Medicare Premiums for Higher-Income Beneficiaries

If you have higher income, the law requires from you to pay higher Medicare premiums for both Medicare Part B and Prescription drug coverage.  This affects less than 5 percent of people with Medicare. The post below provides a brief overview of the subject. For more details, read the Social Security publication Medicare Premiums: Rules for the Higher-Income Beneficiaries.

Monthly Medicare Premiums for 2014

Additional amount of income-related monthly Medicare premiums are known as monthly adjustments. Let us consider Medicare Part B and Medicare prescription drug coverage separately.

  • For most beneficiaries, the government pays 75% of Medicare Part B, and the beneficiary pays the remaining 25%. For people with higher income, their share of Part B will increase to 35, 50, 65, or 80 percent, depending on income.
  • The cost for prescription drug plan are dependent on the plan, and whether you get Extra Help for your Part D. Beneficiaries with higher income will pay not only regular monthly premium, but also an additional amount based on your report to IRS.

To determine, whether or not Medicare beneficiaries owe monthly adjustments, the modified adjusted gross income (MAGI) is used from the most recent Federal tax return. For the year 2014, typically the data from a tax return filed in 2013 (for the tax year 2012) are used.

The table below shows monthly Medicare premiums for 2014, and how they depend on the reported MAGI.

Modified Adjusted Gross Income (MAGI) Part B monthly premium amount Prescription drug coverage monthly premium amount
Individuals with a MAGI of $85,000 or less  2014 standard premium = $104.90   Your plan premium 
Married couples with a MAGI of $170,000 or less
Individuals with a MAGI above $85,000 up to $107,000 Standard premium + $42.00  Your plan premium + $12.10 
Married couples with a MAGI above $170,000 up to $214,000
Individuals with a MAGI above $107,000 up to $160,000  Standard premium + $104.90   Your plan premium + $31.10 
Married couples with a MAGI above $214,000 up to $320,000
Individuals with a MAGI above $160,000 up to $214,000  Standard premium + $167.80   Your plan premium + $50.20 
Married couples with a MAGI above $320,000 up to $428,000
Individuals with a MAGI above $214,000  Standard premium + $230.80   Your plan premium + $69.30 
Married couples with a MAGI above $428,000

 

What if your income has gone down?

Your income may go down for a number of reasons, such as:

  • You married, divorced, or became widowed
  • You or your spouse stopped working or reduced your working hours
  • You or your spouse experienced a scheduled cessation, termination, or reorganization of an employer pension plan

If changes in your income have an impact on your MAGI, you need to contact the Social Security office.

You also need to contact Social Security if the obsolete tax return was used in determining your MAGI, or if you disagree with the decision regarding your income-related monthly adjusted amount. You’ll need to provide the documentation supporting your case for income reduction and reducing Medicare premiums.

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For help finding the best Medicare or Individual Health Plan for you, please contact Liberty Medicare or call us at 877-657-7477.

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