Two neighbours, both 68, both on Original Medicare, paying different amounts for the same Part B. Nothing is wrong. One of them is paying an income-related adjustment.
This guide explains what that is, why it is calculated from an old tax return, and — the part that matters — how to have it reconsidered when your circumstances have changed.
What the adjustment is
Most people pay the standard Part B premium. Above certain income thresholds, an additional amount is added. The same applies to Part D, where the addition is paid separately from your plan premium.
The thresholds and the amounts are set annually and are published on Medicare.gov. We do not print figures here for exactly the reason you would want us not to: they change every year, and a stale figure on a licensed producer’s website is a liability rather than a service.
Why it is based on an old return
The Social Security Administration uses the most recent tax return it has from the Internal Revenue Service. In practice that is the return from two years ago.
So the amount you pay this year is generally based on what you earned two years ago.
For someone whose income is steady, this is merely odd. For someone who has just retired, it can be badly wrong — because two years ago they were working, and now they are not.
That is the situation the appeal process exists for.
The appeal, which is worth knowing about
If your income has fallen because of a life-changing event, you can ask for the determination to be reconsidered using your current income rather than the old return.
The events that qualify are specific. They include marriage, divorce or annulment; the death of a spouse; you or your spouse stopping work or reducing hours; loss of income-producing property through no fault of your own; loss or reduction of a pension; and receiving a settlement from an employer’s closure or bankruptcy.
Retirement is on that list. This is the single most useful sentence in this guide, because a great many newly retired people pay an adjustment based on their working income for a year or more, believing there is nothing to be done.
How to ask
Social Security has a form for it — the request for reconsideration of an income-related monthly adjustment. You describe the life-changing event, state your expected income, and provide evidence.
Evidence means something documentary: a letter from an employer confirming the date you stopped work, a death certificate, a divorce decree, a pension statement. A recent tax return or a signed statement of expected income supports the figure.
Submit it to Social Security. You can do it by post or in person at an office; telephone 1-800-772-1213 to ask which they prefer currently.
Do not wait for the year to end. If you retired this year, ask now.
If the number is simply wrong
Separately from a life-changing event, if the tax data used was incorrect — an amended return, or an IRS error — you can ask for that to be corrected too. Same office, different grounds.
What it does not affect
The adjustment applies to Parts B and D. It does not change your plan choices, your benefits, or what any plan will accept you for. It is purely a premium calculation.
It also does not affect Medicare Supplement premiums, which are priced by the insurer on their own basis.
How it is collected
If you receive Social Security, the Part B amount including any adjustment is normally deducted from your payment. The Part D adjustment is billed to you separately by Medicare, not by your drug plan — which confuses a great many people who assume a bill from Medicare for drug coverage must be a mistake.
It is not a mistake, and it is not optional. If it goes unpaid, drug coverage can be terminated.
What to do
Check the annual notice Social Security sends you setting out next year’s premium. If it includes an adjustment and your income has fallen since the year it was based on, request the reconsideration.
If your income is genuinely higher, then the adjustment is correct and there is nothing to appeal.
Either way, do not let it sit. This is one of the few areas of Medicare where a single form, correctly evidenced, changes what you pay for a whole year.
For the current thresholds, telephone 1-800-MEDICARE or use Medicare.gov. For the appeal, telephone Social Security on 1-800-772-1213. Your State Health Insurance Assistance Program will help you with the form free of charge and has nothing to sell.
General information, not advice
This guide describes how Medicare generally works. It is not advice about your situation, and rules, dates and figures change — verify anything that matters to a decision against Medicare.gov,1-800-MEDICARE, or your State Health Insurance Assistance Program, all of which are free.
Rights and rules vary by state; this describes Ohio, Kentucky and Indiana. Clearview Medicare Advisers LLC is not connected with or endorsed by the United States government or the federal Medicare program.
Not sure how this applies to you?
Tell us your birthday and whether you are still working. That is usually enough for us to say which periods apply to you and by when. No charge and no obligation.
