“The law requires Medicare parts B and D to make premium adjustments based on a person’s income,” an article on Medical News Today explains. “A person’s income cannot be so high that it disqualifies them for Medicare. Even those who receive very high incomes may enroll. However, individuals with higher incomes pay higher premiums.” But what are Medicare income limits and how could they affect you and your family? Here’s everything you need to know about the 2021 guidelines.
What are Medicare income limits?
Put in place in 2007, Medicare income limits (quite literally) limit the amount of money you can make to qualify for Medicare. Individuals aged 65 and over generally qualify for the healthcare program, as do young people with disabilities and those with end-stage renal disease. However, the portion you pay for Medicare varies, depending upon your income level. “Medicare beneficiaries with high incomes pay higher premiums for Medicare part B and part D,” Louise Norris, a licensed broker and analyst for Medicare Resources, tells Parade. “The higher premiums are referred to as an Income-Related Monthly Adjustment Amount or IRMAA, and in 2021, IRMAA surcharges apply to individual Medicare beneficiaries who earn more than $88,000, and to couples who earn more than $176,000. For 2022, these limits are projected to increase to $91,000 and $182,000, respectively.”
Why do they exist?
While there are several reasons why Medicare income limits exist, the main reason is to ensure fairness—and longevity of the program.“These rules were put in place to ensure that beneficiaries with higher incomes would pay a larger portion of the cost of their coverage,” Norris says. “Medicare’s income limits are similar to the tax brackets used by the IRS to tax income,” Christian Worstell—a senior staff writer with Medicare Advantage and a licensed health insurance agent—adds. “Those who make more money must pay a higher percentage of income taxes. And Medicare beneficiaries who make more money must pay a higher rate for their coverage.”
Who is affected by the 2021 change, implemented at the beginning of the year?
Medicare beneficiaries earning more than $88,000 and couples earning more than $176,000 were affected by the 2021 change. “Medicare’s 2021 income limits and corresponding surcharges apply to all beneficiaries with part B and/or part D coverage,” Worstell tells Parade. “To determine eligibility, Medicare will use 2019 tax data for the 2021 plan year. “ That said, it’s important to notify Medicare of any life changes which can and/or do affect your income level, including but not limited to:
Divorce, death, or marriageThe loss of an income-producing propertyChanges in employment statusThe beginning or cessation of a pension
How much can you expect to pay for Medicare coverage?
Individuals making $88,000 or less and married couples who file a joint tax return and make $176,000 or less will pay the standard amount, i.e. their monthly payment will be $148.50. This is for Medicare part B. Individuals making between $88,000 and $111,000 and couples making between $176,000 to $222,000 will pay $207.90 a month, and the rates increase from there. A full breakdown of Medicare’s income limits and the corresponding IRMAA surcharges can be seen on pages 2 and 3 of this PDF, which is published by the official government website for Medicare. Part D prescription drug coverage is also affected by the aforementioned income limits. The additional amount you will pay for prescription coverage or Medicare part D ranges from $12.30 to $77.10, with the same income thresholds applied. That’s on top of any premium you pay, whether through a standalone plan (whose premiums vary) or via the Advantage Plan, which typically includes drug coverage. As for Medicare part A, most people do not pay for this coverage because they paid Medicare taxes while working. In order to receive free part A coverage you must have worked—and paid Medicare taxes—for 10 years or more. If you don’t get premium-free Part A, you may pay up to $471 each month. Next, 12 Surprising Things that Are Covered by Medicare—From Telehealth to Free Preventative Services
Sources
“Medicare Income Limits: What to Know.” Medical News Today.“Who Relies on Medicare? A Profile of the Medicare Population.” AARP.Louise Norris, a licensed broker and analystChristian Worstell, a senior staff writer with Medicare Advantage and licensed health insurance agent"2021 Medicare Costs." Medicare.gov.
