By Rusty Gloor, National Social Security Advisor at the AMAC Foundation, the non-profit arm of the Association of Mature American Citizens
Dear Rusty: Social Security is deducting $297 per month for my Medicare Part B coverage. I have what’s called a “Windfall Elimination Provision” because I receive a pension from my former State employer. Prior to my 65th Birthday in July of this year, Social Security was paying me $764 per month, but when I turned 65 they reduced my amount to $467 per month. I read that the Part B premiums for 2021 are $148.50, so I wonder why I’m paying double that amount? Could it be that I never enrolled in Medicare Part B and they just automatically started deducting that amount? Some sort of penalty? If so, it seems kind of high. Can you explain why I’m paying so much for Medicare Part B? Signed: Curious About Medicare
Dear Curious: Your Part B premium of $297/month has nothing to do with the Windfall Elimination Provision (WEP). WEP affects (reduces) your Social Security retirement benefit amount but doesn’t affect your Medicare premium. Your Medicare Part B premium is $297/month because of a different Medicare rule known as “IRMAA,” which is the “Income Related Medicare Adjustment Amount.” Here’s how IRMAA works:
Medicare determines your Part B premium amount each year using your combined income (from all sources) from 2 years prior, so your 2021 Part B premium is based upon your 2019 income. The income amount used to set your Part B premium is called your Modified Adjusted Gross Income (MAGI), which is your normal Adjusted Gross Income on your tax return plus any other non-taxable income you may have had (including half of your SS benefits, non-taxable interest, etc.). If your MAGI is over a certain threshold, your Part B premium is more than the standard $148.50.
The IRMAA thresholds at which you pay a higher Part B premium depend upon your tax filing status. A married couple filing jointly with MAGI under $176,001 pays the standard premium ($148.50 for 2021), and a single tax filer whose MAGI is under $88,001 also pays the standard Part B premium, but income exceeding those thresholds means a higher Part B premium. How much higher depends upon how much your MAGI exceeds the base amounts above. The Part B IRMAA premium increases on a scale relative to how much your MAGI exceeds the base threshold and, from what you’ve shared, it appears that your 2019 MAGI resulted in a 2021 Part B premium of $297/month.
Since you were already collecting Social Security when you turned 65, you were automatically enrolled in Medicare Part A (which is free) and Medicare Part B (for which you pay a premium), which is why your Medicare premium increased at that time. If you also have “creditable” healthcare from either your or your wife’s employer (“creditable” is a group plan with at least 20 participants), you can dis-enroll from Medicare Part B by filing form CMS-1763 and having an interview with Social Security. That way you could save that $297 monthly Part B premium for as long as you have other “creditable” employer coverage, and then re-enroll in Part B during the Special Enrollment Period which starts when your employer coverage ends (or shortly before to avoid a gap in healthcare coverage).
If you have retired from working and your combined income in 2020 was much lower than in 2019, Social Security will automatically adjust your 2022 Medicare Part B premium as appropriate for your combined income reported to the IRS on your 2020 tax return. If you retired in 2020, you might also wish to submit form SSA-44 (www.ssa.gov/forms/ssa-44-ext.pdf) to claim a “life changing event,” which may result in a smaller Part B premium for 2021 as well.
This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website (amacfoundation.org/programs/social-security-advisory) or email us at email@example.com.