What happens if you are a high-income Medicare beneficiary who is paying a surcharge on your premiums and then your income changes? If your circumstances change- you can reverse those surcharges.
Higher-income Medicare beneficiaries (individuals who earn more than $85-000) pay higher Part B and prescription drug benefit premiums than lower-income Medicare beneficiaries. The extra amount the beneficiary owes increases as the beneficiary’s income increases. The Social Security Administration uses income reported two years ago to determine a beneficiary’s premiums. So the income reported on a beneficiary’s 2015 tax return is used to determine whether the beneficiary must pay a higher monthly premium in 2017.
A lot can happen in two years. If your income decreases significantly due to certain circumstances- you can request that the Social Security Administration recalculate your benefits. For example- if you earned $90-000 in 2015 but your income dropped to $50-000 in 2016- you can request an income review and your premium surcharges for 2017 could be eliminated. Income is calculated by taking a beneficiary’s adjusted gross income and adding back in some normally excluded income- such as tax-exempt interest- U.S. savings bond interest used to pay tuition- and certain income from foreign sources.
You can request a review of your income if any of the following circumstances occurred:
- 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 because of 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
- You or your spouse received a settlement from an employer or former employer because of the employer’s closure- bankruptcy- or reorganization
If your income changes due to any of the above reasons- you can submit documentation verifying the change in income — including tax documents- letter from employer- or death certificate — to the Social Security Administration. If the change is approved- it will be retroactive to January of the year you made the request.