What is IRMAA and How Can I Appeal It?
Medicare recipients with incomes of $97,000 or higher for individuals and $194,000 or higher for a couple filing jointly, will pay what is called an Income Related Monthly Adjustment Amount or IRMAA. The amount you pay is decided by Social Security and is based strictly on the Modified Adjusted Gross Income (MAGI) as reported to the Internal Revenue Service. It will be deducted from your Social Security income check. If you are not yet taking Social Security Benefits, you will receive a bill from Social Security.
Before getting too worked up, let’s look at how Social Security calculates what you owe and what you can potentially do about it.
Social Security uses a 2 year look back – your 2021 Modified Adjusted Gross Income determines what level of IRMAA you pay for Part B and Part D in 2023.
Modified Adjusted Gross Income for Your Household
Income may include:
- Pension income
- Interest income
- Investment income
- Capital gains
- Rental income
- Farm income
- Social Security benefits
Subtracting adjustments for things like:
- Student loan interest or tuition
- Paid alimony
- Self-employment taxes
- Retirement plan contributions
If it has been determined that you owe a higher premium based on your MAGI, you will be notified by letter giving the reason for the determination. If you disagree with the amount, you can appeal with a reconsideration request.
There are several Life Changing Events that could qualify you for a lower premium:
- Work stoppage or working less hours
- Divorce or death of spouse
- Income producing property loss
- Termination or change to a pension
- Receiving a settlement from company closure or bankruptcy
If you disagree with the MAGI information given by the IRS to Social Security, you will need to contact the IRS and correct the information before your appeal. Simply filing an amended tax return might just correct the problem.
If you do want to appeal IRMAA, print out Form SSA-44 (Medicare Income Related Monthly Adjustment Amount) Life Changing Event. This form guides you through steps to help you supply updated income information as well as information listing documentation required for evidence of your new MAGI.
Please note: if you are married each spouse will need to write their own appeal and send it in separately. SSA will communicate with you directly upon review.
Social Security has advised that all forms be mailed, or hand delivered to your local office for processing. You can find the local office here: https://secure.ssa.gov/ICON/main.jsp
The most important thing for an appeal is documentation. Writing a cover letter explaining why you believe you are being overcharged is a good idea. Always, always provide backup documentation. That documentation could include a letter from your former employer, a copy of the last pay stub, bank statements, retirement or termination letters, along with other financial statements. In addition to the SSA-44 form, we recommend supplying the following information when appealing IRMAA:
- “proof” of a life event – most commonly a letter from your employer showing retirement date
- income worksheet showing estimated income from Step 2 or 3 of appeal form. I would also just describe your situation over a paragraph or so along with how you arrive at the income amounts you put into Step 2 or 3 of the appeal form – see samples at the bottom of the page for guidance.
Remember to support your case, supply as much official documentations as you possibly can. Submission of the appeal does NOT guarantee approval. SSA will review and notify you via USPS normally within 60 days.
If your reconsideration appeal successful, Social Security will automatically lower your Medicare Part B premium amounts. If your appeal is denied, you will be provided instructions on appeal the denial to an Administrative Law Judge.
You should continue to pay all IRMAA fees while the appeal is being processed. SS will communicate directly with you about the outcome and provide guidance on refunds or reducing future Part B premiums with any excess amounts you have paid.
To check the status of an appeal, you will need to call Social Security at 1-800-772-1213 as they are the only source of updated information. We find that the appeal process can take 4 – 6 weeks during the non busy time and up to 4 months during the busy time (January – May of each year) so plan accordingly!
PART D Income Adjustments
Part D premiums are also affected by IRMAA. Unlike Medicare Part B, Part D premiums are based on the Part D drug plan you have enrolled in. For 2022, Part D premiums range from around $7 to over $180 a month depending on where you live. If you have a $0 premium Medicare Advantage plan that includes prescription drugs (Part D) then IRMAA fully applies to you as well. Please note, the extra amount you pay will not be part of your plan premiums. If you do not have it taken out of your Social Security check, you will be sent a bill from Medicare. You need to pay that extra amount in full to keep your Part D coverage.
If you have been told by Social Security that you do owe an income adjustment for higher income, you will have to pay that adjustment on top of your regular monthly premium.
Plan Your Medicare Enrollment
Remember, Social Security adjusts premiums at the start of each year. You should receive a letter in December or January informing you of your new premium for the start of the new year. If your income has gone down Social Security will catch up and automatically lower or discontinue your IRMAA. We strongly suggest working with a financial planner or tax professional to discuss the most efficient ways to begin distributions from retirement accounts in order to minimize IMRAA and your overall tax responsibility.
If you are unsure about your future income due to uncontrollable investment returns,we recommend adhering to the philosophy of “when in doubt send the appeal.” Worst case is they say no, and you can always appeal it later. We have had a number of clients receive a reduction/elimination of IRMAA so it never hurts to ask!