Medicare is a universal healthcare program for individuals who are 65 years of age or older, as well as for those who have certain disabilities. As such, it provides coverage for a range of medical expenses, including doctor visits, hospital stays, and prescription drugs. However, it is not free of charge, and beneficiaries are responsible for paying premiums, deductibles, and co-pays. Starting in 2023, Medicare beneficiaries may be subject to a premium surcharge if their income exceeds certain thresholds. This article will explain what this surcharge is, who it applies to, and how it may affect the cost of Medicare coverage.
What is the Medicare Premium Surcharge?
The Medicare premium surcharge is an additional amount that Medicare beneficiaries may have to pay in order to keep their coverage. This surcharge is based on the beneficiary’s modified adjusted gross income (MAGI), and is calculated using filing status and income thresholds that are adjusted annually. Those with higher incomes may be subject to a surcharge of up to 35 percent of the standard premium.
Who is Subject to the Medicare Premium Surcharge?
The Medicare premium surcharge applies to those who have an income that is above certain thresholds. These thresholds are based on filing status and are adjusted annually. For 2021, the income thresholds are as follows: $88,000 for single filers, $176,000 for married couples filing jointly, and $88,000 for married couples filing separately.
It is important to note that the income threshold used to determine whether or not a Medicare beneficiary is subject to the premium surcharge is not the same as the income threshold used to determine whether or not a beneficiary is eligible for Medicare. For example, a single filer with an income of $90,000 would be eligible for Medicare, but would be subject to the premium surcharge because their income is above the $88,000 threshold.
How Will the Medicare Premium Surcharge Affect Costs for 2023?
The Medicare premium surcharge for 2023 has not yet been announced. However, based on the 2021 premium surcharge, those who are subject to the surcharge may have to pay an additional 35 percent of the standard premium. For example, if the standard premium is $100 per month, those subject to the surcharge would have to pay an additional $35 per month, for a total of $135.
It is important to note that the surcharge is not the only additional cost that beneficiaries may have to pay. Those who are subject to the surcharge may also have to pay an additional $20 per month for Part B coverage, and those who are enrolled in Part D may have to pay an additional $12.40 per month.
How Can Beneficiaries Avoid the Medicare Premium Surcharge?
Those who are subject to the surcharge may be able to avoid it by reducing their income to the applicable threshold. For example, a single filer with an income of $90,000 would have to reduce their income to $88,000 in order to avoid the surcharge. This may be possible by making contributions to a tax-deferred retirement account, such as a 401(k) or an IRA.
Conclusion
The Medicare premium surcharge is an additional cost that beneficiaries may have to pay if their income exceeds certain thresholds. In 2023, those who are subject to the surcharge may have to pay up to 35 percent of the standard premium, plus additional costs for Part B and Part D coverage. However, those who are subject to the surcharge may be able to avoid it by reducing their income to the applicable threshold.