Page 11 - Supplement to Income Tax 2020

Recent Tax Developments*

Medicare Part B and Part D Premiums for exempt interest (MAGI) for the year that is 2 years
2020 (page 630) prior to the year for which the surcharge is determined.
That is why the potential Part B surcharge for 2020
Medicare Part B premiums cover eligible physician is based on your MAGI for 2018. Social Security
services, outpatient hospital services, outpatient obtains your filing data from the IRS to determine
laboratory and diagnostic services, certain home any surcharge. If your 2018 tax return information
health services, and durable medical equipment. was not available, Social Security used your 2017 tax
For 2020, the standard monthly Part B premium is return data to determine if you owe a surcharge for
$144.60, an increase of $9.10 from the standard 2020. If you have been notified by Social Security that
premium ($135.50) that applied in 2019, and since you must pay a surcharge, but your MAGI has been
the premiums are deducted from Social Security reduced by a life-changing event, you may be able to
benefits, the increase provided by the 1.6% COLA reduce or eliminate the surcharge. For example, if a
(cost-of-living adjustment) in Social Security benefits surcharge for 2020 was based on your 2018 MAGI
for 2020 will be limited by the higher Part B premium. but your income was reduced in 2019 or 2020 because
For some Medicare beneficiaries with low monthly of a life-changing event, you can ask Social Security
Social Security benefits, the $9.10 increase in Part B to refigure your 2020 premium using your 2019 tax
premiums would exceed the 1.6% increase in their information or your estimated 2020 information
Social Security benefits, but the “hold harmless” rule (Social Security Form SSA-44 can be used or you can
prevents a net reduction in benefits from happening.
For such individuals, the “hold harmless” rule limits call 1-800-772-1213).
the increase in their Part B premium to their Social The premium table on the following page
Security COLA, so their net monthly Social Security assumes that Social Security used 2018 filing status
benefit (after subtracting the premium) for 2020 stays and MAGI to determine any surcharge for 2020.
the same as it was in 2019. For 2020, there are generally five surcharge tiers.
Medicare beneficiaries who directly pay their 2020 For the first four surcharge tiers (but not the top
Part B premiums because they are not receiving Social tier), the income brackets are slightly higher than
Security benefits, and those who enroll in Part B in for prior years as the result of a cost-of-living
2020, are not eligible for the hold-harmless limitation adjustment. However, there are only two surcharge
and generally will pay the standard monthly premium tiers for married persons filing separately who lived
of $144.60 in 2020. However, they, as well as other with their spouse at any time in 2018.
beneficiaries with 2018 MAGI exceeding $87,000, or Part D premium surcharge applies if Part B surcharge
$174,000 if married filing jointly, must pay a monthly applies. If you are subject to the Part B surcharge,
surcharge in addition to the standard premium; see the you also must pay a surcharge in addition to your
next paragraph for surcharge details. regular monthly premium for Part D prescription

Part B surcharge for 2020 based on 2018 MAGI and drug coverage. For 2020, the Part D surcharge ranges
filing status. Whether the premium surcharge applies from $12.20 to $76.40 per month, as shown in the
depends on your adjusted gross income plus tax- last column of the table on the following page.

Supplement to J.K. Lasser’s Your Income Tax 2020 | 7