enrollment penalty.