Getting Medicare Part B premium reduced?

[madsquopper]

Next year I'll have to sign up for Medicare. The part B premium has a surcharge for high incomes but apparently you can ask for a reduction if you have evidence to back it up. Our joint income does push us over the first threshold and into the second, but specifically in 2016 I had some large one-time capital gains that would push me into an even higher premium slot for the 2018 signup. If they do ding me, what I was going to do is send in my 2014-2017 tax returns showing the atypical one-time bump. Any idea on the probability of success?

 

[Gotadimple]

Have you talked to Medicare? They can tell you what they will do, and how to apply for an exception.

 

[braumeister]

They will only consider things on their short list of "life-changing events":

• The death of a spouse
• Marriage
• Divorce or annulment
• You or your spouse stopping work or reducing the number of hours you work
• Involuntary loss of income-producing property due to a natural disaster, disease, fraud, or other circumstances
• Loss of pension
• Receipt of settlement payment from a current or former employer due to the employer’s closure or bankruptcy

You need to send in Form SSA-44 to request a reduction.

 

[kaneohe]

Agree w/ braumeister. Your event is not listed there so chances near zero.

 

[SecondCor521]

Note that the surcharge is recalculated annually so it isn't a lifetime ding, just a one-year ding in the case of the OP.

 

[madsquopper]

Thanks everyone. Took a look at the form and I'm probably screwed for the first year, after which the surcharge would revert. However, one or both of us may retire next year, so maybe could use the "Work Stoppage" or "Work Reduction" option.

That begs the question, how do people "document" their retirement if they retire early and don't plan on taking SS benefits until age 70?

 

[braumeister]

A letter from your employer acknowledging your retirement is what they generally want to see.

 

[Car-Guy]

Thanks everyone. Took a look at the form and I'm probably screwed for the first year,

Join the crowd. Well maybe not much of a crowd on this forum. I just got my annual letter from Medicare and again my IRMAA will force me to pay $428 (if I remember the #s correctly) a mo for part B . Talk about unfair. I paid "a lot" into the system all my working years and now that I'm retired, I pay more than 3 times the normal rates for the same coverage as everyone gets.

Can you say means testing.

 

[meierlde]

Join the crowd. Well maybe not much of a crowd on this forum. I just got my annual letter from Medicare and again my IRMAA will force me to pay $428 (if I remember the #s correctly) a mo for part B . Talk about unfair. I paid "a lot" into the system all my working years and now that I'm retired, I pay more than 3 times the normal rates for the same coverage as everyone gets.

Can you say means testing.

It should be noted that the medicare part of FICA only pays for part A not part B. Part B is paid for by general revenue. So congress in its wisdom decided that the higher income should not get as large a subsidy for part B.
For 2018 the limits to reach the various levels were decreased to pay for the fix in payments to physicians etc in part B.

 

[audreyh1]

Join the crowd. Well maybe not much of a crowd on this forum. I just got my annual letter from Medicare and again my IRMAA will force me to pay $428 (if I remember the #s correctly) a mo for part B . Talk about unfair. I paid "a lot" into the system all my working years and now that I'm retired, I pay more than 3 times the normal rates for the same coverage as everyone gets.

Can you say means testing.

Yes, it’s means testing on Medicare. If you have a lot of income, you pay much, much higher premiums.

Part B is paid through general revenue and premiums.

• Part A is financed primarily through a 2.9 percent tax on earnings paid by employers and employees (1.45 percent each) (accounting for 88 percent of Part A revenue). Higher-income taxpayers (more than $200,000/individual and $250,000/couple) pay a higher payroll tax on earnings (2.35 percent).
• Part B is financed through general revenues (75 percent), beneficiary premiums (23 percent), and interest and other sources (2 percent). Beneficiaries with annual incomes over $85,000/individual or $170,000/couple pay a higher, income-related Part B premium reflecting a larger share of total Part B spending, ranging from 35 percent to 80 percent. The ACA froze the income thresholds through 2019, and beginning in 2020, the income thresholds will once again be indexed to inflation, based on their levels in 2019 (a provision in the Medicare Access and CHIP Reauthorization Act of 2015, or MACRA4). As a result, the number and share of beneficiaries paying income-related premiums will increase as the number of people on Medicare continues to grow in future years and as their incomes rise.
• Part D is financed by general revenues (78 percent), beneficiary premiums (13 percent), and state payments for dually eligible beneficiaries (9 percent). As for Part B, higher-income enrollees pay a larger share of the cost of Part D coverage.

https://www.kff.org/medicare/issue-brief/the-facts-on-medicare-spending-and-financing/

 

[W2R]

Join the crowd. Well maybe not much of a crowd on this forum. I just got my annual letter from Medicare and again my IRMAA will force me to pay $428 (if I remember the #s correctly) a mo for part B . Talk about unfair. I paid "a lot" into the system all my working years and now that I'm retired, I pay more than 3 times the normal rates for the same coverage as everyone gets.

Can you say means testing.

Ouch, what a blow.

This past year I had to pay $187.50/month for Part B instead of the lowest amount, because in 2015 I mistakenly sold too much of my portfolio to get cash to pay for my dream house in cash. So, my 2015 AGI was higher than usual. I should have got a temporary loan, because I was only a little bit over the threshold, but oh well, oops.

