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You generally can’t adjust your Medicare Part B premiums — with one exception, according to Tim Steffen, director of advanced planning at financial services company Baird.
“If something has materially changed in your situation … you can appeal your Medicare premium,” Steffen said.
This applies to events that have reduced your income since 2022, such as divorce, the death of a spouse, the loss of a pension or the start of retirement.
You can appeal once you receive your allocation notice for 2024.
Medicare Part B premiums are based on beneficiaries’ modified adjusted gross income from the previous two years. Therefore, Part B premiums for 2024 are based on your 2022 federal income tax returns.
This includes adjusted gross income – wages, retirement distributions, investment income, capital gains, rental income and Social Security benefits – as well as tax-exempt interest.
If you have municipal bond interest that you don’t pay federal taxes on because it’s exempt, that can still result in higher Medicare Part B premiums, Steffen said.
$1 extra income can mean a higher premium
Managing Part B premium costs can be tricky, because even just $1 in extra income could push you into a higher bracket if you’re close to the thresholds, Steffen noted.
Some tax management strategies, such as Roth individual retirement account conversions will result in higher taxable income for the year the transaction was completed. Therefore, this may also result in a higher Medicare Part B premium.
“You can’t really lower your premium, you can just avoid raising it,” Steffen said.
It’s helpful to keep income thresholds in mind, he said. However, remember that the brackets for future years will change.