Many seniors have their Medicare premiums paid automatically from their Social Security benefits.  However, now some are getting a separate monthly Medicare premium bill, in addition to the amount that is taken from their monthly Social Security benefits.

Kiplinger’s recent article, “How Changes in Income Affect Medicare Premiums,” says they are receiving the extra bill because they’re now subject to the Medicare high-income surcharge, or the “Income-Related Monthly Adjustment Amount (IRMAA).”

The bill should indicate “IRMAA.” This means that a senior must pay this surcharge, because his modified adjusted gross income, plus tax-exempt interest income, was higher than $85,000 if single or $170,000 if married filing jointly on his last tax return on file (usually 2017 for 2019 premiums).

This surcharge ups the monthly Medicare Part B premiums from the standard $135.50 in 2019 to a range of $189.50 to $460.50 per month, depending on income. Medicare Part B (medical insurance) is part of Original Medicare. Part B covers medical services and supplies that are medically necessary to treat a health condition. This can include outpatient care, preventive services, ambulance services and durable medical equipment.

In addition, if a senior has Medicare Part D prescription-drug coverage, he may also have to pay an extra $12.40 to $77.40 per month, in addition to his Part D premiums. If a senior and his spouse file jointly and are both receiving Medicare benefits, they’ll both be subject to the high-income surcharge.

If a senior’s income has dropped since 2017 because of certain life-changing events, like marriage, divorce, death of a spouse or retirement, he can ask to have his Medicare premiums based on more recent income, which could reduce or eliminate the surcharge. The senior must file Form SSA-44 with the Social Security Administration, along with evidence of the eligible life-changing event (such as a statement from your employer with the date of your retirement) and an estimate of your reduced income for the year.

If a senior’s income was unusually high in 2017 for other reasons (e.g., because he sold investments for a profit or rolled money over from a traditional IRA to a Roth), he won’t be able to get his premiums reduced this year. However, the senior may go back down next year when his premiums will be based on his 2018 income.

Reference: Kiplinger (February 19, 2019) “How Changes in Income Affect Medicare Premiums”

Suggested Key Terms: Financial Planning, Elder Law Attorney, Medicare, Social Security