Anyway, I didn't submit the SSA-44 form, and even if I had it wouldn't help because I haven't had any life changing events other than not buying a new dream house in cash every single year. As you might imagine, that wasn't on their list of life changing events.

Also I did not call Medicare about it or anything because for some reason I thought they'd reduce it automatically.

I haven't yet received my annual letter from Medicare. I am convinced that we have the worst local postal service in the country, and anyway they are very slow and frequently mis-deliver mail. I looked online a couple of weeks ago for info about what I'll be paying in 2018, but didn't see it; I'll look again after I finish this post.

Hoping for the best, but fearing I might have to pay the higher amount this coming year too.

 

[FIRE'd@51]

Hoping for the best, but fearing I might have to pay the higher amount this coming year too.

You shouldn't have to, since it is based on your 2016 tax return.

 

[W2R]

You shouldn't have to, since it is based on your 2016 tax return.

Oh good! My 2016 AGI is nice and low. With any luck I won't have any trouble, then. Anyway, I should find out soon....

 

[meierlde]

Oh good! My 2016 AGI is nice and low. With any luck I won't have any trouble, then. Anyway, I should find out soon....

Note the amount is based on AGI plus tax free bonds. (MAGI)

 

[W2R]

I hadn't found out anything about it on mymedicare.gov, so just now I got a bright idea.... and logged into ssa.gov . And what a nice surprise I found there! After much searching, I found that I will be paying $134/month for Part B after December 2017.

WHEW! It's nice to not be paying $187.50 any more. And it was interesting to find out that everything just sort of happened all by itself, automatically, without requiring any input from me whatsoever. Just as somebody told me in a post some months ago (braumeister maybe? I have forgotten who but one of our knowledgable forum members).

 

[Car-Guy]

I am so happy to know that everything just sort of happened all by itself, automatically, without requiring any input from me whatsoever.

Your input was your 2016 tax return. Unfortunately, it is automatic for increase in premimuns too.

 

[W2R]

Your input was your 2016 tax return. Unfortunately, it is automatic for increase in premimuns too.

Yes, I did notice that... Thank goodness in my case, it was just temporary despite my fears.

I wish that was the case for you, too! I'd hate to be paying as much as you are.

 

[nwsteve]

If you think the step-ups in rates are unpleasant now, just wait for next year and beyond when the brackets change and it is much easier to find yourself in the third and up tiers
See-New Medicare Premium Brackets--2018 www.early-retirement.org/forums/f28/new-medicare-premium-brackets-2018-a-89561.html

 

[W2R]

If you think the step-ups in rates are unpleasant now, just wait for next year and beyond when the brackets change and it is much easier to find yourself in the third and up tiers
See-New Medicare Premium Brackets--2018

Luckily, there is not a penny increase for those of us single people with income under $133K. However it looks like for the high earners it is going to be a real punch in gut.

 

[ABQ2015]

Note that the surcharge is recalculated annually so it isn't a lifetime ding, just a one-year ding in the case of the OP.

It took me some digging to confirm that the premium was automatically recalculated annually as most of the literature focuses on the life changing events. My Medicare Part B premiums starting in 2020 will be based on 2018 AGI. My original plan was to keep the AGI slightly below $85K but I'm concerned that this will limit my travel and other retirement choices. Plan B is to withdraw extra from my 401k up to the $107K threshold one year and alternate to below $85K the next year to save $642 every other year, assuming no change in tax bracket.

One frustration is that I don't actually need Part B as I have employer health benefits (e.g., FEHB) in retirement. But I'm concerned about future changes to FEHB and feel more comfortable with both even if I am "over insured."

 

[W2R]

One frustration is that I don't actually need Part B as I have employer health benefits (e.g., FEHB) in retirement. But I'm concerned about future changes to FEHB and feel more comfortable with both even if I am "over insured."

Despite my initial misgivings, similar to yours, I decided to go with both FEHB and Part B. I have to admit it is pretty terrific, overkill or not.

 

[Moemg]

I also have FEHB Blue Cross standard and was thinking about going to Blue Cross basic .Has anyone made this change? The rates keep going up and I am not sure I need all the coverage especially with medicare as primary .

 

[Gotadimple]

One frustration is that I don't actually need Part B as I have employer health benefits (e.g., FEHB) in retirement. But I'm concerned about future changes to FEHB and feel more comfortable with both even if I am "over insured."

Well, your Medicare coverage is secondary to FEHB, so it will only pay for something that FEHB doesn't cover.

I would also think that if FEHB should no longer apply to retirees, Social Security and Medicare would label this a one-time event and allow enrollment in to Part B with no premium surcharge, as you had coverage elsewhere.

- Rita

 

[ABQ2015]

Well, your Medicare coverage is secondary to FEHB, so it will only pay for something that FEHB doesn't cover.

I would also think that if FEHB should no longer apply to retirees, Social Security and Medicare would label this a one-time event and allow enrollment in to Part B with no premium surcharge, as you had coverage elsewhere.

- Rita

I've always read that FEHB will be secondary to Medicare and FEHB will only reimburse up to the Medicare allowance or maybe it is up to the 115% limiting charge. You are probably correct about the one-time event. FEHB plans are being improved to coordinate better with Medicare Part B and Part B may have its advantages over FEHB. I have three years to make my decision.