Medicare Plans: Income-Based Part D Premiums

Starting January 1, 2011, Part D premiums will be based on your income.

This includes Part D coverage you have from a Medicare Prescription Drug Plan, a Medicare Advantage Plan or a Medicare Cost Plan that includes Medicare prescription drug coverage. If your modified adjusted gross income, as reported on your Internal Revenue Service tax return from two years ago, (the most recent tax return information provided to Social Security by the Internal Revenue Service) is above a certain amount, you will pay a higher monthly premium. 1

The income thresholds match the Part B premium adjustment that higher income persons pay now. The income related monthly Part D adjustment amount will be deducted from your monthly Social Security check, no matter how you usually pay your plan premium. If that amount is more than the amount of your Social Security check, you will get a bill from Medicare. The Part D premium adjustment is part of the Patient Protection and Affordable Care Act. 2

The chart below shows estimated prescription drug plan monthly premiums amount based on income. If your income is above a certain limit, you will pay an income-related monthly adjustment amount in addition to your premium.

Part D Monthly Premium
Beneficiaries who are married and lived with their spouse at any time during the year, but file a separate tax return from their spouse:

Income-related monthly adjustment amount
Less than or equal to $85,000 = $0.00
Greater than $85,000 and less than or equal to $129,000 = $50.10
Greater than $129,000 = $69.10

In addition, the income-related monthly adjustment amounts to be paid by Part D beneficiaries who are married, but file a separate return from their spouse and lived with their spouse at any time during the taxable year are as follows:
If Your Yearly Income in 2009 was:

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1 Centers for Medicare & Medicaid Services, “Medicare & You 2011”
2 PATIENT PROTECTION AND AFFORDABLE CARE ACT HEALTH-RELATED PORTIONS OF THE HEALTH CARE AND EDUCATION RECONCILIATION ACT OF 2010, SEC. 3308. REDUCING PART D PREMIUM SUBSIDY FOR HIGH-INCOME BENEFICIARIES