In January 2024, former President Joe Biden signed the Social Security Fairness Act into law, a move that restored Social Security benefits to millions of employees who were previously penalized due to alternative pension plans provided by their employers.
This new law not only impacts the Social Security benefits of many but also has significant implications for Medicare premium payments in 2025.
According to AOL, the changes could affect how retirees manage their payments, with automatic deductions from Social Security benefits replacing previous direct payments to Medicare. These adjustments will bring new procedures for some beneficiaries.
How You Pay Your Medicare Premiums Might Change
Before the passage of the Social Security Fairness Act, many retirees were responsible for sending in their Medicare premium payments directly to the Centers for Medicare & Medicaid Services (CMS).
However, under the new law, if you are now covered by Social Security, your Medicare premiums will be automatically deducted from your benefit payments, simplifying the payment process.
Don’t Make Changes Until Instructed
If you’re still paying your Medicare premiums directly to CMS, it is crucial to continue doing so until you receive specific instructions from the Social Security Administration (SSA).
Once your Social Security record is updated, premium deductions will automatically be made.
If you have prepaid premiums, the SSA will issue a refund.
Changing Your Online Medicare Payments
For those using Medicare Easy Pay or online bill payments, there will be a few steps to follow once the SSA confirms that automated payments are set to begin.
If you’re using Medicare Easy Pay, you’ll need to fill out the Authorization Agreement for Preauthorized Payments (SF-5510) to stop the payments.
If paying via online bill payment, you will need to contact your bank to halt these payments.
Your Medicare Premiums Might Increase
Changes in Social Security benefits could also impact your Medicare premiums, specifically for Medicare Part B and Part D, potentially leading to an Income-Related Monthly Adjustment Amount (IRMAA).
This adjustment is based on your modified adjusted gross income (MAGI).
In 2025, the standard Medicare premium will be $185, covering 25% of the cost of Parts B and D, with the government subsidizing the remainder.
Beneficiaries with a MAGI higher than $106,000 (or $212,000 for married joint filers) will be considered high-income and will pay higher premiums.
Depending on your MAGI, premiums could increase anywhere from 35% to 85% of the total cost of coverage.
Note that the MAGI used in these calculations comes from your IRS tax return two years prior. This means that if your income changes in 2024, the increased premium could apply in 2026.
How Life Changes Can Affect Your Premiums
If you experience significant life events, such as a marriage, divorce, or income loss, you may be able to reduce your IRMAA.
For those who have filed an amended tax return, or experienced any major life changes, it’s important to contact Medicare at 800-772-1213 to discuss adjustments to your premiums.
The Social Security Fairness Act has benefited 2.8 million individuals, restoring or increasing their Social Security benefits.
While this change provides financial relief, it is essential for beneficiaries to understand the potential for higher Medicare premiums as a result of their increased benefits.
