I just received a letter in the mail from Social Security saying that based on our 2005 income our 2007 monthly Medicare Part B premium will be 93.50 plus 49.40 for the income related premium every month for me.
Do they base it on one year? I've paid Medicare all my life and thought when I turned 65 it was free.
A. First, Medicare premiums are not free. As I understand it, at age 65 you automatically will receive Medicare hospital insurance (Part A), which is free. You can also elect to receive Medicare medical insurance (Part B), but you must pay a monthly premium which is deducted from your Social Security benefit check. You do not have to take Medicare Part B if you have adequate coverage elsewhere.
For 2007, the Medicare Part B monthly premium will vary depending on the taxpayers’ income as shown on their 2005 income tax returns and their filing status. The income used is your “Modified Adjusted Gross Income” (MAGI). Your MAGI is a combination of your Adjusted Gross Income (AGI) and tax exempt interest income reported on Line 8b.
Because your 2005 income was over $300,000 your Medicare Part B premium for 2007 is $93.50 + $49.40 = $142.90.
However, if the 2006 income is lower than the 2005 income used to determine the premium amount AND the taxpayer meets certain criteria, the taxpayer can request the premiums be based on the 2006 income. According to the Social Security Administration website:
“If your income has gone down due to any of the following circumstances and the change will make 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 Medicare Part B premium:
· You have married, divorced or your spouse died;
· You or your spouse have stopped working or reduced your work hours;
· You or your spouse have lost income from property due to a disaster or other event beyond your control; or
· Your or your spouse’s benefits from an insured pension plan stopped or went down.
If any of these events happen, you will need to show us evidence of the event and tell us how it has reduced your income. Evidence could be 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 will need to show us your signed copy of the return.”
You can request an appeal in writing by completing a "Request for Reconsideration" (Form SSA-561-U2).
As you state that you retired in 2005, it seems that you would fall under the category “You or your spouse have stopped working or reduced your work hours”, so you may be able to have your premiums reduced. I suggest that you contact your local Social Security Administration office and provide them with this information.
FYI, I am not an expert on Social Security, Railroad Retirement, Medicare or Medicaid topics. I have a basic knowledge of the system, but my experience with these issues is minimal and limited. I do not offer professional consultation on these topics. My above conclusion and suggestion is based solely on reading the information available on the SSA website and continuing education sources.
Does anyone out there have any additional advice or comments for John?