Medicare

How Changes in Income Affect Medicare Premiums

Medicare beneficiaries can see their premiums go up if their income rises, although for some that increase will be only temporary.

Question: I usually have my Medicare premiums paid automatically from my Social Security benefits, but I now receive a separate monthly Medicare premium bill in addition to the amount that is debited from my Social Security benefits each month. Why am I receiving this extra bill?

Answer: It’s likely you are receiving the extra bill because you’re now subject to the Medicare high-income surcharge, officially called the Income-Related Monthly Adjustment Amount (IRMAA). If this is the case, your bill will say “IRMAA.” You have to pay this surcharge if your modified adjusted gross income, plus tax-exempt interest income, was higher than $85,000 if you’re single or $170,000 if married filing jointly on your last tax return on file (usually 2017 for 2019 premiums).

This surcharge boosts your 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 your income. If you also have Medicare Part D prescription-drug coverage, you may also have to pay an extra $12.40 to $77.40 per month in addition to your Part D premiums. If you and your spouse file jointly and are both receiving Medicare benefits, you’ll both be subject to the high-income surcharge. For more information about the rules and the income levels, see Medicare Premiums: Rules for Higher-Income Beneficiaries.

If your income has dropped since 2017 because of certain life-changing events, such as marriage, divorce, death of a spouse or retirement, you can ask to have your Medicare premiums based on your more recent income, which could reduce or eliminate the surcharge. 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. For more information, see Save Money on Medicare.

If your income was unusually high in 2017 for other reasons—say, you sold investments for a profit or rolled money over from a traditional IRA to a Roth—you won’t be able to get your premiums reduced this year. But they may go back down next year when your premiums will be based on your 2018 income.

For more information about your Medicare bill, see Understanding the Medicare Premium Bill.

Most Popular

Are You Still Chasing the Almighty Dollar, Even Though You Have Plenty to Retire?
retirement

Are You Still Chasing the Almighty Dollar, Even Though You Have Plenty to Retire?

In our experience, many have saved enough money to retire comfortably. Yet too many worry about their money running out and want more. Maybe it’s tim…
May 6, 2021
Child Tax Credit 2021: Who Gets $3,600? Will I Get Monthly Payments? And Other FAQs
Coronavirus and Your Money

Child Tax Credit 2021: Who Gets $3,600? Will I Get Monthly Payments? And Other FAQs

People have lots of questions about the new $3,000 or $3,600 child tax credit and the advance payments that the IRS will send to most families in 2021…
May 4, 2021
20 Dividend Stocks to Fund 20 Years of Retirement
dividend stocks

20 Dividend Stocks to Fund 20 Years of Retirement

Each of these high-quality dividend stocks yields roughly 4%, and you can expect them to grow their payouts even more. That's a powerful 1-2 combo for…
May 7, 2021

Recommended

Medicare Basics: 11 Things You Need to Know
Medicare

Medicare Basics: 11 Things You Need to Know

There's Medicare Part A, Part B, Part D, medigap plans, Medicare Advantage plans and so on. We sort out the confusion about signing up for Medicare --…
March 17, 2021
A Retiree’s Guide to Key Dates in 2021
Basics

A Retiree’s Guide to Key Dates in 2021

It's critical -- and financially sound -- to hit these important financial deadlines spaced throughout the year.
January 8, 2021
What You'll Pay for Medicare in 2021
Healthy Living on a Budget

What You'll Pay for Medicare in 2021

For Medicare premiums 2021, look for modest increases in premiums and out-of-pocket costs.
December 16, 2020