The vast majority of Americans who qualify for Medicare receive their Part A (hospital benefits) with no monthly premium. On the other hand, most Medicare beneficiaries are required to pay a monthly premium for their Part B (outpatient medical benefits) and Part D (prescription drug benefits). While most kupuna pay the standard monthly premium amount for Part B and Part D, about 7% of Medicare beneficiaries are required to pay higher premiums because they earn a high income. This is called the “income-related monthly adjustment amount” or IRMAA. It is not uncommon for income to meet the threshold for IRMAA when seniors are first eligible for Medicare – especially because the calculation is based on the most recent tax return – which may be from two years earlier. The trouble is that after retirement, income can drop significantly.
This article is especially important for retiring and new enrollment Medicare beneficiaries who are paying IRMAA but believe their income has dropped below the threshold. Please contact a caring Medicare agent who can help walk you through the appeal process.
For 2022, single seniors with a modified adjusted gross income of more than $91,000 and married couples who file joint tax returns with a modified adjusted gross income of more than $182,000 will be expected to pay the IRMAA.
For 2022, the standard Part B premium is $170.10 per month. Seniors who are assessed IRMAA will pay an additional $68 to $408.20, depending on income. That means, seniors who are required to pay the income-related monthly adjustment amount will have premiums ranging from $238.10 to $578.30.
2022 Part D premiums have an average cost of $33/month and the Part D surcharges range from $12.40 to $77.90, based on income. The surcharge is added to whatever Part D plan premium the Medicare beneficiary has enrolled in.
How to Appeal Premium Surcharges If Your Income Drops After Enrolling in Medicare
While it is possible to appeal the IRMAA, it can’t be done before your Medicare coverage goes into effect or before the Social Security Administration sends you a “benefit determination letter.” New Medicare beneficiaries should keep an eye on their first few bills because sometimes the first bill arrives with the standard premium and then a second bill shows up with the additional IRMAA charge. Kupuna should wait until they receive a bill with the IRMAA before attempting to appeal the decision.
To appeal the IRMAA, seniors must ask the Social Security Administration to reconsider their assessment by filling out a specific form and providing supporting document(s) to show that their income is now lower than the threshold. Accepted documents may include:
A more recent tax return
A letter from your former employer explaining that you have retired since your income was first assessed
More recent pay stubs or some other type of evidence showing that your income is now lower
The form also asks if the beneficiary has experienced any qualifying “life-changing” events for reducing or eliminating the IRMAA such as death of a spouse, divorce, marriage, loss of a pension, reduced work hours or stopped working altogether.
If your reconsideration is granted, any IRMAAs you paid will be credited back to you on your bill.
If your request is denied, you have the right to appeal the decision to an administrative law judge, but this can be a lengthy process and you will continue to be billed the surcharges while you wait.
Note: your income is automatically evaluated every year, which means that whether you are expected to pay the IRMAA (and in what amount) can literally change from year to year as your income fluctuates.
Our independent insurance agents are dedicated to assisting people on Medicare and those who are ready to transition from employer coverage to personal retirement coverage. We help kupuna understand their benefits options and apply for additional coverage, as needed. Because we represent all the major Medicare Advantage and supplement plans in Hawaii, we are able to offer unbiased advice; all at no cost to our clients.
At PBC, our clients are our number one priority and we look forward to getting to know you and your needs. Call us today at (808) 738-4500 to see how we may be of assistance.