Wednesday, May 18, 2022

How Much Is Social Security Part B

Don't Miss

What Is Social Security

Social Security COLA and Medicare Part B Premium

Social Security is a program that pays benefits to Americans who have retired or who have a disability. The program is managed by the Social Security Administration . You pay into Social Security when you work. Money is deducted from your paycheck each pay period.

Youll receive benefits from Social Security once youre no longer able to work due to disability or once youve reached a qualifying age and stopped working. Youll receive your benefits in the form of a monthly check or bank deposit. The amount youre eligible for will depend on how much youve earned while working.

You can apply for Social Security benefits if one of these situations apply to you:

  • Youre 62 or older.
  • You have a chronic disability.
  • Your spouse who was working or receiving Social Security benefits has died.

Social Security retirement benefits are designed to replace a portion of the monthly income you earned before you retired.

How The Age You Retire Affects Your Benefits

You can apply for Social Security retirement benefits once youve turned 62. However, youll receive more money per month if you wait a few years. People who start collecting retirement benefits at 62 will receive 70 percent of their full benefit amount. You can receive 100 percent of your benefit amount if you dont start collecting until full retirement age.

The full retirement age for people born after 1960 is 67. If you were born before 1960, refer to this chart from Social Security to see when youll reach full retirement age.

You can qualify for additional benefits if you have a limited income. Known as Supplemental Security Income , these benefits are for people with limited income who qualify for Social Security because of age or disability.

Can I Delay Enrolling In Medicare Part B

Some people may get Medicare Part A premium-free, but most people have to pay a monthly premium for Medicare Part B. Because Medicare Part B comes with a monthly premium, some people may choose not to sign up during their initial enrollment period if they are currently covered under an employer group plan .

If you are still working, you should check with your health benefits administrator to see how your insurance would work with Medicare. If you delay enrollment in Medicare Part B because you already have current employer health coverage, you can sign up later during a Special Enrollment Period without paying a late penalty. You can enroll in Medicare Part B at any time that you are still covered by a group plan based on current employment. After your employer health coverage ends or your employment ends , you have an eight-month;special enrollment period;to sign up for Part B without a late penalty.

Keep in mind that retiree coverage and COBRA are not considered health coverage based on current employment and would not qualify you for a special enrollment period. If you have COBRA after your employer coverage ends, you should not wait until your COBRA coverage ends to sign up for Medicare Part B. Your eight-month Part B special enrollment period begins immediately after your current employment or group plan ends . This is regardless of whether you get COBRA.

Also Check: Where Do You Go To Get New Social Security Card

When Can I Enroll In Medicare Part B

If you are receiving retirement benefits before age 65 or qualify for Medicare through disability, generally youre automatically enrolled in Medicare Part A and Part B as soon as you become eligible.

If you do not enroll during your initial enrollment period and do not qualify for a special enrollment period, you can also sign up during the annual;General Enrollment Period, which runs from January 1 to March 31, with coverage starting July 1. You may have to pay a late enrollment penalty for not signing up when you were first eligible.

If youre not automatically enrolled, you can apply for Medicare through Social Security, either in person at a local Social Security office, through the Social Security website, or by calling 1-800-772-1213 from 8AM to 7PM, Monday through Friday, all U.S. time zones.

Keep in mind that once you are both 65 years or older and have Medicare Part B, your six-month;Medigap Open Enrollment;Period begins. This is the best time to purchase a Medicare Supplement insurance plan because during open enrollment, you have a guaranteed-issue right to buy any Medigap plan without medical underwriting or paying a higher premium due to a pre-existing condition*. Once you are enrolled in Medicare Part B, be careful not to miss this one-time initial guaranteed-issue enrollment period for Medigap.

B Premium Can Be Limited By Social Security Cola But That Wasnt An Issue For Most Beneficiaries In 2020 Or 2021

Here

In 2021, most enrollees pay $148.50/month for their Part B coverage, which is the standard amount. Most enrollees were also paying the standard amount in 2020; and in 2019 . But thats in contrast with 2017 and 2018, when most enrollees paid a premium that was lower than the standard premium. The standard premium in 2018 was actually $134/month, but the cost of living adjustment for Social Security wasnt quite large enough to cover all of the increase from 2017s premium for most enrollees. Thats why most people paid about $130/month.

The standard Part B premium increased by about $9/month in 2020. But the 1.6% Social Security COLA for 2020 increased the average beneficiarys Social Security benefit . Since the COLA for most beneficiaries exceeded the premium increase for Part B, most Part B enrollees paid the standard premium in 2020. And for 2021, the 1.3% COLA was adequate to cover the increase to the new standard premium for virtually all enrollees.

Don’t Miss: How Much Social Security Do You Get At Age 64

Medicare Part C And Part D

Medicare Part C and Medicare Part D plans are sold by private companies that contract with Medicare.

