How to reverse Medicare surcharges when your income changes
Are you a high-income Medicare beneficiary who is paying a surcharge on your premiums but who has experienced a drop in income or is anticipating one? If your circumstances change, you can reverse those surcharges.
Q: How does your income affect your Medicare premiums?A: Higher-income Medicare beneficiaries (individuals who earn more than $85,000) pay higher Part B and prescription drug benefit premiums than do Medicare beneficiaries with lower incomes. The extra amount the beneficiary owes increases in stages as the beneficiary*s income increases.
Q: How does the SSA determine your income?The Social Security Administration uses income reported two years ago to determine a beneficiary*s premiums. So the income reported on a beneficiary*s 2016 tax return is used to determine whether the beneficiary must pay a higher monthly premium in 2018. But a lot can happen in two years.
Q:What if my income decreases significantly between the two year range?A: 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 2016 but your income dropped to $50,000 in 2017, you can request an income review and your premium surcharges for 2018 could be eliminated.
Q: How is the income calculated?A: 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.
Q: When can you request a review of your income?A: When you are ou married, divorced, or became widowed. *
A: When you or your spouse stopped working or reduced your work hours -
A: When you or your spouse lost income-producing property because of a disaster or other event beyond your control. -
A: When you or your spouse experienced a scheduled cessation, termination, or reorganization of an employer*s pension plan. -
A: When you or your spouse received a settlement from an employer or former employer because of the employer*s closure, bankruptcy, or reorganization. -
Q: How do you request a review of your income?A: If your income changed due to any of the above reasons, you can submit documentation verifying the change in income * including tax documents, a letter from your employer, or a 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. Here is a link to the SSA*s Life-Changing Event form: https://www.ssa.gov/forms/ssa-44.pdf