Will Medicare Part B Premiums Increase In 2011?

Part B is Medicare’s outpatient insurance. Everyone who has Medicare Part B must pay a monthly fee, to have Part B. The standard premium will go up to $115.40 in 2011, but this increase won’t affect most people who will pay the same premium they paid in 2010 ($96.40).

There will actually be three Part B premium amounts in 2011. Which one a person pays depends on when they started Part B and their income.  The Part B premium is typically deducted from the monthly payment received by a Social Security beneficiary.

It might seem strange that some pay a different Part B premium for the same coverage. This happens because federal law says the Social Security benefit can’t decrease as a result of a Part B premium going up. This is called the “hold harmless provision.”

Since Social Security benefits are not increased for 2011, Part B premiums also can’t go up if the premium is automatically deducted from a Social Security check.

This is the second year in a row that “hold harmless” applies to most people with Medicare because there’s no increase to Social Security benefits. The result is that most people will keep paying the 2009 standard premium amount. Others will pay the 2010 or the 2011 standard amount.

If Part B was effective in 2010, the premium deduction is $110.50 per month in 2011. People who sign up for Part B during 2011 will have $115.40 deducted from their monthly Social Security checks.

The exception to this rule is people with higher incomes. This Link will lead to the Medicare Interactive web site for important information about the increased premiums – up to a possible $353.60 per month for individual income above $214,000 ($428,000 for couples).   Essentially, individuals with income more than $85,000 ($170,000 for couples) pay more for Part B and aren’t held harmless. Their premiums will increase in 2011.

People who have low incomes may be able to qualify for assistance programs to pay the Part B premiums and certain other benefits – go to this Link for details and more information.

As always, the professional tax preparers at PRO-TAX stand ready to help you find answers to all tax-related issues. Feel free to call us at 1-800-809-2829.

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