Medicare:

Premium Adjustments

Rules For Higher-Income Beneficiaries

If you have higher income, the law requires an adjustment to your monthly Medicare Part B (medical insurance) and Medicare prescription drug coverage premiums. Higher-income beneficiaries pay higher premiums for Part B and prescription drug coverage. This affects less than 5 percent of people with Medicare, so most people do not pay a higher premium.

How does this affect me?

If you have higher income, you will pay an additional premium amount for Medicare Part B and Medicare prescription drug coverage. We call the additional amount the income-related monthly adjustment amount. Here’s how it works:

  1. Part B helps pay for your doctors’ services and outpatient care. It also covers other medical services, such as physical and occupational therapy, and some home health care. For most beneficiaries, the government pays a substantial portion—about 75 percent—of the Part B premium and the beneficiary pays the remaining 25 percent.
    • If you are a higher-income beneficiary, you will pay a larger percentage of the total cost of Part B based on the income you report to the Internal Revenue Service (IRS). You will pay monthly Part B premiums equal to 35, 50, 65, or 80 percent of the total cost, depending on what you report to the IRS.
  2. Medicare prescription drug coverage helps pay for your prescription drugs. For most beneficiaries, the government pays a major portion of the total costs for this coverage and the beneficiary pays the rest. Prescription drug plan costs vary depending on the plan, and on whether you get Extra Help with your portion of the Medicare prescription drug coverage costs.
    • If you are a higher-income beneficiary with Medicare prescription drug coverage, you will pay monthly premiums plus an additional amount, which is based on what you report to the IRS. Because individual plan premiums vary, the law specifies that the amount is determined using one base premium. We tie the additional amount you pay to the base beneficiary premium, not your own premium amount. If you are a higher-income beneficiary, we deduct this amount from your monthly Social Security payments regardless of how you ordinarily pay your monthly prescription plan premiums. If the amount is greater than your monthly payment from Social Security, or you do not get monthly payments, you will get a separate bill from another Federal agency, such as the Centers for Medicare & Medicaid Services or the Railroad Retirement Board.
How does Social Security determine if I must pay higher premiums?

To determine if you will pay higher premiums, Social Security uses the most recent Federal tax return that the IRS provides to us. If you must pay higher premiums, we use a sliding scale to make the adjustments. We base the sliding scale on your modified adjusted gross income (MAGI). Your MAGI is the total of your adjusted gross income and tax-exempt interest income.

If you file your taxes as “married, filing jointly” and your MAGI is greater than $170,000, you need to pay higher premiums for your Part B and Medicare prescription drug coverage. If you file your taxes using a different status and your MAGI is greater than $85,000, you also need to pay higher premiums.)

If you must pay higher premiums, we will send you a letter with your premium amount(s) and the reason. If you have Medicare Part B and Medicare prescription drug coverage, you will pay higher premiums for both. If you have only one—Medicare Part B or Medicare prescription drug coverage—you will pay an income-related monthly adjustment amount only on the benefit you have. If you decide to enroll in the other program later in the same year and you already are paying an income-related monthly adjustment amount, we will apply an adjustment automatically to the other program when you enroll. In this case, we will not send you another letter explaining how we made this determination.

Remember, if your income is not greater than the limits described above, this law does not apply to you.

Which tax return does Social Security use?

To determine your 2012 income-related monthly adjustment amounts, we use your most recent Federal tax return that the IRS provides to us. Generally, this information is from a tax return filed in 2011 for tax year 2010. Sometimes, IRS only provides information from a return filed in 2010 for tax year 2009. If we use the 2009 tax year data and you filed a return for tax year 2010 or did not need to file a tax return for tax year 2010, call us or visit any local Social Security office. We will update our records.

If you amended your tax return and it changes the income we count to determine the income-related monthly adjustment amounts, let us know. Social Security needs to see a copy of the amended tax return you filed and your acknowledgment receipt from IRS. We will update our records with the information you provide, and correct or remove your income-related monthly adjustment amounts, as appropriate.

What if my income has gone down?

If your income has gone down due to any of the following situations and the change makes a difference in the income level we consider, contact us to explain you have new information and may need a new decision about your income-related monthly adjustment amount:

  • 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 due to 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; or
  • You or your spouse received a settlement from an employer or former employer because of the employer’s closure, bankruptcy, or reorganization.

If any of the above applies to you, we need to see documentation verifying the event and the reduction in your income. The documentation you provide should relate to the event and may include a death certificate, a letter from your employer about your retirement, or something similar. If you filed a Federal income tax return for the year in question, you need to show us your signed copy of the return.

What if I disagree?

