The law requires an adjustment to your monthly Medicare Part B (medical insurance) and Medicare prescription drug coverage premiums. This affects less than five percent of people with Medicare. Most people don’t pay higher premiums.
If You Have a Higher Income
If you have higher income, you’ll pay an additional premium amount for Medicare Part B and Medicare prescription drug coverage. We call the additional amount the income-related monthly adjustment amount. Here’s how it works:
- Part B helps pay for your doctors’ services and outpatient care. It also covers other medical services, such as physical and occupational therapy, and some home health care. For most beneficiaries, the government pays a substantial portion — about 75 percent — of the Part B premium, and the beneficiary pays the remaining 25 percent.If we determine you’re a higher-income beneficiary, you’ll pay a larger percentage of the total cost of Part B based on the income you normally report to the Internal Revenue Service (IRS). You’ll pay monthly Part B premiums equal to 35, 50, 65, 80, or 85 percent of the total cost, depending on what you report to the IRS.
- Medicare prescription drug coverage helps pay for your prescription drugs. For most beneficiaries, the government pays a major portion of the total costs for this coverage, and the beneficiary pays the rest. Prescription drug plan costs vary depending on the plan, and whether you get the Extra Help, also known as the subsidy, with your portion of the Medicare prescription drug coverage costs.If you’re a higher-income beneficiary with Medicare prescription drug coverage, you’ll pay monthly premiums plus an additional amount, which is based on what you report to the IRS. Because individual plan premiums vary, the law specifies that the amount is determined using a base premium. We tie the additional amount you pay to the base beneficiary premium, not your own premium amount. If you’re a higher-income beneficiary, we deduct this amount from your monthly Social Security payments regardless of how you usually pay your monthly prescription plan premiums. If the amount is greater than your monthly payment from Social Security, or you don’t get monthly payments, you’ll get a separate bill from another federal agency, such as the Centers for Medicare & Medicaid Services or the Railroad Retirement Board.
How Social Security Determines You Have a Higher Premium
Social Security uses the most recent federal tax return the IRS provides to us. If you must pay higher premiums, we use a sliding scale to calculate the adjustments, based on your modified adjusted gross income (MAGI). Your MAGI is your total adjusted gross income and tax-exempt interest income.
If you file your taxes as “married, filing jointly” and your MAGI is greater than $170,000, you’ll pay higher premiums for your Part B and Medicare prescription drug coverage. If you file your taxes using a different status, and your MAGI is greater than $85,000, you’ll pay higher premiums. (See the chart below, Modified Adjusted Gross Income (MAGI), for an idea of what you can expect to pay.)
If you must pay higher premiums, we’ll send you a letter with your premium amount(s) and the reason for our determination. If you have both Medicare Part B and Medicare prescription drug coverage, you’ll pay higher premiums for each. If you have only one — Medicare Part B or Medicare prescription drug coverage — you’ll pay an income-related monthly adjustment amount only on the benefit you have. If you decide to enroll in the other program later in the same year, and you already are paying an income-related monthly adjustment amount, we’ll apply an adjustment automatically to the other program when you enroll. In this case, we won’t send you another letter explaining how we made this determination.
Remember, if your income isn’t greater than the limits described above, this law does not apply to you.
Your Tax Return
To determine your 2020 income-related monthly adjustment amounts, we use your most recent federal tax return the IRS provides to us. Generally, this information is from a tax return filed in 2019 for tax year 2018. Sometimes, the IRS only provides information from a return filed in 2018 for tax year 2017. If we use the 2017 tax year data, and you filed a return for tax year 2018 or did not need to file a tax return for tax year 2018, call us or visit any local Social Security office. We’ll update our records.
If you amended your tax return, and it changes the income we count to determine the income-related monthly adjustment amounts (your MAGI), let us know. Social Security needs to see a copy of the amended tax return you filed and your acknowledgment receipt from IRS. We’ll update our records with the information you provide, and correct or remove your income-related monthly adjustment amounts, as appropriate.
If Your Income Has Gone Down
If your income has gone down due to any of the following situations, and the change makes a difference in the income level we consider, contact us to explain that you have new information and may need a new decision about your income-related monthly adjustment amount:
- You married, divorced, or became widowed.
- You or your spouse stopped working or reduced your work hours.
- You or your spouse lost income-producing property because of a disaster or other event beyond your control.
- You or your spouse experienced a scheduled cessation, termination, or reorganization of an employer’s pension plan.
- You or your spouse received a settlement from an employer or former employer because of the employer’s closure, bankruptcy, or reorganization.
If any of the above applies to you, we need to see documentation verifying the event and the reduction in your income. The documentation you provide should relate to the event and may include a death certificate, a letter from your employer about your retirement, or something similar. If you filed a federal income tax return for the year in question, you need to show us your signed copy of the return. Use Form Medicare Income-Related Monthly Adjustment Amount – Life-Changing Event to report a major life-changing event. If your income has gone down, you may also use Form SSA-44 to request a reduction in your income-related monthly adjustment amount. You can find Form SSA-44.
Monthly Medicare premiums
The standard Part B premium for 2022 is $170.10. If you’re single and filed an individual tax return, or married and filed a joint tax return, the following chart applies to you:
