Question: I got a bill from CMS and the premium is not what I expected. What should I do?

Social Security and Medicare have been around a long time. For most individuals, the Medicare Part B premium comes out of their Social Security check automatically, so they don’t generally have to think about paying the premium. When individuals collect Social Security Benefits, Medicare begins automatically and they get their card in the mail. If the individual decides to keep Medicare part B during this initial auto enrollment, the monthly premium ($144.60) comes out of their Social Security Benefit each month.

In your situation, you do not collect Social Security yet. More and more people make the Medicare enrollment decision before they begin to collect Social Security Benefits. The Medicare enrollment decision happens when you turn 65 years old, but Social Security can happen as early as 62. For those individuals born after 1937, full retirement age is after their 65th birthday. Many of these newly eligible individuals have opted to not collect Social Security earlier than their full retirement age, but still need to make a Medicare enrollment decision.

For those individuals who do not collect Social Security Benefits, they must actively enroll in Medicare Part A and B (if they need it) and they will get a quarterly bill for the premiums. That is the bill you just received. If you take the monthly $144.60 and multiply it by three months the total is $433.80. Sometimes the bill that individuals receive is even higher than that. This can be for two reasons: the first is determined by when your birthday month falls, they are billing you for four months not three ($144.60 X 4= $578.40). This would only happen one time to get you on the normally quarterly bill schedule.

The second reason could be that your income is high according to the IRS. In this situation, your Medicare part B premium could be between $202.40 or up to $491.60 per month. Those higher monthly premiums would then make for a higher quarterly bill as well. This higher Medicare Part B is call an IRMAA (Income Related Monthly Adjustment Amount), and is based on your income on your tax returns two years ago. The 2020 IRMAA is based on your 2018 tax returns.

If you feel your income is no longer that high, you can request an adjustment of your IRMAA based on more recent tax returns or a Life Changing Event. Examples of a Life Changing Event could be retirement, death of a spouse, remarriage, and many others. This situation should be addressed with the local Social Security Administration office.

To get back to the Medicare Part B premium bill, this is a bill you must pay if you want your Medicare Part B to stay active. You can use that bill you received to set up an automatic payment, like an Electronic Funds Transfer (EFT) or to bill a credit card. You can also use your secure account to pay this bill via credit card or debit card. If you prefer to write checks, you can continue to send a check each quarter.

You should receive this bill quarterly on or about the 10th of the month. The payment is due by the 25th of the month. This is not a bill I would recommend paying late. The amount seems high and it is, but it is for three months, so you won’t pay that amount again for a few months.

This bill from Medicare is called the CMS-500. You can find lots of information on the website about this bill and other helpful information.

Once you have decided to collect Social Security Benefits, your Part B premium will begin to be deducted automatically from your monthly Benefit amount. At that point you won’t get this bill any longer, but you will pay the premium out of your Social Security Benefit before it is deposited into your account.