Medicare Advantage plans cover everything that Medicare parts A and B do and often include coverage for extra services. Medicare Part D plans cover prescription drugs.

Part C and Part D plans are optional. If you do want either part, youll also have multiple options at various price points. You can shop for Part C and Part D plans in your area on the Medicare website.

Some plans will have an additional premium but others will be premium-free.

You can have your Part C or Part D plan premiums deducted from Social Security. Youll need to contact the company that sells your plan to set it up. It might take several months to set up and for automatic payments to begin.

This means your first payment could end up being very large since itll cover multiple months at once. Your plan will walk you through the details and let you know how long it will take.

Your premiums will be deducted once per month after everything is set up.

Higher Premiums For Enrollees With High

Since 2007, people who earn more than $85,000 have paid higher Part B premiums based on their income.

For the first time, the threshold for what counts as high income was adjusted for inflation as of 2020, increasing it to $87,000 for a single individual and $174,000 for a couple. And it increased again for 2021. Harry Sit, of The Finance Buff, explains how the inflation indexing works here.

Indexing the high-income threshold: The math The indexing is based on the percentage by which the average of the Consumer Price Index for Urban consumers for the 12-month period ending in the most recent August exceeds the average of the 12-month period that preceded that. So for 2021, we look at how the average CPI-U from September 2019-August 2020 exceeded the average CPI-I from September 2018-August 2019.

On this page, you can pull up the data for CPI-U and manually calculate how the average CPI-U has changed. Youll add up all the numbers from September 2019 through August 2020 , and divide by 12 to get the average . Then youll do the same thing for September 2018 through August 2019 . The difference between those two numbers is 3.705, which represents a 1.46% increase from the 254.016 average CPI-U for September 2018 to August 2019.

So as Sit explains here , we increase 87,000 by 1.46% which results in 88,270 and then round to the nearest $1,000. That gives us an income threshold of $88,000, which is the lower bound of high-income as of 2021.

Don’t Miss: How To Calculate Social Security Benefits At Age 70

How Social Security Determines You Have A Higher Premium

Social Security uses the most recent federal tax return the IRS provides to us. If you must pay higher premiums, we use a sliding scale to calculate the adjustments, based on your modified adjusted gross income . Your MAGI is your total adjusted gross income and tax-exempt interest income.

If you file your taxes as married, filing jointly and your MAGI is greater than $176,000, youll pay higher premiums for your Part B and Medicare prescription drug coverage. If you file your taxes using a different status, and your MAGI is greater than $88,000, youll pay higher premiums , for an idea of what you can expect to pay).

If you must pay higher premiums, well send you a letter with your premium amount and the reason for our determination. If you have both Medicare Part B and Medicare prescription drug coverage, youll pay higher premiums for each. If you have only one Medicare Part B or Medicare prescription drug coverage youll pay an income-related monthly adjustment amount only on the benefit you have. If you decide to enroll in the other program later in the same year, and you already are paying an income-related monthly adjustment amount, well apply an adjustment automatically to the other program when you enroll. In this case, we wont send you another letter explaining how we made this determination.

Remember, if your income isnt greater than the limits described above, this law does not apply to you.

What About Part C And Part D

How Much Does Medicare Cost

Youll pay your Part C or Part D bill directly to the insurance company. Each company has their own preferred methods, and not all companies accept all payment types.

Generally, you should be able to:

  • pay online with a debit or credit card
  • set up automatic payments
  • mail a check
  • use your banks automatic bill pay feature

You might also be able to set up a direct deduction for your retirement or disability payments.

You can contact your plan provider to find out what payment options are available. They can also let you know if theres anything you should be aware of with each payment type, such as added fees or time delays.

You May Like: What Can People Do With Your Social Security Card

What Is The Part B Premium Reduction Plan

The Part B premium reduction plan is just like it sounds. You enroll in the policy, and the carrier pays either part or the whole premium for your outpatient coverage. In the summary of benefits or evidence of coverage, youll see a section that says Part B premium buy-down; this is where you can see how much of a reduction youll get. Although, your agent or the customer service number on the back of your card can also tell you about the coverage.

How Much Of Your Social Security Is Taken By Medicare Costs

The Centers for Medicare and Medicaid Services recently announced that the standard Medicare Part B premium will be $148.50 in 2021, an increase of $3.90 per month from $144.60 in 2020.; That increase, which I earlier feared would be considerably more, was restricted by legislation enacted last fall.; But even with legislation to keep the Medicare Part B flat, the Part B premium still went up 2.6% over 2020, twice as much as the annual cost-of-living adjustment . ;This trend of Medicare costs increasing several times faster than Social Security benefits creates chronic headaches for retirees, as the Medicare Part B premium consumes a growing share of Social Security benefits.

