Every year there are hundreds of thousands of Medicare enrollees that enter in the program. Just about all of them pay the exact same amount every month for their Medicare coverage, but there are a few circumstances where enrollees could be paying more or less in premiums. If you’re about to enroll in Medicare, you’re probably wondering what you’ll be every month for health care coverage, there are a couple factors that could impact your monthly fees.
Medicare Part B helps in paying for doctors’ services, as well as for certain outpatient care that is received. In addition, this part of Medicare also covers other types of medical services such as occupational and physical therapy, as well as some forms of home health care.
Although for most people, Medicare Part A is free, as long as you’ve worked a job that paid taxes for at least ten years. On the other hand, there is a monthly premium that is due for Medicare Part B coverage. The majority of enrollees who are in Medicare Part B will pay the same amount of Part B premium.
This is because the government actually pays a large amount of the premium for Medicare beneficiaries, and Medicare enrollees are only required to pay the remainder of the premium Part B themselves. In 2016, the amount of this monthly premium is $121.80.
However, if you have a modified adjusted gross income on your IRS tax return from two years prior that is more than a certain amount, you may be required to pay a bit more than $121.80 per month for Medicare Part B coverage, based on what Medicare calls an “Income Related Monthly Adjustment Amount,” or IRMAA. This IRMAA is actually an additional charge that will added to your Part B premium.
Here is how Medicare determines how much you will pay for your Part B coverage in 2016. For example, based on the chart below, find the amount of your adjusted gross income for two years prior (2014), as well as the method in which you file your annual tax return.
|File individual tax return||File joint tax return||File married and separate tax return||Your monthly Medicare Part B premium (in 2016)|
|$85,000 or less||$170,000 or less||$85,000 or less||$121.80|
|Above $85,000 up to $107,000||Above $170,000 up to $214,000||Not applicable||$170.50|
|Above $107,000 up to $160,000||Above $214,000 up to $320,000||Not applicable||$243.60|
|Above $160,000 up to $214,000||Above $320,000 up to $428,000||Above $85,000 and up to $129,000||$316.70|
|Above $214,000||Above $428,000||Above $129,000||$389.80|
In addition to paying more for Medicare Part B, higher earning Medicare enrollees may also be required to pay more for their Medicare Part D prescription drug coverage, too. Just as with Medicare Part B, the government pays a substantial amount of the Part D premium, and beneficiaries are only required to pay the remainder of the premium out-of-pocket.
However, unlike Medicare Part B, the Part D premiums can vary a great deal depending on the particular plan that you have chosen. The cost of Part D can also be dependent upon whether or not you receive assistance through Medicare’s Extra Help program in paying the cost.
In determining who will need to pay a higher amount of premium for Medicare Part D, Social Security will use your most recent Federal tax return. A sliding scale is then used, based upon the amount of your modified adjusted gross income, as well as the manner in which you file your tax return.
Those who are subject to the higher Part D premium will receive a letter from Medicare that indicates the premium amount to be paid, along with the reason for the higher premium determination.
Part B Penalties
Another important factor that you should be aware of is the penalties that could make your premiums increase. If you miss your enrollment period for Part B Medicare without one of the approved exemptions, you could have drastic penalties placed on your monthly costs. For every year that you don’t accept Part B, you’ll face a 10% increase every month. The longer that you wait, the larger the monthly premiums. If you think you could qualify for one of the exemptions, and you don’t want to enroll into Part B, it’s important that you fully understand the rules.
If your income changes, you should let the Social Security office know. It could have a significant impact on Medicare premiums. You could have an income change because of a divorce, death, losing income because of a natural disaster, or some other complications with your income. Regardless of the reason of the drastic change in income, you should always notify Social Security with proper documentation of the loss and they will make the corrections from there.
If you think any calculations were done incorrectly, there is a mistake, or you disagree with any of the income adjustments made to your premiums, you can request an appeal. You can complete a Request for Reconsideration at your local Social Security office.
If you have problems paying for your monthly premiums, there is some assistance that you can apply for. There are several different programs like QMB, QI, SLMB, and QDWI. Each of them can help you pay for either Part B premiums, Part A premiums, both or even additional costs. Each program has different monthly income limits for both individuals and married couples.
If you’re struggling to pay your premiums, you can visit the official Medicare website or call your Medicare office to see if you qualify for any of these programs. You should always be able to afford the health care coverage that you need. Finances shouldn’t get in the way of receiving the medical attention that you need.
If you have any questions about Medicare Parts A and B, your monthly premiums, or any assistance programs, we would be happy to help. Enrolling in Medicare and getting adequate coverage is one of the most important things that you can do.