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Volume 10 - Opinions of Counsel SBRPS No. 22

Opinions of Counsel index

Senior citizens exemption (income requirement) (social security-Medicare premium reduction) - Real Property Tax Law, § 467:

The amount of social security benefits withheld by the Social Security Administration to pay the premium for Medicare Part B, where a person chooses to be covered by that program, is income for purposes of determining eligibility for the senior citizens exemption.

Our opinion has been requested concerning the definition of income for purposes of the partial exemption for real property owned by senior citizens with limited incomes (Real Property Tax Law, § 467). The definition is found in RPTL, section 467(3)(a), which provides, in relevant part, “Such income shall include social security . . .  benefits. . . .” The question is which amount of social security (i.e., before or after the Medicare premium reduction) assessors should use in computing income.

Where a senior citizen, entitled to receive social security, is also eligible to be covered by Medicare Part B, a portion of his or her monthly social security benefit is retained by the Social Security Administration as the premium for such medical insurance. More specifically, “[p]articipation in the hospital insurance program, Medicare Part A, is not voluntary . . . ” (70A Am Jur 2d Social Security and Medicare, § 450). “Part B Medicare is a voluntary insurance program that pays medical expenses not covered by the Part A Medicare hospital insurance program” (ibid., § 486). “If an enrollee in Medicare B is receiving monthly benefits under the Social Security Act . . ., his Medicare B premiums will generally be deducted from such benefits. The enrollee does not have the choice of paying his premiums by direct remittance to avoid the deduction” (ibid., § 514).

In our opinion, the total (i.e., unreduced) social security amount should be used in determining the applicant’s income eligibility. There is no mandated deduction for personal medical expenses in the statutory definition (see, 2 Op.Counsel SBEA No. 65). {1}  Moreover, the fact that the senior citizen chooses to use part of his or her social security benefit to purchase medical insurance (i.e., Medicare B) cannot be said to reduce his or her social security income. The Medicare Part B premium payments still comprise part of social security, and, given the statutory definition of income (quoted above), we believe that they must be considered in computing income for purposes of section 467 of the Real Property Tax Law.

August 5, 1996

NOTE:  See also Opinion 10-28.

{1}  Municipalities offering the senior citizens exemption do have the further option of permitting applicants to deduct from their incomes “all medical and prescription drug expenses actually paid which [are] not reimbursed or paid for by insurance” (§ 467(3)(a) as amended L.1996, c.313).