Section 3308 of the Health Care Reform Bill extended high income premium surcharges to Part D, parallel to those in Part B. So basically, those of you who are paying a surcharge on your Part B premium will now, if you have Part D, will pay a surcharge on your premium there as well, beginning in 2011. (For those few of you who do not have Part B, you are subject to this if you have Part D and exceed the income limits we discuss.) Another section of the statute froze the income levels which determine if you are subject to the surcharge, and if so, how much it is. Basically, an individual with a “modified adjusted gross income” (MAGI) of over $85,000 in 2009, or a couple filing jointly with such an income of over $170,000 in 2009, will be subject to these. (Page 20 of Managing Your Medicare explains how your MAGI is calculated; basically it is your Federal adjusted gross income plus any tax-exempt interest you earned.)
Perhaps because this will be the first tax imposed as a result of the new legislation, little information seems to be available about it yet, and so far nothing is on the government websites. But I have used the statue to figure out what the surcharges will be. And remember that your 2009 income and marital status is the determiner. And if both of a couple have Part D, each has to pay this.
If you were single and had a MAGI over $85,000 but less than $107,000, or if you were a couple filing jointly with an MAGI of over $170,000 but less than $214,000, your monthly premium surcharge will be $12.00 a month, or $144.00 a year.
If you were single and had a MAGI over $107,000 but less than $160,000, or if you were a couple filing jointly with an MAGI of over $214,000 but less than $320,000, your monthly premium surcharge will be $31.10 a month, or $373.20 a year.
If you were single and had a MAGI over $160,000 but less than $214,000, or if you were a couple filing jointly with an MAGI of over $320,000 but less than $428,000, your monthly premium surcharge will be $50.10 a month, or $601.20 a year.
If you were single and had a MAGI over $214,000, or if you were a couple filing jointly with an MAGI of over $428,000, your monthly premium surcharge will be $69.10 a month, or $829.20 a year.
If you were married and living together, but file separately, and had a MAGI of over $85,000 but less than 129,000, your monthly premium surcharge will be $50.10 a month, or $601.20 a year.
If you were married and living together, but file separately, and had a MAGI of over $129,000, your monthly premium surcharge will be $69.10 a month, or $829.20 a year.
You will not be paying these surcharges to your drug plan (or Medicare Advantage Plan, if you get your Part D from them) with your monthly Part D premium. Rather, for those of you on Social Security, they will be deducted from your monthly payment. Rather, for those of you on Social Security or Railroad Retirement, or who receive a federal pension from the Office of Personnel Management, they will be deducted from your monthly payment; all others will be billed directly by Medicare, just like they are for Part B. Note that the amount of your surcharge does not vary by the size of your plan’s premium; and, for those of you who do not pay any Part D premium (because your Medicare Advantage plan does not charge one) will still have to pay this surcharge.
Pages 20-21 of Managing Your Medicare explains how to appeal to Social Security if they use the wrong income, or if your circumstances have changed significantly since you filed your 2009 income tax (perhaps you retired, your business burned down, you divorced, or your spouse died, etc.).
Finally, I have learned that the Medicare website’s Compare function, which allows you to find the best drug plan or Medicare Advantage Plan, does not take this surcharge into account, so you will not get the full story on how much you will pay, as the surcharge you are responbible for won't be included. But at least it will still be able to help you pick out the best plan for you. And for those of you who are thinking that you might wish to forego Part D if you are subject to a surcharge, especially a high one, remember, that if you don’t have other creditable coverage, and you do not take Part D, if you latter sign up, you will be penalized $0.32 per month for each month that you could have had Part D but did not. (This amount may change each year.)
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