Medicare Part B premiums are automatically deducted from Social Security, Railroad Retirement Board, and Office of Personnel Management payments. The standard Medicare Part B premium is adjusted based on a taxpayer’s Modified Adjusted Gross Income (MAGI). MAGI for Medicare purposes is the taxpayer’s AGI plus any tax-exempt interest. Medicare uses a taxpayer’s MAGI from two years prior to determine any premium adjustment. For example, the MAGI from the 2020 tax return will determine 2022 Medicare premiums.
The standard Part B premium amount in 2022 is $170.10. Based on a taxpayer’s Modified Adjusted Gross Income, they may be required to pay an Income Related Monthly Adjustment Amount (IRMAA) on their Part B premium. MAGI thresholds and the associated Part B IRMAA is shown in the table below for each tax filing status:
|
If your yearly income in 2020 (for what you pay in 2022) was |
You pay each month (in 2022) |
||
|
File individual tax return |
File joint tax return |
File married & separate tax return |
|
|
$91,000 or less |
$182,000 or less |
$91,000 or less |
$170.10 |
|
above $91,000 up to $114,000 |
above $182,000 up to $228,000 |
Not applicable |
$238.10 |
|
above $114,000 up to $142,000 |
above $228,000 up to $284,000 |
Not applicable |
$340.20 |
|
above $142,000 up to $170,000 |
above $284,000 up to $340,000 |
Not applicable |
$442.30 |
|
above $170,000 and less than $500,000 |
above $340,000 and less than $750,000 |
above $91,000 and less than $409,000 |
$544.30 |
|
$500,000 or above |
$750,000 or above |
$409,000 or above |
$578.30 |
(https://www.medicare.gov/your-medicare-costs/part-b-costs)
At open enrollment, Medicare participants have the option to enroll in Part D prescription drug plans. Part D premiums are in addition to Medicare Part B supplement premiums and they vary per plan. Taxpayers with a higher MAGI will be required to pay a Medicare Part D surcharge in addition to their plan’s premium. Similarly to Part B premiums, the surcharge will be deducted from Social Security benefits if the participant is receiving them: otherwise, the individual will receive a bill for the monthly surcharge amount. The Part D IRMAA for 2022 is shown in the table below:
|
If your filing status and yearly income in 2020 was |
|||
|
File individual tax return |
File joint tax return |
File married & separate tax return |
You pay each month (in 2021) |
|
$91,000 or less |
$182,000 or less |
$91,000 or less |
your plan premium |
|
above $91,000 up to $114,000 |
above $182,000 up to $228,000 |
not applicable |
$12.40 + your plan premium |
|
above $114,000 up to $142,000 |
above $228,000 up to $284,000 |
not applicable |
$32.10 + your plan premium |
|
above $142,000 up to $170,000 |
above $284,000 up to $340,000 |
not applicable |
$51.70 + your plan premium |
|
above $170,000 and less than $500,000 |
above $340,000 and less than $750,000 |
above $91,000 and less than $409,000 |
$71.30 + your plan premium |
|
$500,000 or above |
$750,000 or above |
$409,000 or above |
$77.90 + your plan premium |
As a part of Schultz Financial Group’s year-end tax planning process, we review our client’s tax returns and are cognizant of how small adjustments in adjusted gross income can have a large impact on annual Medicare premiums. Contact us to speak with an advisor.
Editors’ Note: This article was originally published in 2020, but has been updated to reflect 2022 data.