Millions of seniors get health benefits through Medicare in retirement, but those benefits come at a cost. While Part A, which covers hospital care, is generally free for enrollees, Part B, which covers doctor visits and preventive care, comes at a premium.
The cost of that premium, however, can vary from year to year. Currently, the standard Part B premium is $135.50, but in 2020, it's increasing by $9.10 to $144.60 -- a fact that many seniors are unhappy about.
But here's some more bad news: If you're a higher earner, you'll pay even more than $144.60 for Part B next year. That's because higher earners are subject to income-related monthly adjustment amounts (IRMAA) that make Medicare even pricier.
High-income seniors will pay the price
Though only 7% of seniors with Part B pay an IRMAA surcharge, it's a burden for those liable for it. IRMAAs are based on the modified adjusted gross income you reported on your taxes two years prior, so your 2020 Medicare premiums will be based on your 2018 tax return.
Here are the income brackets you should be aware of :
If You're an Individual Tax Filer With an Income Of:
Or a Joint Tax Filer With an Income Of:
Your Part B IRMAA Is:
Your Total Monthly Part B Premium Cost Is:
Less than or up to $87,000
Less than or up to $174,000
More than $87,000 and less than or equal to $109,000
More than $174,000 and less than or equal to $218,000
More than $109,000 and less than or equal to $136,000
More than $218,000 and less than or equal to $272,000
More than $136,000 and less than or equal to $163,000
More than $272,000 and less than or equal to $326,000
More than $163,000 and less than $500,000
More than $326,000 and less than $750,000
More than or equal to $500,000
More than or equal to $750,000
The rules are a little simpler if you're a higher earner who's married and lives with your spouse at any time during the year, but you and your spouse file separate tax returns. In that case, you'll face a $318.10 surcharge if your income is more than $87,000 and less than $413,000 for a total monthly premium of $462.70. If your income is equal to or more than $413,000, you're looking at a $347 surcharge that results in a $491.60 monthly Part B premium.
Appealing your IRMAA
If your financial circumstances have changed since you filed the tax return used to determine your IRMAA, you can attempt to appeal that surcharge. You may be eligible to appeal if you:
- Got married or divorced.
- Experienced the death of a spouse.
- Lost out on a major source of income (like your job, or an income-producing property).
- Think the Social Security Administration has the wrong tax information for you on file.
Keep in mind that your IRMAA will affect your Medicare Part D premiums as well, so if you have reason to believe you shouldn't be subject to a surcharge, get moving in filing an appeal.
Know your Part B costs
Chances are, you'll rely heavily on Medicare Part B in the coming year. While paying extra for coverage may not be ideal, the upside is that you're probably in that situation because you have a healthy level of retirement savings or income from a pension or other source. And that's something you can't feel too bad about.
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