Did you know that the price of Medicare varies depending on your income? Your local Medicare advisor team at Medicare Services wants you to know this vital information now that tax season has arrived.
Learn how your income tax return will affect the cost of your Medicare coverage by reading on.
How Does Medicare Make Use of Your Tax Return?
Your income tax return is used by Medicare to calculate how much you pay in Medicare Part B and Part D premiums.
Your Medicare premiums are determined based on the tax return from the previous two years. Your 2021 Part B and Part D premiums, for example, are dependent on your 2019 tax return.
Medicare Part B
Medicare Part B includes hospital appointments, as well as programs considered essential or preventive. Original Medicare includes part B. (along with Medicare Part A). This means that if you are within three months of turning 65, you are automatically eligible for Part B coverage.
Your monthly Part B premium can differ depending on your income level. The Part B deductible starts at $148.50. For more details, see the table below.
| Single Yearly Income (2019) | Joint Yearly Income (2019) |
Part B Monthly Premium (2021) |
|---|---|---|
| $88,000 or less | $176,000 or less |
$148.50 |
| $88,000 – $111,000 | $176,000 – $222,000 |
$207.90 |
| $111,000 – $138,000 | $222,000 – $276,000 |
$297.00 |
| $138,000 – $165,000 | $276,000 – $330,000 |
$386.10 |
| $165,000 – $500,000 | $330,000 – $750,000 |
$475.20 |
| $500,000+ | $750,000+ |
$504.90 |
Medicare Part D
Prescription medications are covered by Medicare Part D. It isn't included in Original Medicare. This ensures that any prescription drug coverage you obtain while on Medicare must be purchased in addition to Original Medicare or your preferred Medicare Advantage or Supplement Plan.
You may be required to pay a Medicare Part D premium based on your salary. If you owe a recurring fee, it is in addition to the expenses of your prescription plan.
Many people may not pay a deductible for their prescription drug coverage. For more information on average premiums for prescription drug coverage, see the table below.
| Single Yearly Income (2019) | Joint Yearly Income (2019) |
Part D Monthly Premium (2021) |
|---|---|---|
| $88,000 or less | $176,000 or less |
Your plan premium ($0 added) |
| $88,000 – $111,000 | $176,000 – $222,000 |
Your plan premium + $12.30 |
| $111,000 – $138,000 | $222,000 – $276,000 |
Your plan premium + $31.80 |
| $138,000 – $165,000 | $276,000 – $330,000 |
Your plan premium + $51.20 |
| $165,000 – $500,000 | $330,000 – $750,000 |
Your plan premium + $70.70 |
| $500,000+ | $750,000+ | Your plan premium + $77.10 |
Medicare Advantage Plans
Your coverage would include Medicare Parts A, B, C, and D in one package if you want a Medicare Advantage Prescription Drug (MAPD) plan. As a result, you won't have to pay more for a Medicare Advantage plan because of your salary.
Regardless of your plan type, you will owe the federal government your Parts B and D premiums (as seen in the tables above).
Medicare Supplement Plans
Annual and monthly rates for Medicare Supplement programs are typically higher, but out-of-pocket costs are typically smaller. If you will pay a higher premium for this form of package, you are likely to pay less at the doctor's or hospital.
It's worth noting, though, that Supplements don't cover prescription drugs. If you want a Supplement plan, you will be responsible for the costs of a Part D plan and/or premium if you want drug coverage.
Contact a medicare advisor in your area
Our Medicare experts are here to assist you in selecting the best plan for your specific needs. Our mission is to make the process as simple as possible, whether you're learning more about Medicare, enrolling, or switching to the right plan.
To get started, call (844)731-6614 if you're new to us.