If you have just recently enrolled in Medicare, you may be wondering how your premiums are calculated. Although Medicare eligibility is not income-based, the income you report on your tax return does play a role on your monthly premiums. As with everything else when it comes to IRS and taxes, things can get complicated and confusing!
As a refresher, Part A (hospital) generally has no premium, but Part B (doctors) has a base premium. To put it simply, the standard Part B premium amount for 2021 is $148.50. Most people end up paying that amount. However, if your modified adjusted gross income1 (MAGI) as reported on your IRS tax return from 2 years ago is above certain thresholds, listed in the below table, the monthly premiums will end up higher.
Keep in mind that if you are already receiving social security benefits, your Part B premium is automatically deducted from your benefit payments.
The rules are not set-in-stone though, so Social Security is able to adjust your premiums if you have experienced a “life-changing event” that caused a significant income reduction. For example, if your marital status changed, or you lost your job or income-producing business or property. You would need to file Form SSA-44 to request a reduction in your income-related monthly adjustment amount.
If you want to learn more, check out our Medicare webinar we recorded last year. If you have any questions or need clarification regarding your Medicare or Social Security benefits, feel free to reach out to us.
Disclosure: BFSG does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to BFSG’s web site or blog or incorporated herein and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please see important disclosure information here.
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