| Tue, Jul 02, 2013 @ 09:00 AM

How Can Your Income Affect Your Medicare Premiums?

Posted by Medicare Made Clear

medicare monthly premiumDid you know that your income can play a role in how much you pay for your Medicare Part B and Part D plan monthly premiums?

On average, most people pay 25 percent of their Part B monthly premium and the government pays the other 75 percent. Part D plan monthly payments vary depending on the plan and whether the person gets any type of financial assistance. Generally, the government pays a large part of the prescription drug costs and the Medicare recipient pays the rest.

Usually, Higher Incomes = Larger Premiums

According to the Social Security Administration, people with higher incomes will pay a larger part of the monthly premium amount. This could be 35, 50, 65 or 80 percent of the total cost for Part B. For a Part D plan, a high income recipient will pay their monthly payment, plus an extra payment amount.  This extra payment is called the income-related monthly adjustment amount.

Most people don’t fall into this group. Less than 5 percent of people who receive Medicare pay the higher premium amounts.

How Monthly Premiums are Calculated

The Social Security Administration will use the most recent Federal tax returns to figure out who will pay higher monthly premiums. If you have to pay a higher premium, the Social Security Administration will use a sliding scale to figure out the extra premium amount. They will base the sliding scale on your modified adjusted gross income (MAGI). Your MAGI is the total of your adjusted gross income and tax-exempt interest income.

To learn more, visit Medicare plans A, B, C & D and what they cover

For more information, contact the Medicare helpline 24 hours a day, seven days a week at 1-800-MEDICARE (1-800-633-4227), TTY 1-877-486-2048. If you have questions about Medicare Made Clear, call 1-877-619-5582, TTY 711, 8 a.m. – 8 p.m. local time, seven days a week.

Resources:

Save on Drug Costs: The Official U.S. Government Site for Medicare (Medicare.gov)

Medicare Choices Summary Chart: MedicareMadeClear.com

Medicare Premiums: Rules for Higher Income Beneficiaries: See income ranges and premium amounts. Social Security Administration (ssa.gov)

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