Making Your Money Last
Higher '07 Income Snares Part B Seniors
Hit with an extra cost for your Medicare Part B premium? Here's how to appeal it.
By Susan B. Garland, Editor, Kiplinger's Retirement Report
May 29, 2009
EDITOR'S NOTE: This article was originally published in the March 2009 issue of Kiplinger's Retirement Report. To subscribe, click here.
For the third year in a row, higher-income Medicare beneficiaries received notice that they'll pay more in Part B premiums than other seniors. But this year, there's a catch: The size of the premium is based on returns for tax year 2007, before the economic downturn slashed the nest eggs of many retirees.
The premium is calculated on a sliding scale based on a taxpayer's adjusted gross income plus any tax-exempt income. According to the Social Security Administration, 2 million beneficiaries (4.9% of all beneficiaries) paid a higher premium in 2008, compared with 1.7 million (4.2%) in 2007.
The standard Part B premium is $96.40. Individuals with a modified AGI from $85,000 to $107,000 in 2007 will pay a $134.90 premium (married couples pay twice that on joint income from $170,000 to $214,000). Individuals from $107,000 to $160,000 (married, $214,000 to $320,000) pay $192.70. Individuals from $160,000 to $213,000 (married, $320,000 to $426,000) pay $250.50. And individuals above $213,000 (married, above $426,000) pay $308.30.
You can contest the higher premium if your income has dropped because of a "life-changing event." A life-changing event is marriage, divorce, job loss, reduced work hours, loss of income from income-producing property or cuts in pension benefits.
What is not considered a life-changing event is a drop in income because of investment declines. For example, if you had a significant amount of income in 2007 from selling shares, you're liable for the higher premium this year even if your income is much lower.
If you do fit one of the categories, fill out Form "Medicare Part B Income-Related Premium-Life Changing Event," which you can find at www.ssa.gov/online/ssa-44.pdf. If Social Security rejects your request, you have 60 days to file an appeal.
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Reader Comments (2)
Posted by: Cathy at 06/11/2009 03:01:28 AM
We are seniors caught in the higher-premium Medicare due to our income. We are both still working at 72 but not full-time. The salaries and RMD withdrawals have driven up our income, therefore we are penalized. We would be better off not working and not having saved as much for our retirement. We are currently paying over $11,000 a year for health coverage with Medicare and our supplemental insurance. This penalty on our earnings affects everything we do as far as investing. We would be better served by pulling our income down below the levels and lolling around instead of contributing to the economy of our country. We are going to look into dropping Medicare altogether if we can find a private insurer to purchase coverage from. That way we would be out from under the heavy hand of the government. If more and more of the higher earners did this, Medicare would find itself in an even bigger financial hole. If Medicare is any indication of the government running the health care system in this country, we are in big trouble.
Posted by: Ray Joiner at 09/17/2009 08:10:16 PM
Regarding Cathy's post of June 11, the small $211.90 monthly difference between the lowest and highest Medicare Part B premiums is hardly an example of "the heavy hand of government"; rather, it is a bargain. At age 72, Cathy hopes to find a private insurer who will offer a better deal than Medicare? Perhaps she has discovered by now what a joke that is! There is indeed much wrong with government and its heavy hand today, but Cathy's complaint is a sad example of the...nature of our current Zeitgeist. By definition, she can EASILY afford what she complains about.