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 may be able to reverse those surcharges.
Higher-income Medicare beneficiaries (individuals who earn more than $85,000 per year) pay higher Part B and prescription drug benefit premiums than lower-income Medicare beneficiaries. The extra amount a beneficiary is required to pay increases as the beneficiary’s income increases, however the Social Security Administration uses income reported two years ago to determine a beneficiary’s premiums. Thus, 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, and you can request that the Social Security Administration recalculate your benefits if your income decreases significantly due to any of the following circumstances:
- 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, and your premium surcharges could be eliminated.