Q. My wife and I are being charged extra for Medicare Part B and prescription drug coverage premiums, apparently based upon our higher income in years past. Beginning last year, our income dropped significantly. Is there way to get the surcharges removed?
A. Yes, if you can link the reduction in income to a “life changing event” as defined by Medicare.
First, a bit of background for our readers. Medicare premiums for 2017 are linked to your “Modified Adjusted Gross Income” (“MAG I”) as shown on your income tax return. Higher-income Medicare beneficiaries (individuals who earn more than $85,000/year) pay higher Part B and Prescription Drug Benefit Premiums then lower income Medicare beneficiaries. The extra amount increases as the beneficiary’s income increases. The Social Security Administration uses income reported two years previous to determine a beneficiary’s current premiums. Thus, the income reported on a beneficiary’s 2015 tax return is used to determine whether the beneficiary must pay a higher monthly premium in 2017. Here are the income brackets used by Medicare to add a surcharge:
Standard Bracket: For Individuals with a MAGI under $85,000 annually, or Married Couples with a MAGI under $170,000 annually, the Standard Premium for Part B is $134 per Month, but you may pay less this year if it is taken directly out of your social security benefits. For Individuals above those numbers, the standard premium increases as follows:
Bracket #1: For individuals with MAGI above $85,000 and married couples with a MAGI above $170,000, the standard premium increases by $53.50 per person;
Bracket #2: For individuals with MAGI above $107,000 and married couples with MAGI above $214,000 the standard premium increases by $133.90;
Bracket # 3: For individuals with MAGI above $160,000, and married couples with MAGI above $320,000, the standard premium increases by $214.30 per month.
Bracket #4: For individuals with MAGI above $214,000 and married couples with MAGI above $428,000, the standard premium increases by $294.60 per month.
Likewise, there are corresponding increases in the prescription drug coverage monthly premium amounts, although not as dramatic as the Part B surcharge.
If your income has changed due to a significant event, there is a procedure to demonstrate that to Medicare and seek a reduction in your “add-on” monthly premiums for both Part B and Prescription Drug Coverage. The change must be linked to what Medicare considers a “life changing event”, which includes the following:
1) You married, divorced, or became widowed;
2) You or your spouse stopped working or reduced your work hours;
3) You or your spouse lost income-producing property because of a disaster or other event beyond your control;
4) You or your spouse experienced a scheduled cessation, termination, or reorganization of an employer’s pension plan, or received a settlement because of an employer’s closure, bankruptcy or reorganization.
If any of the above events apply to you, you may be eligible for a reduction in the monthly surcharges for both the Part B and Prescription Drug Coverage Premiums. To assist you, Medicare has a form called Form SSA – 44 [”Medicare Income -Related Monthly Adjustment Amount – Life-Changing Event”]. You can download it on line at www.SSA.gov, or you may request a copy by calling 1-800-772-1213. Your best bet is to complete the form and take it along with appropriate documentation to your local Social Security office. Good luck!