You can get your Part B premiums reduced after you retire, and you don't need to wait until 2009.
First, some background: In 2007, Medicare started to base Part B premiums on the beneficiary's income for the first time ever with higher-income people paying more every month. The premiums and income limits rose moderately in 2008. Now, joint filers who earned $164,000 or less in 2006, and single filers who earned $82,200 or less, pay the base rate of $96.40 per month for the year.
But everyone who earned more in 2006 pays higher premiums. Joint filers who earned up to $204,000, and single filers who earned up to $102,000, pay $122.20 per month. Premiums gradually increase based on income up to the top premium $238.40 per month for joint filers who earned more than $410,000 and single filers who earned more than $205,000.
The premiums for 2008 are based on 2006 income because those are the last tax returns the IRS has on record. But under certain circumstances you may be able to get your premiums reduced if your income has dropped since then and retirement is one of those reasons.
The so-called life-changing events that count include the death of a spouse, marriage, divorce, a reduction in income due to the loss of income-producing property or due to the loss of certain forms of pension income, and work stoppage or work reduction which includes people who retired since 2006.
If you've experienced any of these changes, contact the Social Security Administration at 800-772-1213, or visit your local field office. You'll need to file Form SSA-44, "Medicare Part B Income-Related Premium Life-Changing Event," available at www.socialsecurity.gov, which includes detailed instructions about the information you'll need to submit.
Most important, you'll need to estimate your income for the year and provide evidence of the qualifying change for retirees, that could be a statement from an employer verifying that you've retired or past and current pay stubs showing a change in hours.
If your retirement brings your 2008 income below the cut-off for the surcharges, then your premiums will be recalculated and any excess premiums you've already paid will be refunded retroactively.
Kimberly Lankford is a contributing editor to Kiplinger's Personal Finance magazine. Send your questions and comments to [email protected].