I hope your summer is going well.
The primary goal of my newsletter is to explain some of the complexities of Medicare and to identify opportunities to potentially save you some money. This brings us to the process Medicare uses to determine Part B premiums. This process is complex but allows for exceptions to keep premiums lower.
The majority of seniors enrolled in Medicare are paying a standard base monthly premium for Part B ($104.90 – $121.80). However, there is a segment of Medicare population (about 5%) who are paying more for Part B and may be unaware the amount of their premium is linked to their income. And, because this premium is adjusted annually, any Medicare beneficiary could receive an unexpected premium notice.
This edition’s Closer Look segment explains how Medicare determines Part B premiums and how knowing the rules and exceptions may result in a lower premium.
A Closer Look: Medicare Part B Premiums
As mentioned in my opening letter, not everyone is paying the same amount for their Medicare Part B premium. Although the majority of Medicare beneficiaries pay the standard premium amount ($104.90 – $121.80), others pay more. The premium amount is not determined by age, health, or where you live, but by your income in a given year.
Since 2007, higher income beneficiaries have been paying higher premiums (called Income Related Monthly Adjustment Amount or IRMAA) to cover a greater percentage of Part B costs. To make premium determinations, Social Security obtains income data from the IRS. This data is typically income stated on your tax return from two years prior. Social Security uses your Modified Adjusted Gross Income (MAGI) to determine if your Part B premium will be subject to IRMAA. The IRS website, Modified Adjusted Gross Income Computation, provides a calculator for determining your MAGI.
Note: MAGI is generally your Adjusted Gross Income plus tax-exempt interest income.
If your Part B premium is subject to IRMAA, Social Security will mail a series of notices, the last being an Initial Determination Notice. The final notice is sent toward the end of each year for the next calendar year to inform the beneficiary of an income-related adjustment to their premium. The notice states a determination has been made for premium adjustment and includes the premium amount to be charged, as well as your appeal rights and instructions for filing an appeal. An inaccurate tax return, filing error or certain qualified “life events” such as a divorce, death of a spouse, loss of work or pension that reduces income, can qualify for an exemption.
If you disagree with Social Security’s determination, you can call Social Security at 1-800-772-1213 to request reconsideration. Often they’ll ask for a Life-Changing Event form plus documentation to support any decrease in income such as a more recent tax return, divorce decree, proof of new income, or letter of job loss. Taking the completed form and documentation to your local Social Security office can save you some time. The reconsideration, or appeal, can result in a reduction or possible elimination of a higher premium adjustment being levied. Other life events such as selling a home or a spike in investment income may not qualify for an exception. The Medicare Part B determination is performed annually so you can pay more or less from one year to the next. It is important to look for these notices each year! For more information:
Note: Higher income seniors can also pay an adjustment amount (using the same income parameters for Part B premiums) for Medicare Part D, the prescription drug program. This is not addressed above because unlike Medicare Part B, Medicare Part D is a voluntary program and no premium adjustment is applied if one does not enroll in a drug plan. For general rules for Medicare premiums for higher-income seniors, please read the latest guide from Social Security, Rules for Higher-Income Beneficiaries.
The Question Column: Covered Services
Q: Does Medicare cover Acupuncture and Chiropractic services?
A: Medicare does not cover acupuncture. Under Original Medicare, you will pay 100% of the cost for acupuncture treatment.
Medicare does cover medically necessary chiropractic services. Medicare Part B covers 80% of the cost for “manipulation of the spine” if medically necessary (to correct a subluxation) after the Part B deductible is met. No x-ray is required to diagnose the subluxation and there is no cap on the number of medically necessary visits to a chiropractor.
Note: a Medicare Supplement may cover the Medicare beneficiary’s share of costs. For example, Medicare Supplement Plan F will cover the Part B deductible and 20% coinsurance for Medicare approved chiropractic treatment.