For those with an income above a certain amount, they may be required to pay an Income-Related monthly adjustment amount (IRMAA) in addition to their Part B premium and Part D premium.
The Social Security Administration (SSA) determines if you owe an IRMAA based on the income you reported on your IRS tax return two years prior.
If you feel you’re higher Part B premium is incorrect, there are steps you can take to Appeal IRMAA.
How to Appeal IRMAA
Most enrollees have their Part B premium taken out of their Social Security check before the beneficiary gets the deposit. If you are not taking income benefits with Social Security, you will typically receive a bill.
Those in the highest income bracket can pay considerably more for their Medicare Part B costs. Social Security will determine what you pay based on your modified adjusted gross income (MAGI) as reported by the IRS.
A Request for Reconsideration is a petition you can file with the SSA to reduce your Part B premium. You should submit a Request for Reconsideration if there is a valid reason you believe you should not have to pay the higher premium.
What to Know About Your Modified Adjusted Gross Income
Your Modified Adjusted Gross Income amount is made up of your total adjusted gross income in addition to any tax-exempt interest income. On your IRS Form 1040, these are line items 37 and 8b; if you are unsure of your MAGI, you can easily figure it out by looking at your tax return records.
Income examples that you may have reported on your tax return would include wages, dividends, alimony received, rental income, investment income, capital gains, farm income, and SSA benefits.
Deduction examples that you may have taken on your tax return would be things like alimony paid, tuition, student loan interest, and retirement plan contributions.
If the SSA determines that you owe a higher premium based on your MAGI, they will notify you of your new amount by mail. This notice is called an initial determination and the notice should include information on how to request a new initial determination.
If you think the income information Social Security used to determine your IRMAA was incorrect or outdated, you can also request them to revisit the decision.
If this is the case, you may need to contact the IRS and correct that information before you file the appeal. Correcting the issue may be as simple as filing an amended tax return.
A new initial determination is a revised decision that the SSA makes regarding your IRMAA. If you have experienced a life-changing event that caused a decrease in income, you can request that the SSA revisit its decision.
If you do not know why you are paying an IRMAA, you can call the Social Security hotline.
Situations Social Security Considers Being Life-Changing Events
- Spousal Death
- You or your spouse stop working or reduce the number of hours worked
- Involuntary loss of income-producing property due to a natural disaster, disease, fraud, or other circumstances
- Pension loss
- Receipt of the settlement payment from a current or former employer due to the employer’s closure or bankruptcy
You can appeal your Medicare Part B premium increase for outdated or incorrect information when you:
- Filed an amended tax return with the IRS
- Have a more recent tax return that shows you are receiving a lower income than previously reported
You can request a new initial determination by submitting a Medicare IRMAA Life-Changing Event form. You can also schedule an appointment with Social Security.
Documentation will need to be provided with either your correct income or of the life-changing event that caused your income to go down.
When you move into retirement, it is common for you to stop working or work fewer hours. This can impact your monthly income quite a bit and be must less than when you were working.
For example, if you were single with an income of $95,000 when you retired in 2016. Then in 2018 when you retire your income is only $45,000 from Social Security and IRA distributions.
If this is the case, then you should not have to pay a higher Part B premium based on your former income.
Appealing the IRMAA Decision
If requesting a new initial determination is not an option, you have the right to file an appeal for your Medicare Part B premium increase.
Requesting a reconsideration is also referred to as appealing an IRMAA decision.
Social Security does not have a strict timeframe in which they must respond to a reconsideration request.
If you have questions about your appeal status, it is best to contact the agency currently reviewing your appeal.
If you can demonstrate a change in your income, it does not hurt to try to file an appeal. An appeal will not cost you anything and if you state your case well enough, you may just save yourself some money.
If you want to appeal your IRMAA, you should visit the Social Security website for the form called Request for Reconsideration. This will give you three options on how to appeal, with the easiest and most common way being a case review.
Documentation is the most important thing in any kind of appeal. You should write a cover letter explaining how you think you are being overcharged. Then you will need to provide backup documentation.
Examples of Backup Documentation:
- A letter from your former employer confirming your retirement.
- A copy of your last pay stub to show your decreased income.
- Any official documents that support your case.
If you have a successful appeal, Social Security will automatically correct your Medicare Part B premium amount. If you are denied, they will provide instructions on how to appeal the denial to an Administrative Law Judge.
While you are in the process of the appeal, you will continue to pay the higher Medicare Part B premium.
Medicare Enrollment and Planning Ahead
If you are sure that you will be subjected to higher premiums, you should plan your retirement date accordingly.
You can work with a financial planner to find out when to begin your distributions from retirement accounts in a way that will affect your Medicare premiums as little as possible.
A Request for reconsideration on your Medicare Part B premium will be your first step.
When you have your Medicare costs figured out, you can investigate your Medicare Supplement options. Medicare supplements are an excellent money-saving option.
These plans have a premium, and they give you the most comprehensive coverage. In a bad health situation, like a severe illness or an injury, you may only spend a bit on a deductible or coinsurance during the year.
A popular plan is Plan G, this plan covers all the gaps in Medicare except the annual Part B deductible. Paying this deductible can sometimes save you more money than if you were to have a Medicare Supplement Plan F.
Important to Remember
The IRMAA also affects your Part D premium. You will pay the premium for your chosen plan, and then the adjustment will be added to that premium. Your prescription drug insurance company will collect the amount on behalf of Social Security
If you think you will qualify to appeal your Medicare Part B premium increase, it is best to apply. It won’t cost you anything and if you have documentation, you could end up saving yourself quite a bit of money in the long run.
If you need help understanding your Medicare options, we’re here to help. Give us a call today, or complete our online rate form to see rates in your area now.