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Medicare "B" Premiums in 2007 Based on 2006 Taxable Income

Added on 9/15/06

Buried in the 2003 tax act was a little noticed provision to base Medicare Part B premiums on the adjusted gross income of the taxpayer. The 2007 Part B premiums will be based upon the 2005 AGI (Adjusted Gross Income) of the taxpayer. For Medicare recipients that are single with an AGI under $80,000 (married taxpayers under $160,000), there will be no change in the monthly premium of $100.40

The added premium will vary from a low of $12.90 per month for single taxpayers with AGI’s between $80,000 & $100,000 (married couples between $160,000 and $200,000) to an added $72.90 per month for single persons above $200,000 (Married couples above $400,000).

The AGI is really a modified AGI, which is the AGI plus tax-exempt interest and dividends. Since the 2007 Medicare B premiums are based upon 2005 taxable income, there is no way to change the 2007 premium for any individual that is above the AGI thresholds.

For 2008 and beyond, there may be an opportunity to order your financial affairs so that your modified AGI is below the prescribed levels.

Isn’t Congress grand? Ask you congressman or senator how they voted on this back door increase in 2003.