Medicare Part B

[jimenright]

I have a client who lives on Social Security and a small pension. She had a daughter who died from cancer and left my client the proceeds of an annuity some $60,000. She immediately gave the $60,000 to her grandchildren. An unexpected consequence of the additional income was a large increase in the Medicare Part B from her Social Security check. She is on a tight budget so this additional payment will cause a large hit on her lifestyle. Does she stand any chance of lowering the additional Payment?

[Mo Sheets]

Medicare Website

Here is the information from the Medicare website. You will need to determine what her MAGI is to determine the additional premium to be charged each month.

Most people pay the Part B premium of $104.90 each month (this amount won’t change in 2015).


You pay $147 per year for your Part B deductible (this amount won’t change in 2015).

Some people automatically get Part B. Learn how and when you can sign up for Part B.

If you don't sign up for Part B when you're first eligible, you may have to pay a late enrollment penalty.

If your modified adjusted gross income as reported on your IRS tax return from 2 years ago (the most recent tax return information provided to Social Security by the IRS) is above a certain amount, you may pay more.

Part B helps pay for your doctors’ services and outpatient
care. It also covers other medical services, such as
physical and occupational therapy, and some home
health care. For most beneficiaries, the government
pays a substantial portion—about 75 percent—of
the Part B premium and the beneficiary pays the
remaining 25 percent.

If you are a higher-income beneficiary, you will pay a
larger percentage of the total cost of Part B based on the
income you report to the Internal Revenue Service (IRS).
You will pay monthly Part B premiums equal to 35, 50,
65, or 80 percent of the total cost, depending on what you
report to the IRS.

How does Social Security determine
if I must pay higher premiums?
To determine if you will pay higher premiums, Social
Security uses the most recent Federal tax return that the
IRS provides to us. If you must pay higher premiums,
we use a sliding scale to make the adjustments. We 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.
If you file your taxes as “married, filing jointly” and
your MAGI is greater than $170,000, you will pay higher
premiums for your Part B and Medicare prescription drug
coverage. If you file your taxes using a different status and
your MAGI is greater than $85,000, you will pay higher
premiums. (See the chart on pages 8-9 for an idea of what
you can expect to pay.)
If you must pay higher premiums, we will send you a
letter with your premium amount(s) and the reason for
our determination. If you have both Medicare Part B and
Medicare prescription drug coverage, you will pay higher
premiums for each. If you have only one—Medicare Part
B or Medicare prescription drug coverage—you will pay

The standard Part B premium for 2014 is $104.90. If you
are single and filed an individual tax return, or married and
filed a joint tax return, the following chart applies to you:
Modified Adjusted
Gross Income (MAGI)
Part B
monthly
premium
amount
Prescription
drug coverage
monthly
premium
amount
Individuals with a MAGI
of $85,000 or less
Married couples with a
MAGI of $170,000 or less
2014
standard
premium=
$104.90

Your plan
premium
Individuals with a MAGI
above $85,000 up to $107,000
Married couples with a MAGI
above $170,000 up to $214,000
Standard
premium
+ $42.00
Your plan
premium
+ $12.10

Individuals with a MAGI above
$107,000 up to $160,000
Married couples with a MAGI
above $214,000 up to $320,000
Standard
premium
+ $104.90
Your plan
premium
+ $31.10

Individuals with a MAGI above
$160,000 up to $214,000
Married couples with a MAGI
above $320,000 up to $428,000
Standard
premium
+ $167.80
Your plan
premium
+ $50.20

Individuals with a MAGI
above $214,000
Married couples with a
MAGI above $428,000
Standard
premium
+ $230.80
Your plan
premium
+ $69.30

Social Security will contact some people who have to pay more depending on their income. The amount you pay can change each year depending on your income.

I hope this helps!

Maureen

[jimenright]

Thanks Maureen.

I am already aware of the information you provided. I don't think my client has any recourse but to pay the increased premiums for one year. I was hoping there would be some exception but I don't think there is.

[Burke]

It happened to one of my clients when a large capital gain bumped her income up over the threshold. It was a one-time thing, and I don't think there is any recourse. Your client could have disclaimed the annuity if it was left to her under the will, rather than accepting it and then giving it away. Too late now. And it was probably a dumb thing to do anyway. If she is on a "tight budget" she probably needs that money! And she had to pay taxes on it as well. Did she subtract the taxes before giving it away?

[jimenright]

Taxes

were withheld by the insurance company (not enough though). She also had to pay additional property tax because of the increased income.

[Burke]

They never ask US before they do this stuff.......

[Roland Slugg]

They never ask US before they do this stuff.

Well, some do, and it's too bad this person didn't. She had several better options than the one she chose. Fortunately, the Medicare Part B premium increase will only last for one year ... assuming her income drops back down where it was before. Thus, her added cost will amount to about $500 for the year her premiums are 40% higher.