By Leah S. Poniatowski, J.D.
The Social Security Administration (SAA) updated its rules concerning income ranges and participant liability for Medicare Part B and prescription drug coverage. The changes will increase the amount higher income participants will be responsible for in 2018 and 2019 (Final rule, 83 FR 55626, November 7, 2018).
Participants in Medicare Part B whose modified adjusted gross income (MAGI) is above a specified threshold—$85,000 for single tax-filers and $170,000 for those married filing jointly—must pay an income-related monthly adjustment amount (IRMAA) along with the standard monthly premium. IRMAA is determined by a participant’s MAGI and tax-filing status. The MAGI ranges for 2018 were changed following the passing of the Medicare Access and CHIP Reauthorization Act of 2015 (P. L. 114-10), and the 2019 ranges were further updated by the Bipartisan Budget Act of 2018 (P. L. 115-123).
Rule revisions. In the final rule, the SSA updated MAGI ranges for all tax filing statuses for 2018 and years beginning in 2019. The SSA also added tables to show the applicable MAGI ranges, the subsidized and unsubsidized coverage premium percentages. Further, beginning in 2020, the MAGI ranges will be adjusted for inflation. Additionally, other revisions were made in order to harmonize with the legislation.
Impact of revisions. The four-tiered structure of the MAGI ranges effective for incomes from 2011 through 2017 and associated percentages (35, 50, 65, and 80) for each group remained the same for 2018, but the income ranges were revised, narrowing the income band for participants responsible for 50 percent and increasing the income band for participants responsible for 65 and 80 percent, respectively, thus increasing a higher-earning participant’s liability by as much as 15 percent. More concretely, the 50-percent tier cut-off changed from $160,000 for single filers and $320,000 for joint filers to $133,500 and $267,000, respectively, and the income range of the 2011-2017 65-percent group was shifted to become the 80-percent group. For 2019, the 2018 income ranges remain the same, but a new 85-percent liability tier was added, which will affect those with MAGI equal to or greater than $500,000 for single-filers and $750,000 for joint filers.
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