If you are a Medicare beneficiary that had a high income within the last couple of years, you may be penalized with a higher premium by Medicare. This penalty can affect your Part B premium and your prescription drug (Part D) premium. There is a process to appeal a Part B premium penalty.
The technical name for this penalty is the Income-Related Monthly Adjustment Amount, or IRMAA. A Request for Reconsideration is a petition that you can file with Social Security if you feel your premium amount is unwarranted or based on inaccurate information (more on that below).
Once you retire, your income is likely to drop. Yet, the IRMAA can cause you to pay may more even though at retirement your income is lower. The Request for Reconsideration could help lower your premium.
How Your Part B and Part D Premium is Calculated
Your Modified Adjusted Gross Income (MAGI) is calculated by adding your adjusted gross income plus any tax-exempt income. This could include items such as dividends, interest, capital gains, wages, rental income, or non-taxable Social Security benefits.
In order to determine this amount, Social Security will use the information from your most recent federal tax return. So the amount that they are basing your premium on could be your MAGI from 18-24 months ago.
Part B Monthly Premium
Most people pay the standard Part B premium amount ($148.50 in 2021). Social Security will tell you the exact amount you’ll pay for Part B in 2021. You pay the standard premium amount if:
■ You enroll in Part B for the first time in 2021.
■ You don’t get Social Security benefits.
■ You’re directly billed for your Part B premiums.
■ You have Medicare and Medicaid, and Medicaid pays your premiums.
(Your state will pay the standard premium amount of $148.50 in 2021.)
If your modified adjusted gross income as reported on your IRS tax return from 2 years ago is above a certain amount, you’ll pay the standard Part B premium and an income-related monthly adjustment amount.
Part D monthly premium
The chart below shows your estimated drug plan monthly premium based on your income. If your income is above a certain limit, you’ll pay an income-related monthly adjustment amount (IRMAA) in addition to your plan premium.
If Social Security determines that you are in a bracket that will trigger a Part B or Part D premium penalty, you will receive a letter from them informing you of what your premium will be. They will also include an explanation of your Medicare Part B premium penalty. If you disagree with their assessment, you can then file a Request for Reconsideration.
Situations That May Qualify You For a Lower Part B Premium
You can call the SSA to request the reconsideration. The number is 1-800-772-1213.
Here are the situations that may cause a Part B premium penalty to be reversed:
Tax return inaccurate or out of date:
- A beneficiary filed an amended tax return for the year SSA is using to make an IRMAA decision
- There was an error in the IRS data
- The IRS provided SSA with older data and the beneficiary wants to use newer information
- You had a major life-changing event that significantly reduced your income
A life-changing event that affects the beneficiary’s modified adjusted gross income:
- Death of spouse
- Divorce or annulment
- Work reduction
- Work stoppage
- Loss of income from income-producing property
- Loss or reduction of certain kinds of pension income
The most common of these is work reduction or work stoppage. If you were making $100,000 when you retired two years ago and your retirement income is now $40,000, you have a pretty good case for having your premium reduced.
How To Appeal a Part B premium penalty
When following the steps below, be sure to keep a record of all your correspondence. This is your Medicare Part B premium penalty you are trying to lower, so it puts money back in your pocket if you are successful. So, make sure you keep a copy of everything. The IRMAA also can affect your Part D premiums. If you are entitled to having your premium adjusted it is in your best interest to do so.
- Complete a request to SSA for Contact SSA to learn how to file this request. .
- Your premium amounts will be corrected if your reconsideration is successful. If your reconsideration is denied, you can appeal to the Administrative Law Judge (ALJ) within 60 days of the date on the reconsideration denial. Follow the directions on the denial to file an appeal with the ALJ. If you decide to appeal to the ALJ, you may want to contact a legal services organization or lawyer to help you with this or any further levels of appeal—but this is not required.
- You must submit any new evidence within 10 days of filing your appeal to the ALJ. Contact the ALJ to learn how to submit this. You can ask the ALJ for an extension if you are unable to submit new evidence within 10 days.
- If your ALJ appeal is successful, your premium amount will be corrected. If your appeal is denied, you can choose to appeal to the Medicare Appeals Council (MAC) within 60 days of the date on the ALJ denial.
- The Part B premium amount will be corrected if the MAC appeal is successful. If the MAC denies your appeal, you can choose to appeal to the
- The level in the Medicare process of appeals that comes after the Medicare Appeals Council (MAC) level. This is the final level of the Medicare appeals process.
This page is for informational purposes only. Please consult the Social Security Administration for help completing this form or for answers to your questions. We cannot assist you with IRMAA questions or concerns.