Medicare Part B Means Test FAQ

1.  I have heard that the premium for Medicare Part B is going to be tied to the insured's income?  Is this true?

2.  Who has to pay the premium surcharge?

3.  How much is the premium surcharge?

4.  Will the premium surcharge change after 2007?

5.  Where can I get more information now?

If you have any other questions, please contact us.

1.  I have heard that the premium for Medicare Part B is going to be tied to the insured's income?  Is this true?

Yes it is.  When the 2003 Medicare prescription drug bill was passed there was a little noticed provision tacked on that added a "means" test to the bill.  Starting in 2007 the premium for Medicare Part B can increase substantially for high income individuals.  It is projected that about 2 million people will see the increase.  The increase is in the form of a premium surcharge that is to be paid in addition to the normal Part B premium.

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2.  Who has to pay the premium surcharge?

To determine if you are required to pay the premium surcharge for 2007 you need to calculate your "modified adjusted gross income" as follows.

• Start with your 2005 adjusted gross income.

• Add to this any tax-exempt interest, EE bond interest used for educational purposes, and any excluded foreign earned income.

• The sum is your modified adjusted gross income.

If you are married and your modified adjusted gross income is over $160,000 or you are single and it is over $80,000 you will have to pay the premium surcharge.  

Note: This surtax is owed even if you did not sign up for prescription drug coverage.

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3.  How much is the premium surcharge?

The premium surcharge increases as the amount of your modified adjusted gross income increases.  The following tables summarize the surcharge amounts for 2007.

Married:

Single:

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4.  Will the premium surcharge change after 2007?

Yes.  It increases dramatically. 

For 2008, the surcharge percentages will be double those shown in the previous tables and will be based on 2006 income.

For 2009, the surcharge percentages will be triple those shown in the previous tables and will be based on 2007 income.   

There are a couple of items of good news - well, slightly good.

• The income levels in years after 2007 will be adjusted for inflation.

• You will have an opportunity to dispute the surcharge determination and use income from a later year if your circumstances change due to a major event such as death of your spouse, divorce, retirement, or a significant cutback in hours worked. 

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5.  Where can I get more information now?

There is some information available on the Centers for Medicare and Medicaid Services (CMS) web site. 

To get to the information follow these steps - 

1. Go to http://www.cms.hhs.gov/MMAUpdate.  

2. Option 1:  For an overview, in the "Downloads" section of the page click on the link for Summary of the Provisions of PL 108-173 [PDF, 1.56 MB].  The information about the means testing is in Title VIII - Cost Containment, Subtitle B - Income-Related Reduction in Part B Premium Subsidy, Section 811.  The links in the Table of Contents are not operational so you cannot simply go to the Table of Contents and click on the link.  Section 811 is pages 128 - 129 of the document and you can scroll down to those pages. 

3. Option 2:  To read the text of the law, the "Downloads" section of the page click on the link for H.R. 1 (pdf, 1.1 mb).  Again, you have to scroll down to Title VIII - Cost Containment, Subtitle B - Income-Related Reduction in Part B Premium Subsidy, Section 811.  This starts on page 299 and goes to page 304.

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