By now, you are likely familiar with the Medicare term, Income-Related Monthly Adjustment Amount, better known as IRMAA. Those who are subject to them, often wonder whether or not they can appeal them. In general, many retirees are only subject to IRMAA for the first couple of years in retirement due to the two-year look-back period.
For instance, let’s say that you and your spouse are retiring this year and are filing for Medicare. Let’s assume that your household’s Modified Adjusted Gross Income (this is what they base IRMAA charges on) in 2018 was $250,000. If that’s the case, then your Part B premium in 2020 including your monthly adjustment amount, would be $289.20 per month, per person. This amount is an exact doubling of the traditional Medicare Part B premium of $144.60.
Assuming you are subject to IRMAA charges, the Social Security Administration will mail you a notice called an initial determination. This initial determination is based on your tax return from two years prior. For instance, 2020 Medicare premiums are based on tax returns from 2018 as in the example above.
Most retirees believe that they are just stuck with the IRMAA premium assigned to them until the two years pass, but that may not be true for you and this decision can be worth thousands of dollars in your pocket. If you have read my book, “Medicare Simplified: What Retirees Need to Know About Medicare in 100 Pages or Less“, then you know you need to be your own best advocate!
Because let’s be honest, it doesn’t seem fair that you will pay exorbitant premiums just because you had significant income two years ago. You are retiring now and your income is going to decrease. If this decrease places you in a different MAGI bracket below, there may be something you can do about the IRMAA charge.
If the change to your income causes you to fall to a lower premium bracket, you can request a new initial determination due to a “Life-Changing Event.” So, it’s not technically an appeal, but a request for a new initial determination.
Below is the list, directly from their form, of what Medicare considers to be a life-changing event…
If you have retired or started working on a part-time basis, you may qualify to have your Medicare premiums reduced.
It’s surprising to know, but Medicare isn’t actually out to get every red cent from you, even if it feels that way sometimes. People retire and their incomes are reduced, sometimes significantly. Medicare recognizes that and offers you an opportunity to have your premium adjusted. They will not come to you to make you aware of this option though, you must pursue it yourself. It’s why I say, you must be your own best advocate!
If this scenario describes you, below is a link to the Social Security form (SSA-44) to apply for a new initial determination. The form itself is actually tremendously helpful to help you identify whether or not you may qualify for a life-changing event.
In my experience, Medicare is actually quite quick in responding to these requests and you may even receive a refund of IRMAA charges already paid.
I hope this helps!
-Ashby
Interested in learning more about Medicare?
I was recently a guest on Taylor Schulte’s Stay Wealthy retirement podcast. Taylor is a financial advisor in San Diego and we had a great conversation about what retirees need to know about Medicare.
Click the image below to listen to the podcast:
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