Social Security beneficiaries will soon get notices showing exactly how much money to expect in their monthly checks for 2024.
Those recipients are slated to get a 3.2% boost to their benefits starting in January with the 2024 annual cost-of-living adjustment. Retirement benefits are expected to go up by more than $50 per month, on average.
One factor that will affect exactly how much beneficiaries receive is their Medicare Part B premium, which is typically deducted directly from Social Security checks.
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Medicare Part B serves as medical insurance and covers doctor and other provider services, outpatient care, home health care, durable medical equipment and some preventive services.
Standard monthly premiums are slated to rise by $9.80 per month to $174.70 in 2024, from $164.90 per month this year.
However, people with higher incomes will pay more as a result of what is called income-related monthly adjustment amounts, or IRMAA.
When to appeal your Medicare Part B premium
You generally can’t have your Medicare Part B premiums adjusted – with one exception, according to Tim Steffen, director of advanced planning at financial services company Baird.
“If something has materially changed in your situation … you can appeal your Medicare premium,” Steffen said.
That applies to events that have caused your income to go down since 2022, such as a divorce, the death of a spouse, the loss of a pension or starting retirement.
You may file an appeal once you receive your benefit notice for 2024.
Medicare Part B premiums are based on beneficiaries’ modified adjusted gross income from two years prior. Therefore, 2024 Part B premiums are based your 2022 federal tax returns.
That includes adjusted gross income — wages, retirement distributions, investment income, capital gains, rental income and Social Security benefits — as well as tax-exempt interest.
If you have municipal bond interest that you don’t pay federal taxes on because it is exempt, that can still prompt higher Medicare Part B premiums, Steffen said.
$1 in extra income can mean a higher premium
Managing Part B premium costs can be tricky, because even just $1 in additional income could push you into a higher bracket if you are close to the thresholds, Steffen noted.
Certain tax management strategies, like Roth individual retirement account conversions, will trigger higher taxable income for the year the transaction was completed. Consequently, that may also result in a higher Medicare Part B premium.
“You can’t really lower your premium, you can just avoid increasing it,” Steffen said.
It helps to stay mindful of the income break points, he said. However, be sure to keep in mind brackets for future years will change.