If you disagree with the decision regarding your income-related monthly adjustment amounts, you have the right to appeal. You may request an appeal in writing by completing a Request for Reconsideration (Form SSA-561-U2) or you may contact your local Social Security office to file your appeal. You can find the appeal form online at www.socialsecurity.gov/online request a copy through our toll-free number at 1-800-772-1213 (TTY 1-800-325-0778). You do not need to file an appeal if you are requesting a new decision because you experienced one of the events listed here and it made your income go down or if you have shown us the information we used is wrong.

If you disagree with the amount of MAGI we received from the IRS, you have to correct that information with the IRS. If we determine you must pay a higher amount for Medicare prescription drug coverage, and you do not have this coverage, you will have to call the Centers for Medicare & Medicaid Services (CMS) at 1-800-MEDICARE (1-800-633-4227; TTY 1-877-486-2048) to make a correction. Social Security receives the information about your prescription drug coverage from CMS.


Monthly Medicare premiums for 2017

The standard Part B premium for 2016 is $134. (If you applied for Medicare prior to 2017 and are subject the the hold-harmless provision.) If you are single and filed an individual tax return, or married and filed a joint tax return, the following chart applies to you:

2015 Modified Adjusted Gross Income (MAGI) Part B monthly premium amount Prescription drug coverage monthly premium amount
Individuals with a MAGI of $85,000 or less /
Married couples with a MAGI of $170,000 or less

2017 Standard premium = $134.00

Your plan premium

Individuals with a MAGI above $85,000 up to $107,000 /
Married couples with a MAGI above $170,000 up to $214,000
Standard premium
+ $53.50
Your plan premium
+ $13.30
Individuals with a MAGI above $107,000 up to $160,000 /
Married couples with a MAGI above $214,000 up to $320,000
Standard premium
+ $133.90
Your plan premium
+ $34.20
Individuals with a MAGI above $160,000 up to $214,000 /
Married couples with a MAGI above $320,000 up to $428,000
Standard premium
+ $214.30
Your plan premium
+ $55.20
Individuals with a MAGI above $214,000 /
Married couples with a MAGI above $428,000
Standard premium
+ $294.60
Your plan premium
+ $76.20

If you are married and lived with your spouse at some time during the taxable year, but filed a separate tax return, the following chart applies to you:

2015 Modified Adjusted Gross Income (MAGI) Part B monthly premium amount Prescription drug coverage monthly premium amount
Individuals with a MAGI of $85,000 or less

2017 Standard premium = $134.00

Your plan premium
Individuals with a MAGI above $85,000 up to $129,000 Standard premium
+ $214.30
Your plan premium
+ $55.20
Individuals with a MAGI above $129,000 Standard premium
+ $294.60
Your plan premium
+ $76.20



Monthly Medicare premiums for 2016

The standard Part B premium for 2016 is $121.80. (If you applied for Medicare prior to 2016 and are subject the the hold-harmless provision your premium will remain at $104.90.) If you are single and filed an individual tax return, or married and filed a joint tax return, the following chart applies to you:

2014 Modified Adjusted Gross Income (MAGI) Part B monthly premium amount Prescription drug coverage monthly premium amount
Individuals with a MAGI of $85,000 or less /
Married couples with a MAGI of $170,000 or less

2016 Hold Harmless premium=$104.90

2016 Standard premium = $121.80

Your plan premium
Individuals with a MAGI above $85,000 up to $107,000 /
Married couples with a MAGI above $170,000 up to $214,000
Standard premium
+ $48.70
Your plan premium
+ $12.70
Individuals with a MAGI above $107,000 up to $160,000 /
Married couples with a MAGI above $214,000 up to $320,000
Standard premium
+ $121.80
Your plan premium
+ $32.80
Individuals with a MAGI above $160,000 up to $214,000 /
Married couples with a MAGI above $320,000 up to $428,000
Standard premium
+ $194.90
Your plan premium
+ $52.80
Individuals with a MAGI above $214,000 /
Married couples with a MAGI above $428,000
Standard premium
+ $268.00
Your plan premium
+ $72.90

If you are married and lived with your spouse at some time during the taxable year, but filed a separate tax return, the following chart applies to you:

2014 Modified Adjusted Gross Income (MAGI) Part B monthly premium amount Prescription drug coverage monthly premium amount
Individuals with a MAGI of $85,000 or less

2016 Hold Harmless premium=$104.90

2016 Standard premium = $121.80

Your plan premium
Individuals with a MAGI above $85,000 up to $129,000 Standard premium
+ $194.90
Your plan premium
+ $52.80
Individuals with a MAGI above $129,000 Standard premium
+ $268.00
Your plan premium
+ $72.90

Source: Publication No. 05-10536