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Medicare

Why Some People Pay Less for Medicare Than Others

What you need to know about Medicare premiums -- and how to reduce yours under certain circumstances.

Question: I can’t get my head around the Medicare Part B premium. I’ve read that the basic premium is supposed to be $134 for 2017, but that most seniors will pay $109 a month and some will pay more than $400. Can you clear things up?

Answer: We’ll try. The 2017 premium is officially $134, but about 70% of beneficiaries (those receiving Social Security benefits in December and not subject to high-income surcharges) will pay much less, averaging about $109. The law forbids an increase in Part B premiums to reduce January 2017 benefits below the amount received in December 2016. This means that different people will pay different premiums: last year’s $104.90 plus the amount that the 2017 0.3% cost-of-living adjustment adds to their Social Security benefit. The rising premium offsets the COLA, but it can’t reduce the benefit below December’s level.

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Those who start receiving benefits in 2017 will pay $134 a month, because they’re not protected by the “benefits can’t go down” rule, unless that is, their income is high enough to trigger a surcharge. Those surcharges can drive 2017 premiums as high as $428.60 a month. Beneficiaries will get a notice from Social Security pinpointing what they’ll pay.

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[QUESTION2]I’ll retire in April, and I’m sure my income for 2017 will fall below the level that triggers the high-income surcharge for Medicare. But if the government sets the premium based on my 2015 tax return, I’ll have to pay almost $350 a month. Am I stuck with the surcharge until Medicare gets my 2017 tax return showing lower income?[QUESTION2END]

Answer: No. Because retirement is considered a “life changing” event, you can appeal to have your estimated 2017 income used to set the premium. The basic premium for Medicare Part B for someone who signs up this year is $134 a month. The surcharges, which start when adjusted gross income plus tax-free interest exceeds $85,000 for single filers and $170,000 for joint filers, can drive that monthly cost as high as $428.60.

You’ll need to file Form SSA-44 with Social Security to avoid a surcharge. We’ve heard that the most efficient way to handle this is to call Social Security (800-772-1213) to set up a face-to-face meeting at a local office. If you wind up paying the surcharge for a month or two before your appeal is approved, Social Security will reimburse you for the overpayment.

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