Ask the Expert: Does change in filing status change Medicare premium?

Spouses pay Medicare premiums based on the Modified Adjusted Gross Income (MAGI) on their joint tax return. But why should Medicare be allowed to count a couple's total income to determine each spouse's individual premium? Why aren't their incomes considered separately for purposes of their individual Medicare premiums? Can they avoid this inequity if they pay taxes as Married Filing Separately?

Married Filing Separately is the least advantageous filing status. It's almost certainly a money-losing idea even in the unlikely event that it reduces one spouse's Medicare premium.

In addition to forfeiting a variety of tax credits and deductions, people who pay taxes as married filing separately are subject to much less generous tax brackets. For example, on their 2019 tax returns, single taxpayers pay 37% — the highest rate — on income of $510,301 or more. Married couples filing jointly pay 37% on income of $612,351 or more. People who are married filing separately hit the 37% tax bracket when their income reaches $306,176.

Medicare surcharges for higher-income taxpayers filing separately are also higher. True, a person who is married filing separately with 2018 income of $87,000 or less pays the same 2020 Medicare Part B premium as a single taxpayer with the same income: $144.60 a month. But if his or her 2018 income was over $87,000, that premium leaps to $462.70 a month. Joint filers don't pay $462.70 a month until their combined income surpasses $326,000.

And a taxpayer who's married filing separately with 2018 income of $413,000 or more pays $491.60 a month for Part B this year. Joint filers don't pay that much unless their combined income was $750,000 or more.

The bottom line

Taxpayers who are married and file taxes separately are subject to higher Medicare surcharges than married couples who file jointly.

More information

medicare.gov/your-medicare-costs/part-b-costs

bankrate.com/finance/taxes/tax-brackets.aspx