I sold my house in 2006 for a large profit, and now it looks like I'll have to pay extremely high Medicare Part B premiums because my income was so high that year. Is there any way to contest the premium increase because it was a once-in-a-lifetime profit, not my regular income?
First, some background: In 2007, Medicare started to base Part B premiums on the beneficiary's income for the first time ever -- with higher-income people paying more.
The premiums for 2008 are based on 2006 income because those are the last tax returns the IRS has on record. You may be able to get your premiums reduced if your income has dropped since then under certain circumstances. But a home-sale profit is not one of the approved reasons.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The "life-changing events" that do count include the death of a spouse, marriage, divorce, a reduction in income due to the loss of income-producing property or due to the loss of certain forms of pension income, and work stoppage or work reduction (which includes people who have retired since 2006).
If you've experienced any of these changes, contact the Social Security Administration at 800-772-1213 or visit your local field office. You'll need to provide an estimate of your 2007 taxes or a signed copy of your tax return.
You also need to provide evidence of the qualifying change. For retirees, that could be a statement from an employer verifying that you've retired, or you could use past and current pay stubs showing a change in hours. If approved, any excess premiums can be refunded retroactively.
A big home-sale profit in one year doesn't qualify as an approved life-changing event. But your premiums should go back down again next year, when your income is back to normal.
In 2008, 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. Joint filers earning up to $204,000, or single filers earning up to $102,000 pay $122.20 per month. The premiums gradually increase based on income up to a maximum 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, see my Medicare Premiums to Increase column.
-
Why Playing It Safe in Retirement Is a Big RiskFear of losing money could actually cost you in retirement. Find out why being too conservative with your life savings can hurt you and how to stop that from happening.
-
Tax Refund Alert: House GOP Predicts 'Average' $1,000 Payouts in 2026Tax Refunds Here's how the IRS tax refund outlook for 2026 is changing and what steps you can take now to prepare.
-
What Not to Do in an Airport LoungeBefore you settle into that cushy lounge chair, skip the rookie moves that annoy other travelers and can even get you kicked out.
-
Getting Out of an RMD Penaltyretirement When your brokerage firm miscalculates your required minimum distributions, you have recourse.
-
Borrowers Get More Time to Repay 401(k) Loans
retirement If you leave your job while you have an outstanding 401(k) loan, Uncle Sam now gives you extra time to repay it -- thanks to the new tax law.
-
It’s Not Too Late to Boost Retirement Savings for 2018
retirement Some retirement accounts will accept contributions for 2018 up until the April tax deadline.
-
How to Correct a Mistake on Your RMDs from IRAsretirement If you didn't take out the correct required minimum distribution because your brokerage firm made a mistake, the IRS may show some leniency.
-
Making the Most of a Health Savings Account Once You Turn Age 65
Making Your Money Last You’ll face a stiff penalty and taxes if you tap your health savings account for non-medical expenses before the age of 65. After that, the rules change.
-
Reporting Charitable IRA Distributions on Tax Returns Can Be Confusing
IRAs Taxpayers need to be careful when reporting charitable gifts from their IRA on their tax returns, or they may end up overpaying Uncle Sam.
-
Make the Most of the New Military Retirement Plan
retirement The government is offering a new retirement option so that service members who leave the military before qualifying for a pension can still receive some benefits.
-
How Changes in Income Affect Medicare Premiums
Medicare Medicare beneficiaries can see their premiums go up if their income rises, although for some that increase will be only temporary.
