Glossary

income-related premium

Premiums for Medicare Part B and Part D that apply to higher-income Medicare beneficiaries. The Medicare Modernization Act of 2003 established an income-related Part B premium requiring higher-income Medicare beneficiaries to pay a greater share of average Part B costs (35 percent to 80 percent, depending on their income). Beneficiaries are required to pay the income-related Part B premium if their income is equal to or greater than $85,000 for an individual and $170,000 for a couple in 2010. The Affordable Care Act (ACA) froze the threshold for the income-related Part B premium at 2010 levels through 2019. The ACA also created an income-related Part D premium, effective in 2011, using the same surcharge percentages and income thresholds as for Part B. Similar to the Part B premium provision, the income thresholds for the Part D income-related premium are not indexed to increase annually, thus making more beneficiaries subject to the higher premiums each year.