Applying for Medicare, Part II

December 29, 2011

My previous post related my experience in applying for Medicare about three months before my 65th birthday. In short, I applied on-line and received” a “Notice of Award” some 10 days later informing me that I am entitled to Medicare hospital and medical insurance beginning next year. I was left with wondering how much Medicare was going to cost me and what my payment options (if needed) would be since the “Notice of Award” was silent on those topics.

A week or so later I received another letter from Social Security Administration (SSA) focusing on how much I will need to pay each month to receive my Medicare Part B Medical Insurance benefit (as opposed to the Part A Hospital Insurance benefit). These payments will be in addition to the Medicare taxes my employers and I have both paid since the inception of the program, a not insignificant sum in the aggregate for either party. The letter was silent as to whether I would need to pay anything for Part A Hospital Insurance, but I learned from another source that, in consideration of my payments over the years that, like most people, I do not need to pay an additional premium for Part A. (It would be helpful in my view if the SSA included that tidbit in their communication.)

In order to determine my Medicare Part B IRMAA (in the middle of the letter “premium”  becomes the “IRMAA” or Income-Related Monthly Adjustment Amount), the SSA consulted with the Internal Revenue Service in order to compute my “MAGI” or Modified Adjusted Gross Income from 2010. My MAGI is the sum of my adjusted gross income from my joint tax return with my wife increased by a small amount of tax exempt interest excluded from our taxable income. Based on my MAGI, the SSA consulted a table (included with the letter) and determined my IRMAA.

The letter also lists a variety situations e.g. marriage, divorce, annulment, death, job loss, reduced hours, loss in income-producing property, cancelled pension plan, bankruptcy, that could affect my MAGI and hence my IRMAA. Fortunately, none of these applied in my case.

So I now know how much I will pay. I am still unsure what method I will use to pay my IRMAA but, unlike the first letter I received from SSA which made no reference to further correspondence, the most recent letter said “If you do not contact us within 10 days after you receive this letter, we will send you another letter which will tell you how you will pay the income-related monthly adjustment amount.”

I look forward to that.

R. Kevin Price

© 2008-2012 R.K. Price