Does My Income Affect My Medicare Benefits?
Medicare is a government program that pays medical bills for people who are at least 65 years old, or who are disabled. Individuals with disabilities can qualify for Medicare regardless of age.
There are four parts to the Medicare system. Individuals may be eligible for any of these four divisions, regardless of how much they have in assets or income. However, the amount of income and assets a person has does have an impact on how much an individual pays for Medicare coverage.
Medicare pays medical bills with money from the Social Security Trust Fund, which most people pay into while they work. Retired and disabled people pay a monthly insurance premium for Medicare Part B.
The Four Medicare Divisions
• Part A concerns hospital insurance. Part A helps to pay for inpatient hospital stays and follow-up care.
• Part B concerns medical insurance. Part B helps pay for physician’s services, and other medical services.
• Part C concerns Medicare Advantage plans, which are now available throughout the United States.
• People with Medicare Parts A and B can receive their health services through a provider under Part C.
• Part D covers medications prescribed by a physician.
Does Income Affect Medicare Benefits?
Income may affect your Medicare Benefits. For example, a high income may translate to a higher Part B premium. All individuals who sign up for Medicare Part B pay a premium for it on a monthly basis. In the year 2009, the amount of the premium was $96.40 per month. The monthly premium for Medicare Part B is calculated on earnings. As a general rule of thumb, the higher a person’s income, the higher the premium the person will pay. An individual who earns $85,000 a year or more (above $170,000 for a couple) will have to pay a higher monthly premium for Medicare Part B. To calculate a person’s Medicare income-based Part B premium, Social Security looks at the individual’s last tax return, provided by the Internal Revenue Service. Social Security figures the individual’s adjusted income to decide if the person is required to pay a higher rate for the Medicare Part B premium.
However, the calculations are based on the most recent tax information available. In 2010 Social Security is typically looking at the tax return filed in 2009; the 2009 filing is for tax year 2008. Much can happen in a person’s life in the course of a year. If an individual’s income has gone down due to certain circumstances, the person may contact the Social Security Administration to discuss the amount of his or her Part B premium. Social Security dictates the situations that can instigate a new ruling, such as a divorce, death of a spouse, loss of income due to a natural disaster, or other occurrence beyond the person’s control.
Income may affect your Medicare Benefits
If a person has little money and few assets, the state in which he or she resides may defray some of the costs for the individual’s Medicare premiums, and in some situations, the state may also help with deductibles and copayments.