IRMAA - What is it and what should I do?

The income-related monthly adjustment amount (IRMAA) sliding scale is a set of statutory percentage-based tables used to adjust Medicare Part B and Part D prescription drug coverage premiums. The higher the beneficiary's range of modified adjusted gross income (MAGI), the higher the IRMAA.

 
 
 
 

So, you assumed that your cost for Part B for 2022 would be $170.10 per month, and then you would just shop for a Part D prescription benefit. Instead, your monthly Part B premium is “adjusted” up, as is the monthly cost for your prescription drug benefit.

Why you? The Social Security Administration receives information from the Internal Revenue Service; specifically, your income from two years prior. That information is used to determine if your premium will be adjusted up. 

Can I appeal? Yes, in certain situations. The following is a hypothetical example involving a person who was notified by Social Security that he will be subject to IRMAA:

Hypothetical Example

  • In 2020, you and your spouse had $205,000 Adjusted Gross Income on line 11 in your Federal tax return (Married, filing jointly). You did not report any Tax-exempt interest on line 2a. The combination of Adjusted Gross Income and Tax-exempt interest is Modified Adjusted Gross Income (MAGI).

  • You retired in December 2021 and applied for Medicare effective July 1, 2022. Your spouse is still working.

  • You anticipate that your Medicare Part B premium will be $170.10 per month.

  • You receive a letter from Social Security stating that, based on your Modified Adjusted Gross Income (MAGI) in 2020 (two years prior), your “Adjustment” for Part B premium is $68.00 per month, making your total Part B premium $238.10. Additionally, your “Adjustment” for Part D prescription coverage will be $12.40 per month.

  • While it is true that your Married, filing jointly Adjusted Gross Income (AGI) in 2020 was $205,000, your income in 2022 will be significantly reduced, due to your retirement. You anticipate that 2022 AGI for you and your spouse will be $125,000. 

  • Based on the two-year look-back for income, it seems that you would have to pay higher premiums for 2022 (look-back to 2020) and for 2023 (look-back to 2021), even though your income has been significantly reduced, due to your retirement. You would get relief in 2024, when your premiums will be based on 2022 income.

Request for Reduction in IRMAA

Social Security allows for a request for reduction in IRMAA in certain situations, called Life-Changing Events. In this example, the Life Changing Event is Work Stoppage, and there are other situations that qualify.    

Form SSA-44 – Medicare Income Related Monthly Adjustment Amount – Life Changing Event can be submitted to Social Security as an appeal. If you file this form, you should continue to pay the higher premium amounts until Social Security responds to your request. If your IRMAA is lowered, Social Security will typically credit your overpayments retroactive to your first payment. 

 

Would you like to see how the request for reduction in IRMAA form SSA-44 is completed for the above hypothetical example? 

E-mail me at jeff@otlbenefits.com, and I will send you a copy.