If you are a Medicare beneficiary with 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.
The technical name for this penalty is the Income-Related Monthly Adjustment Amount, or IRMAA. There is a way to dispute and appeal your 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.
If Social Security determines that you are in a bracket that requires a higher premium, 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 your appeal to go through:
Tax return inaccurate or out of date: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
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
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, so if you are entitled to having it 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. .
- If your reconsideration is successful, your premium amounts will be corrected. 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.
- If your MAC appeal is successful, your Part B premium amount will be corrected. If the MAC denies your appeal, you can choose to appeal to the within 60 days of the date on the MAC denial.
Saving On Your Medicare Supplement Plan
The most popular plan that we sell is the Plan G. It is identical to the more popular Plan F except that with the Plan G you pay the annual Part B deductible which is $183 in 2017. Yet, in many cases, we find that the difference in premiums between Plan F and Plan G can be anywhere from $350 to $700 per year.
With either plan, Medicare is going to get that $183 deductible paid. With a Plan G, you can pay it directly to your Part B provider once per year. Under a Plan F, you are basically paying the deductible plus a convenience fee (in the form of a higher premium) for the insurance company to pay it for you. Most of our clients prefer to pay it themselves and pocket the premium difference. We have a short video that explains the difference between Plan F and Plan G and gives premium examples of how much you can save by choosing the Plan G over the Plan F.
If you want to see how much you can save by choosing the Plan G over the Plan F, call one of our licensed insurance agents at 1-888-228-6119, or use the form to the right to tell us how we can help.