Consider this, $375 per month is about one quarter of the average $1,523 per month Social Security benefit in 2021.; About one third of those participating in our 2020 Senior Survey indicated they spent that much on their total healthcare costs. ;Another 31% said they spend more than $1,000 a month on total healthcare costs roughly two-thirds of the average Social Security benefit!; These findings are particularly troubling considering that the Government Accountability Office estimated in 2019 that almost half of households with people aged 55 and older have no retirement savings or other form of pension outside of Social Security.

The following chart illustrates how survey participants responded a year ago.

Recommended Reading: What Age Can I Sign Up For Social Security

How Much Does Medicare Part B Cost

Q: How much does Medicare Part B cost the insured?A: In 2021, most people earning no more than $88,000 pay $148.50/month for Part B. And in most cases, Part B premiums are just deducted from beneficiaries Social Security checks.

The Part B premium increase from 2020 to 2021 was smaller than initially projected, thanks to a short-term government spending bill that was enacted in the fall of 2020, and that included a provision to cap the increase in the Part B premium for 2021.

If You Disagree With Our Decision

Heres how much 2021 Medicare Part B premium increase will ...

If you disagree with the decision we made about your income-related monthly adjustment amounts, you have the right to appeal. The fastest and easiest way to file an appeal of your decision is online. You can file online and provide documents electronically to support your appeal. You can file an appeal online even if you live outside of the United States.

You may also request an appeal in writing by completing a Request for Reconsideration , or you may contact your local Social Security office to file your appeal. You can use the appeal form online, or request a copy through our toll-free number at 1-800-772-1213 . You dont need to file an appeal if youre requesting a new decision because you experienced one of the events listed and, it made your income go down, or if youve shown us the information we used is wrong.

If you disagree with the MAGI amount we received from the IRS, you must correct the information with the IRS. If we determine you must pay a higher amount for Medicare prescription drug coverage, and you dont have this coverage, you must call the Centers for Medicare & Medicaid Services at 1-800-MEDICARE to make a correction. Social Security receives the information about your prescription drug coverage from CMS.

You May Like: What Can Someone Use Your Social Security Number For

Are My Medicare Premiums Tax Deductible

Medicare premiums are tax deductible. However, you can deduct premiums only once your out-of-pocket medical expenses reach a certain limit.

The IRS has set that limit at 7.5 percent of your adjusted gross income . Your AGI is the money you make after taxes are taken out of each paycheck.

The IRS allows you to deduct any out-of-pocket healthcare expenses, including premiums, that are more than 7.5 percent of your AGI.

So, if you have an AGI of $50,000, you could deduct healthcare expenses after youve paid $3,750 in medical expenses. Depending on your premiums and other healthcare spending, you might not reach this number.

If your spending is less than 7.5 percent of your AGI, you cant deduct any healthcare expenses, including premiums. However, if your healthcare spending is more than 7.5 percent of your income, you can deduct it.

Keep careful track of your out-of-pocket medical expenses throughout the year so you can make the proper deductions at tax time.

You can pay your Medicare bills online or by mail if they arent automatically deducted. You wont pay an added fee for parts A, B, or D, based on your payment method.

There are several ways to pay:

Who Pays More For Medicare Part B

Each year the government crunches the numbers to determine total costs for providing Medicare Part B coverage. For most enrollees, the government agrees to cover 75% of the cost and charges enrollees the Medicare Part B premium to cover the other 25%.

In 2021, a single taxpayer whose 2019 return reported MAGI of no more than $88,000 and married couples with MAGI up to $176,000 paid the lowest base Medicare Part B monthly premium of $148.50 per person.

If your income is above those levels, the government shifts more of the premium cost to your personal balance sheet. Instead of covering 75% of the premium cost, the government pays anywhere from 65% to as little as 15% of the premium, based on your IRMAA.

The annual Medicare report estimates that about 5 million beneficiaries currently pay a higher premium, and by 2029 more than 10 million enrollees will pay an IRMAA surcharge.

Recommended Reading: How Can I Calculate What My Social Security Will Be

What Is Medicare Part B

Medicare Part B;helps cover medical services like doctors’ services, outpatient care, and other medical services that Part A doesn’t cover. Part B is optional. Part B helps pay for covered medical services and items when they are medically necessary. Part B also covers some preventive services like exams, lab tests, and screening shots to help prevent, find, or manage a medical problem.

Cost:;If you have Part B, you pay a Part B premium each month. Most people will pay the standard premium amount.;Social Security will contact some people who have to pay more depending on their income. If you don’t sign up for Part B when you are first eligible, you may have to pay a late enrollment penalty.

For more information about enrolling in Medicare, look in your copy of the “Medicare & You” handbook, call Social Security at 1-800-772-1213, or visit your local Social Security office. If you get benefits from the Railroad Retirement Board , call your local RRB office or 1-800-808-0772.Learn More:

More articles

Popular Articles