This article was originally published here
In a video interview, the founder and President of Sensible Money, Dana Anspach, outlined the parts of Medicare and the costs connected with Part B and Part D.
Medicare Part A, sometimes known as hospital insurance, is free if you have worked in the United States for several years. “If you’re qualified for Social Security benefits, you’re usually also eligible for free Medicare Part A,” Anspach explained.
Other services and supplies are covered by Medicare Part B, which has a monthly cost that fluctuates depending on your income.
There’s also Part D, which covers medicines and is free if your income is low enough but has a cost after surpassing certain thresholds.
Amount of Income-Related Monthly Adjustment
In 2022, the regular Part B premium will be $170.10. According to Medicare.gov, most consumers pay the basic Part B payment.
Suppose your modified adjusted gross income (MAGI), as reported on your IRS tax return two years ago, exceeds a specific threshold. In that case, you’ll have to pay the usual premium plus an income-related monthly adjustment (IRMAA). IRMAA is a fee added to your insurance premium.
“Like so many other aspects of retirement, it’s more complicated than you might assume,” Anspach explained. “First, the Social Security office uses data from two years ago to establish your premium amount, so if you enroll in Medicare for the first time in 2022, they will use data from your 2020 tax return.”
Let’s say you’re 65 in 2022, and your MAGI from 2020 is less than $182,000 if married filing jointly or $91,000 if single; in this scenario, your Part B premiums will be $170 per month, and Part D will be free, according to Anspach. (To determine your MAGI, subtract any tax-exempt interest income from your adjusted gross income (AGI).)
Your premiums will now be greater if your MAGI surpasses additional threshold values. “This is known as means-testing, and the IRMAA is the technical name. According to Anspach, your premium amounts are communicated to you via a letter from the Social Security Administration called an Initial Determination Letter.
Singles with a MAGI of more than $142,000 or married with a MAGI of more than $284,000, for example, will pay $442 per month for Part B and $52 per month for Part D.
A MAGI of more than $500,000 for singles and $750,000 for marrieds attracts the highest premiums of $578 for Part B and $78 for Part D.
According to Anspach, you will receive a quarterly invoice for these premiums if you are not yet enrolled in Social Security. If you participate in the Social Security program, your premiums are withheld from your monthly payment.
Premiums for Part B
Requesting a Re-Determination of the Initial Decision
Anspach also described how recipients might ask the Social Security Administration for a revised first determination, as MAGI is affected by a list of life-changing events; however, your situation must be on the list to make this request.
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