Brace for higher Medicare Part B premiums

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in Small Business Tax,Small Business Tax Deduction Strategies

For the second year in a row, senior citizens enrolled in Medicare Part B will have to pay a higher premium charge. Medicare Part B covers physician services, qualified out-patient hospital care, medical equipment and certain other services.

Alert: The basic monthly Medicare Part B premium for 2013 is $104.90 a month (up from $99.50 2012). This represents a 5% increase.  

What’s more, higher-income individuals must pay even higher monthly Medicare Part B premiums, based on their modified adjusted gross income (MAGI). To top things off, higher-income senior citizens also owe a surcharge on Part D premiums for coverage of prescription drugs.

The Medicare Part B and Part D rates for single and joint filers in 2013 are shown in the chart below.

The Social Security Administration (SSA) uses the tax figures from two years ago to determine the Part B premiums. Thus, the MAGI reported on a taxpayer’s 2011 tax return determines whether the taxpayer must pay a higher monthly Part B premium in 2013. For example, a single filer with a MAGI of $150,000 in 2011 will have to pay a monthly Medicare Part B premium of $209.80 in 2013.  

Note that the 2010 health care law suspends inflation adjustments to the MAGI brackets for Medicare Part B premiums until 2020. For more information, visit www.ssa.gov.

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