ASK KIM


Lower Your Medicare Premiums

Kimberly Lankford

What you pay for Part B coverage is based on your 2006 income. If it's dropped since then, you may be able to get lower rates.



I've been paying extra for Medicare Part B because of my income. But I'm about to retire in August. Can I get my Part B premiums reduced after my income goes down, or do I need to wait until 2009 for the premiums to be readjusted?

You can get your Part B premiums reduced after you retire, and you don't need to wait until 2009.

First, some background: In 2007, Medicare started to base Part B premiums on the beneficiary's income -– with higher-income people paying more. The premiums and income limits rose moderately in 2008.

Now, joint filers who earned $164,000 or less in 2006, or single filers who earned $82,200 or less pay the base rate of $96.40 per month for the year. But everyone earning more pays higher premiums. Joint filers earning up to $204,000, or single filers earning up to $102,000, pay $122.20 per month. The premiums gradually increase up to a top premium of $238.40 per month for joint filers who earned more than $410,000 or single filers who earned more than $205,000.

For a full list of the premiums by income, see my Medicare Premiums to Increase column.

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The premiums for 2008 are based on 2006 income because those are the last tax returns the IRS has on record. But you may be able to get your premiums reduced if your income has dropped since then under certain circumstances -- and retirement is one of those reasons.

Other "life-changing events" include the death of a spouse, marriage, divorce, a reduction in income due to the loss of income-producing property or due to the loss of certain forms of pension income, and work stoppage or work reduction -- which includes people who retired since 2006.

If you've experienced any of these changes, contact the Social Security Administration at 800-772-1213 or visit your local field office. You'll need to file Form SSA-44, Medicare Part B Income-Related Premium -- Life-Changing Event, which includes detailed instructions about the information you'll need to submit.

Most important, you'll need to estimate your income for the year and provide evidence of the qualifying change. For retirees, that could be a statement from an employer verifying that you've retired or past and current pay stubs showing a change in hours. If your retirement brings your 2008 income below the cut-off for the surcharges, then your premiums will be recalculated and any excess premiums you've already paid will be refunded retroactively.

For more information, see Medicare Part B Premiums: New Rules for Beneficiaries With Higher Incomes. You can also find a lot of helpful information about the new premiums throughout the Social Security Web site and more information about Medicare at the Medicare Web site.

Got a question? Ask Kim at askkim@kiplinger.com.




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