Most people who enroll in Medicare Part B, which covers doctor visits, diagnostic tests and other outpatient services, pay a standard monthly premium, $174.70 in 2024. But if your household income is above a certain amount, you may have to pay more than the basic monthly fee. If the government says your monthly tab is going to be higher, there are ways to appeal that decision.

The added charge, known by the acronym IRMAA (income-related monthly adjustment amount) was included in the 2003 Medicare Modernization Act, designed to help financially stabilize the program. According to the Centers for Medicare & Medicaid Services (CMS), about 8 percent of Medicare beneficiaries are subject to these higher premiums.

“The idea is that people with higher levels of income should be paying more,” says Alex S. Seleznev, a wealth management specialist and certified financial planner.

CMS decides each year how much higher-income Medicare recipients will have to pay; the Social Security Administration (SSA) determines who must make those added payments.

The added charge is based on a beneficiary’s modified adjusted gross income (MAGI), which is your total adjusted gross income plus any tax-exempt interest that you report on your federal 1040 tax form. For example, individuals with annual incomes of $103,000 are subject to a higher premium in 2024, while the income threshold for joint filers is $206,000.

Here’s the tricky part: The SSA doesn’t use your most recent tax return to figure out whether you have to pay higher premiums. It looks back two years. That means the income on your 2022 tax return — filed in 2023 — will determine what you’ll have to pay in 2024.

Depending on your annual income, the amount you’ll have to pay above the standard Part B premium could range from $66.90 to $419.30 a month next year. The high-income charge also applies to Part D prescription drug coverage, and those extra charges could range from $12.90 to $81 a month, also based on your 2022 income. Part D plan premiums vary widely, depending on what plan you pick and where you live. These surcharges apply whether you are enrolled in original Medicare (Parts A and B) or a Medicare Advantage plan.

If the SSA decides you will have to pay a higher premium, the agency will send you a letter telling you how the surcharge was calculated, what to do if you believe the information used to calculate the premium adjustment is incorrect and what to do if your income has been reduced or you’ve had what the government calls a “life-changing event.”

Corporate health insurance plans were expanded in the past as a means to not only draw in but also retain high-caliber employees. These plans often come with extended coverage, encompassing elements like additional doctor visits, laboratory tests, and imaging, accompanied by manageable co-pays. However, it’s worth acknowledging that these comprehensive benefits come at a considerable cost, even when considering the employer’s contribution. In today’s world, corporate health plans exhibit a trend towards providing reduced benefits coupled with higher deductibles. This landscape typically offers employees a range of plan options varying in deductible amounts, co-insurance rates, and allowances for doctor visits and urgent care, among other factors. Customization is primarily limited to these variables.

Moreover, when an employee departs from a corporate health plan, they are granted the choice to enroll in COBRA, which essentially maintains their access to the same health insurance plan but at the full cost borne by the employee. To illustrate, if the monthly employee premium previously stood at $300,  which the employer matched with $300, the employee’s COBRA premium would now be $600 per month. This signifies the plan while incurring twice the financial commitment. Additionally, it’s pertinent to note that often, associated life insurance benefits are lost as well.

In contrast, private health insurance plans extend a broader range of options to the insured, frequently at a more reasonable premium. In many cases, it proves advantageous for employees to forego COBRA and instead secure an independent private plan. Doing so can result in notable savings, often ranging between 30% to 50% of the employer’s COBRA plan costs. This approach offers a sensible and financially astute choice. And let’s not overlook the significance of maintaining your life insurance coverage in this decision-making process.

A sentiment frequently voiced is the desire for an all-encompassing health insurance that covers every possible scenario. While that concept is undoubtedly appealing, the truth is that the original intent of health insurance was to provide coverage for hospitalization and surgical procedures in the event of a major medical crisis. To put it into perspective, consider your automobile insurance – it doesn’t handle expenses like new tires, a transmission replacement, or filling up your gas tank.

In times gone by, as businesses aimed to attract and retain top-tier employees, health insurance plans underwent evolution, broadening their scope to go beyond catastrophic hospitalization and surgery. These revised plans featured perks like unlimited doctor visits with a modest co-pay, wellness care, maternity services, chiropractic care, infertility treatments, and sometimes even elective procedures classified as non-medically necessary, such as cosmetic surgeries like facelifts and breast augmentations.

With the escalating expenses associated with health insurance, there has been a shift within corporate plans to trim down coverage for many of these elective, non-medically necessary services. Here’s an example, a friend is employed by a large national corporation. Back when he and his partner were attempting to conceive their now 9 and 11-year-old children, they pursued In Vitro Fertilization, which incurred costs exceeding $30,000 per child. Remarkably, his company fully covered the entire expense along with the complete maternity costs. However, about a year after their youngest child was born, the company made the decision to discontinue that particular benefit, as the financial burden on the company became unsustainable. He regards himself as exceptionally fortunate for the coverage he received during that window.