What is the Medicare High Income Surcharge?
The Medicare High Income Surcharge (HIS) is an additional amount paid by some Medicare Part B and Part D subscribers based on their modified gross adjusted income (MAGI). The HIS is an additional amount that is paid by those who have a high MAGI in the year they are enrolling in Medicare. The goal of the HIS is to help offset the cost of Medicare Part B and Part D premiums.
Who Pays the Medicare High Income Surcharge?
The HIS applies to individuals who are above a certain income threshold, which is determined by the IRS each year. For 2021, the income threshold for individuals is $88,000 for those who file as single, $176,000 for married couples filing jointly, and $88,000 for married couples filing separately. Individuals who make more than the threshold for their filing status will be required to pay the HIS.
How Much is the Medicare High Income Surcharge?
The HIS is an additional amount that is paid in addition to the regular Part B and Part D premiums. The amount of the surcharge depends on the MAGI of the individual. The surcharge can range from 35% to 85% of the Part B and Part D premiums. For 2021, the HIS rates are as follows:
- For individuals with MAGI between $88,000 to $111,000, the surcharge is 35% of the Part B and Part D premiums.
- For individuals with MAGI between $111,001 to $138,000, the surcharge is 50% of the Part B and Part D premiums.
- For individuals with MAGI between $138,001 to $163,000, the surcharge is 65% of the Part B and Part D premiums.
- For individuals with MAGI over $163,000, the surcharge is 85% of the Part B and Part D premiums.
How Does the Medicare High Income Surcharge Affect My Taxes?
The HIS is considered an additional amount that is paid on top of the regular Part B and Part D premiums. The HIS is not included in the MAGI and is not considered income for tax purposes. This means that the HIS is not subject to income taxes or self-employment taxes.
Will the Medicare High Income Surcharge Increase in 2023?
The HIS is determined by the IRS each year and can change from year to year. As of now, there is no indication that the HIS will increase in 2023, but it could change depending on the economic conditions. The IRS will make a determination each year on the HIS and will provide the details when they are available.
What Can I Do to Avoid the Medicare High Income Surcharge?
The best way to avoid the HIS is to make sure that your MAGI is below the threshold for your filing status. If your MAGI is above the threshold, you can take steps to reduce it, such as making contributions to a retirement account, deferring income, or taking advantage of other tax deductions or credits.
Conclusion
The HIS is an additional amount that is paid by those who have a high MAGI in the year they are enrolling in Medicare. The amount of the surcharge is determined by the MAGI and can range from 35% to 85% of the Part B and Part D premiums. The best way to avoid the HIS is to make sure that your MAGI is below the threshold for your filing status. The IRS will make a determination each year on the HIS and will provide the details when they are available.