What's this I hear about Medicare premiums now being based on your income? Will this change my monthly cost by a lot?

For the first time ever, the 2007 premiums for Medicare Part B will be based on your income.

The monthly cost won't change significantly for most people. Couples earning $160,000 or less (based on their 2005 adjusted gross income plus tax-exempt interest) and single filers earning $80,000 or less will pay $93.50 each per month for Medicare Part B, which covers physician services and outpatient hospital visits. That's a 5.6% increase over last year's cost.

But if you earn more than those levels, you'll pay from $106 to $162 per month. Individuals earning more than $200,000 and couples earning more than $400,000 will pay the top price, which is nearly double the $88.50 monthly premium for 2006. See the table below for a complete pricing list.

While your mind is on Medicare right now, also start thinking about your Part D prescription drug coverage for next year. Open enrollment runs from November 15 to December 31 and it's your only opportunity to change drug plans before you're locked in for the new year. Even if you're happy with your plan, review your options. Several new choices may be a better deal than your current coverage, especially if you've been prescribed new drugs over the past year.

The private insurance companies that offer Part D coverage will start to advertise their 2007 prices and policies on October 1 and the new pricing information will be listed on the Medicare.gov Web site by mid-October. Because of the administrative nightmares last January, the government is recommending that people switch plans by December 8th to allow enough time to process the paperwork before the new plan takes effect on January 1 -- even though you actually have until December 31 to sign up.

Your best resource is still the Medicare Prescription Drug Plan Finder, which lets you type in names of the drugs you take and figure your potential out-of-pocket costs for plans in your area (the 2007 prices will not be available on that site until mid-October). The government also offers a personalized resource, MyMedicare.gov, where you can see information about your current plan and claims, in addition to your options for next year.

If you need individualized assistance, the State Health Insurance Assistance Programs (SHIPs) have again amassed an army of volunteers to walk you through your choices. Call 800-633-4227 for local contact information.

New Medicare Part B Prices

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