Ask the Expert: Questioning higher Medicare surcharges
In 2020, some of us sold investments in panic as the stock market went crazy. Most of us are retired, on fixed incomes; but because the sale realized many years of capital gains, we're being penalized with a surcharge on our Medicare premiums. Also, because Social Security looks at us as individuals, husband and wife each pay the Medicare surcharge even though we're filing jointly. We paid the IRS for these investment gains, why hit us again?
Why won't they accept a 2021 tax return proving low income? We're told there's nothing we can do except wait two years till they remove the Medicare surcharge. It's costing us over $500 a month. Two years of this will be more than $12,000. This is totally unfair.
The Medicare surcharge will only last one year. Your 2022 premiums are based on the income you reported in 2020. Your 2023 premiums will be based on your 2021 tax return, which you say shows low income.
Social Security won't accept your 2021 return from you because it only takes data from the Internal Revenue Service — and 2-year-old data is the most recent information the IRS can supply.
Would the surcharge have felt less unfair in 2020, when your income was high? Maybe not: It’s a very steep increase. This year's standard monthly Medicare premium is $170.10; but a husband and wife subject to the surcharge may pay from $238.10 to $578.30 each, depending on their income.
But your understandable outrage is also based on the fact that your high 2020 income was a fluke — a one-year aberration. Social Security's position is in that case, your 2022 surcharge will also be a one-year aberration.
The bottom line
Higher annual income — regardless of the reason — can substantially increase your Medicare premium.
More information
bit.ly/harvardmedicarepremiums
TO ASK THE EXPERT Send questions to act2@newsday.com. Include your name, address and phone numbers. Questions can be answered only in this column. Advice is offered as general guidance. Check with your own consultants for your specific needs.
