Higher premiums are right around the corner for some beneficiaries of the federal Medicare health insurance program. Will you have to fork over the higher monthly amount? That’s the question a woman from North Kingstown was driving at in a call to MoneyLine:

Q: My concern is about the [Medicare] premium that we’re going to be paying, which will go up according to income. Over the last several years, except for 2005, my adjusted income was in the $70,000 [range]. Last year, 2005, it was $111,000, because I sold a waterfront house, so, as you can imagine, I had a lot of capital gains. . . . I want to know what I should do to facilitate them giving me an exception, because I don’t want to get stuck with a higher premium than I’m already paying. . . .

– E.L., North Kingstown

A: The bad news is that you’ll be stuck paying the higher premium for next year. The good news is that you’ll probably have to pay only the standard premium for 2008, not a higher amount.

That’s the short answer. Following are some details:

Starting in January, the rules change regarding the amount people pay each month for coverage under a section of Medicare known as Part B. (Medicare Part B generally helps cover the cost of visits to the doctor’s office and certain other expenses.)

Most of Medicare’s 40 million beneficiaries will pay the standard premium. For 2007, the standard premium will be $93.50 a month, up from the current $88.50 a month.

But under the new rules, certain beneficiaries — those the government calls “higher income” beneficiaries — will, for the first time, have to pay more than the standard premium, solely because of their income levels.

Altogether, between 1.6 million and 2 million Medicare beneficiaries nationwide will pay a higher-than-standard premium.

Will you be one of them? It depends on what the government calls your “modified adjusted gross income” (MAGI).

To find your MAGI, the government will look to the U.S. Form 1040 that you filed earlier this year, the one covering 2005, said Kurt Czarnowski, regional communications director for the Social Security Administration.

The government will first take your adjusted gross income (a figure found at the bottom of the front page of your return), then add to that a few other items on your return, such as your tax-exempt interest income.

If you’re single, and your modified adjusted gross income was less than $80,000 for 2005, you’ll be all set — you’ll pay the standard Medicare Part B monthly premium. The same principle applies if you’re married (filing a joint return) and your MAGI is less than $160,000.

But if the figure is greater than the thresholds listed above, the amount of your Medicare Part B monthly premium will be higher.

For example, if you’re single, with MAGI between $80,000 and $100,000, your monthly premium will be $105.80. If you’re single, with MAGI between $100,000 and $150,000, you’ll pay $124.40 a month.

In your question to MoneyLine, you said that your adjusted gross income for 2005 was $111,000. Assuming that also turns out to be your MAGI for 2005, you’ll have to pay a total of $1,492.80 in Medicare Part B premiums next year, instead of the standard $1,122, which is what most beneficiaries will pay.

In other words, you’ll have to cough up about $371 more for Part B coverage. That’s about 33 percent higher than the standard premium.

What can you do about it? “There is no discretion in the statute to count this income differently,” Czarnowski said. “There is no way to prorate that income or use other information to offset the one-time income.”

Yes, the rules allow for appeal. However, you generally may appeal only under certain circumstances. For instance, if you filed an amended return after you sent in your original tax return covering 2005, you may ask the government to use the data from your amended return instead.

You may also appeal if you’ve had a “life-changing event” — and if that event has resulted in a “significant reduction” in your income, the new regulations say.

But there’s no provision that allows for a recalculation of your premium because your income has gone up for any given year.

In your particular case, however, there is some good news: If your MAGI for 2006 drops back down to the $70,000 range that you mentioned in your question to MoneyLine, you’ll probably wind up paying only the standard Medicare Part B premium for 2008. (That’s because the government will look to your 2006 return to figure your Part B premium for 2008, Czarnowski said.)

By the way: The Social Security Administration is involved in this process by law; most people have their Medicare Part B premiums deducted automatically from their monthly Social Security benefit.

Once Social Security sets your Medicare Part B premium for next year, it’ll include that information in the notice it sends you by the end of this month, the one detailing the cost-of-living increase in your Social Security benefit for 2007, according to a report published earlier this month by U.S. Government Accountability Office.

“Beneficiaries will have 60 days after receiving the notice of the premium increase to file an appeal. However, they may also request a new determination without filing an appeal if they have experienced a life-changing event that results in a significant reduction in their income, or they have more recent, amended or corrected tax return information,” the report said.

(You’ll have to read the notice carefully. Today’s MoneyLine uses the term “appeal” loosely, but keep in mind that different rules generally apply depending on whether you’re seeking a recalculation, reconsideration or formal appeal.)

TODAY’S TIP: The newest state quarter should be showing up in your pocket change soon. The U.S. Mint recently launched the South Dakota quarter, in a ceremony at Mount Rushmore.

The “tails” side of the coin has an image of Mount Rushmore, with the state bird — the Chinese ring-necked pheasant — flying overhead.

South Dakota was the 40th state to be admitted to the Union, and the South Dakota quarter is the 40th to be issued in the Mint’s “50 State Quarters” program.

It’s the final state quarter to be issued this year, joining the Nevada, Nebraska, Colorado and North Dakota quarters.

Scheduled for next year: the Montana, Washington, Idaho, Wyoming and Utah quarters.

For more information, or to order special sets, call the Mint toll-free at 1-800-872-6468, or use this Web site:

www.usmint.gov

Lesson plans about the South Dakota quarter are available free for download:

www.usmint.gov/kids

Neil Downing is a Journal staff writer and author of The New IRAs and How to Make Them Work for You. Questions about your money matters? Call us at 1-401-277-7484 and leave a message, or e-mail:

moneyline@projo.com

Sorry, no personal replies; as many questions and issues as possible will appear here.