Medicare Part B premiums will go up in 2024. How to manage those costs

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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.

Retirement Changes Abound

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.

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