We all know that Medicare isn’t free…. don’t we? Well, there are two parts to Original Medicare – Part A and Part B. Part A covers Hospital Room and Board, Home Health and Hospice and generally has no premium. HOWEVER, Part B covers medical visits, procedures, and tests, but is not free. Unless you qualify for full Medicaid [State Income Assistance], you will owe a monthly premium for Part B. It is paid directly back to the Social Security Administration. But how much will you pay and why is the amount different for different people? And why are there so many premium changes? Let’s take a deeper dive into this Part B premium!
What is IRMAA…..
No, I am not talking about a hurricane that hit the coast of Florida. IRMAA stands for Income Related Monthly Adjustment Amount and pertains to Medicare Part B premiums. The standard rate for Part B premium in 2022 is $170.10 per month, which by the way includes the largest annual rate increase in many decades. However, that is a starting point for many. IMRAA thresholds determine that some will pay a higher premium based on income. Social Security has decided that some individuals should pay a higher premium based on their MAGI or Modified Adjusted Gross Income from their tax return from the prior year. This tax return holds income information from two years in arears. In other words, if you enroll in Part B in 2022, your premium will be based on your income from 2020 which you submitted in 2021 on your taxes. Some folks can pay up to $578.30 per month. Yikes!
Can Your Premium Change?
Your premium gets adjusted each year based on your tax filing. So, the old one falls off, and the new filing comes into play. You will get a letter each year near the end of the year letting you know what your premium will be the following January. There are several factors that can play into the change in premium and how much. The first factor is that the standard rate and thresholds are adjusted by Social Security each year. Even if your income says you are still at the ‘standard rate’, your premium still may go up each year because Social Security also RAISES the standard rate. But that isn’t all…..
Sudden Boost in Income
Let’s assume that you are at the standard rate for several years with only minor cost of living increases and things are going along fine. Then, you receive a letter from Social Security saying your new premium for the next year is going up by nearly $100 a month. What is that about? Well, what people don’t realize is that any boost in income can affect your Part B premium. Examples would be sale of a rental property, inheritance due to finalizing an estate for a deceased parent, aunt or uncle, or maybe even severance pay out or last commission prior to retirement. It may come as a surprise because you will forget about it until two years later after tax season, and your Part B premium jumps!
Is There Anything That Can Be Done?
You have all seen the commercials boasting an Advantage Plan that pays you back money for your Part B premium. They claim you can get your money back into your Social Security check. BE WARNED – this is very misleading. There are very few occasions where someone may qualify for this type of plan. You have to either be very low income and eligible for state Medicaid or live in one very specific zip code in the state of Florida. And that is about it. However, there is something you can do to bring that higher premium down mid-year should you have a life change. A life change can be retirement (work reduction or stoppage), marriage, divorce, loss of pension and more. There is a form called SSA-44 Life Change Form Request that you can fill out and submit with supporting documents to the Social Security Administration. This will be reviewed, and your Part B premium can be adjusted accordingly anytime.
Don’t Forget About Part D
Lastly, if you have what Social Security calls a ‘surcharge’ on your Part B premium due to high income, then you will also have to pay the additional premium for Part D drug coverage. This also goes back to Social Security and is added on top of your plan premium. The amount is smaller, so it isn’t referenced as often. And strangely, you pay it to the insurance company who then pays it back to Social Security for you.
Want to Know More?
Not to worry, friend. CDI is here to help you through this entire maze. We can help from the very beginning even if it takes multiple meetings, in person or virtual. Reach out to us if you would like more information. We will protect you and save you money! Email at carrie@cdi-cares.com or check out www.cdi-cares.com for a contact page and other helpful blogs.
QUOTE OF THE DAY:
“The longer I live, the more beautiful life becomes.”
n Frank Lloyd Wright