Medicare and High Income: Does Income Change the Cost of Medicare?
In New Jersey and other states, those with Medicare and a high income find themselves having to pay higher costs. It's possible that you are seeing higher premiums than you anticipated on your Medicare Part B and your prescription coverage under Medicare Part D.
All signs point to your income as the culprit. While this is shown to affect only around five percent of Medicare recipients in New Jersey and other states, you may find yourself in this particular niche. Read on to see if this includes you and how.
For Medicare, How Does Higher Income Affect You?
Social Security determines your premium amounts based on the income you report to the IRS in your most recent return. This is based on your modified adjusted gross income, or MAGI, which is your adjusted gross income and your tax-exempted gross income.
You will pay higher premiums if:
- You file your taxes under "married" status and make more than $170,000, or
- You file your taxes under any other status and make more than $85,000.
You will have received written notice of this decision to charge more, with an explanation as to why. Typically, when you receive Medicare Part B, the government handles about 75 percent of the expenses, leaving the recipient the other 25. If you must pay a higher premium, the sliding scale comes in increments, so you might pay 35, 50, 65, 80, or 85 percent of the cost. This is all determined by what you report to the IRS.
Medicare Part D also has an additional cost if you are determined to have an income above the thresholds. Medicare Part D plans have a monthly premium which is determined by the prescription drug plan you choose. This premium remains the same, however you are billed an additional amount from Social Security if your income hits the “high income” benchmarks.
What If Your Income Situation Changes?
If you’ve said "I might have made this much at the time I filed, but things have changed and I can't afford this now." Worry not. For Medicare and high income recipients, there are extenuating circumstances that can lower the costs of your premiums considerably.
Contact your local NJ Social Security office and explain you have information and need a new adjusted payment if you or your spouse experience any of the following:
- Marriage, divorce, or spousal death;
- Retirement or reduced work hours;
- Loss of an income-producing property to natural disaster or other event beyond your control;
- Layoffs or terminations (or the employer reorganized their pension plan); or
- Employer has gone bankrupt, closed, or reorganized, and you received a settlement.
You need to provide relevant documentation of the incident(s) in question, which can include notice of termination, a death certificate, etc. These will need to be submitted with the relevant forms. One of or all of these things may change your status as a high-income Medicare recipient.
Discuss Medicare and High Income Situation with NJ Medicare Brokers
If you have questions or concerns about your income level, whether you fall into that five percent, or any other Medicare and high income questions, it pays to talk to a professional who knows all the ups and downs and may find help for you in places you didn't think to look. New Jersey Medicare Brokers offer unbiased, experienced experts who can help settle your worries as you navigate your healthcare plan.
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