Medicare Medical (Part B) coverage helps pay for doctors’ services and outpatient care along with other services.
Most people incorrectly think that the costs of providing Medicare Part B coverage are covered by the monthly Part B premium.
Since its start, the Medicare Part B premium has been highly subsidized. The standard Part B premium paid by most people covers only about 25 percent of actual coverage cost, with the government paying the remaining 75 percent. In 2013, the standard Medicare Part B premium is $104.90 per month.
Since 2007, a small percentage of higher income beneficiaries have paid a higher monthly Part B premium. This affects less than 5 percent of people with Medicare. Most people do not pay a higher premium. Higher Medicare Part B premiums start for individuals having a modified adjusted gross income (MAGI) above $85,000 or couples above $170,000.
Using an income-based sliding scale based on the amount of modified adjusted gross income reported to the IRS, these premiums could equal 35, 50, 65 or 80 percent of the total premium cost. Increased monthly premiums can be appealed. In addition, if you pay an increased premium and your income has gone down because of the following reasons, an increased premium can be reviewed without an appeal. These reasons are:
- You married, divorced, or became widowed;
- You or your spouse stopped working or reduced your work hours;
- You or your spouse lost income-producing property due to a disaster or other event beyond your control;
- You or your spouse experienced a scheduled cessation, termination, or reorganization of an employer’s pension plan; or
- You or your spouse received a settlement from an employer or former employer because of the employer’s closure, bankruptcy, or reorganization.
If any of the above applies, you will be asked for documentation verifying the event and the reduction in your income.
Higher-income beneficiaries with Medicare prescription drug coverage (Part D) also pay higher premiums.
More information is in the booklet “Medicare Premiums: Rules for Higher-Income Beneficiaries, online at www.socialsecurity.gov/pubs/10536.html.