How are Medicare Premiums Calculated?
If you are what Social Security considers a “higher-income beneficiary,” you pay more for Medicare Part B, the health-insurance portion of Medicare. (Most enrollees don’t pay for Medicare Part A, which covers hospitalization.)
Medicare premiums are based on your modified adjusted gross income, or MAGI. That’s your total adjusted gross income plus tax-exempt interest, as reported in the most recent tax data Social Security has from the IRS. To set your Medicare cost for 2019, Social Security likely relied on the tax return you filed in 2018 that details your 2017 earnings.
If your MAGI for 2017 was below the “higher-income” threshold — $85,000 for an individual taxpayer, $170,000 for a married couple filing jointly — you pay the “standard” Medicare Part B rate for 2019, which is $135.50 a month. At higher incomes, premiums rise, to a maximum of $460.50 a month if your MAGI exceeds $500,000 for an individual, $750,000 for a couple.
You can ask Social Security to adjust your premium if a “life-changing event” caused significant income reduction or financial disruption in the intervening tax year — for example, if your marital status changed, or you lost a job, pension or income-producing property.