Although Medicare is a federally-funded program, beneficiaries share some of the costs. This includes monthly premiums for Medicare Part B (medical insurance) and Part D (prescription drug plans). Although most enrollees pay the standard amount for Part B (Part D varies according to the plan and provider you choose), those with a higher income may pay higher monthly premium. In this post, we describe how to appeal higher Medicare premiums.
How Are Medicare Part B Premiums Determined?
To determine monthly premiums, Social Security uses a sliding scale called IRMMA: income-related monthly adjustment amount. If you receive Social Security benefits, the premium comes directly from your SSI check. If you do not receive SSI yet, Social Security sends you a bill for the extra amount.
Medicare Part B has a base premium of $135.50 in 2019 (the amount changes most years). However, if your modified adjusted gross income (MAGI) is above a certain threshold, you likely pay more. Social Security bases IRMMA on your reported income from two years ago. So, in 2019, you need to look at your income tax return for the year 2017.
What Is Modified Adjusted Gross Income?
Your modified adjusted gross income includes the adjusted gross income you reported to the IRS as well as your income from tax-exempt interest. If you filed your 2017 income taxes under Form 1040, your adjusted gross income is on line 37. Tax-exempt interest is found on line 8b. (Please note that the form is different for tax year 2018.)
Add the amounts on lines 37 and 8b to determine your modified adjusted gross income. You also need to know your filing status. Option 1 includes single, head-of-household, and qualifying widow or widower with a dependent child. Option 2 is married filing jointly and option 3 is married filing separately.
Once you know your filing status and your MAGI, find your premium on the following table. If Social Security decides you owe a higher premium, you will receive notification that includes the amount and the reason. You may appeal this decision.
Medicare Part D Premium Surcharge
|2018 Income Filing as Individual||2018 Income Filing Jointly||2018 Income Married Filing Separate||Medicare Part D Premium|
|Up to $87,000||Up to $174,000||Up to $87,000||Your Plan's Premium|
|$87,000 to $109,000||$174,000 to $218,000||Not Applicable||Your Plan's Premium + $12.20|
|$109,000 to $136,000||$218,000 to $272,000||Not Applicable||Your Plan's Premium + $31.50|
|$136,000 to $163,000||$272,000 to $326,000||Not Applicable||Your Plan's Premium + $50.70|
|$163,000 to $500,000||$326,000 to $750,000||$87,000 to $413,000||Your Plan's Premium + $70.00|
|$500,000 and up||$750,000 and up||$413,000 and up||Your Plan's Premium + $76.40|
When Can You Appeal Your Medicare Part B Premium?
Even if your MAGI falls within the guidelines listed above, you may still qualify for a reduced premium. There are a number of qualifying life-changing events, but the outcome depends on whether your income is now lower than it was when you filed your 2017 taxes. For example, if you or your spouse retired, you may have seen a significant drop in income. This is enough to appeal Social Security’s decision, assuming you have documentation to support your claims.
In addition to retirement, there are a number of life events that may result in a reduced income. Or, that may have changed your status from married to single (or vice versa). Common life events that may qualify for appeal include:
- Changes to your pension
- Becoming widowed
- Getting married or divorced
- Losing an income-generating property (not due to sale or transfer of the property)
- Receiving a settlement from your employer
Your issue may be that the IRS reported incorrect MAGI information to Social Security. If that describes your situation, you first need to talk to the IRS. You likely also need to file an amended tax return.
Can You Get a Medicare Part D Adjustment?
Social Security also uses IRMAA to determine whether you pay an additional premium for your Medicare Part D plan. Your base premium depends on your plan, location, and provider. Your premium could be as low as around $15 a month or 10 times that amount.
If Social Security determines you owe an extra premium, you pay this amount to Social Security, not your Part D provider. If the adjusted amount does not come directly from your Social Security check, Medicare sends you a bill. In either case, the adjusted amount is in addition to your monthly Part D premium.
If you also pay a late enrollment penalty, this is in addition to both your monthly premium and the adjusted amount.
How Do You Appeal Your Medicare Premium?
To appeal your Medicare Part B or Part D premiums, complete the following form: Medicare Income-Related Monthly Adjustment Amount – Life-Changing Event.
Choose the appropriate life-changing event and your new adjusted gross income and the applicable tax year. It also includes a section where you can estimate your new adjusted gross income.
Odds of success are much higher if you can provide documentation to support your claims. This could include:
- Marriage license or divorce decree
- Letter from your or your spouse’s former employer
- Recent paystub that reflects your current salary
The more documentation you can provide that supports your claims, the more likely your appeal will be successful. We also suggest you include a cover letter that explains your unique situation and why you request an IRMAA adjustment.
If you prefer, you may also request an in-person appointment by calling Social Security at 800-772-1213 (TTY 800-325-0778).
While Social Security considers your appeal, you must continue paying the additional premiums. If your appeal is approved, the correction follows automatically. If, however, Social Security denies the appeal, they send instructions on appealing that decision. Again, you must continue paying the higher premiums during that appeal process.
Planning Ahead to Reduce Medicare Premiums
Each year, Social Security sends notification of your premiums for the following year. If you plan to retire soon, talk to your financial adviser about how distribution of retirement funds might affect monthly Medicare premiums.
If you’re still working when you sign up for Medicare, don’t forget to talk to your company’s health plan representative to determine coverage options and limitation. For example, some plans refuse to cover employees once they qualify for Medicare. The size of your organization also plays a role in coverage. Specifically, it determines whether private insurance or Medicare pays first.
Saving Money on Your Medicare Plan
The licensed agents at Medicare Solutions can help you compare plan options and answer your Medicare questions. Call us toll-free at 855-350-8101 to get started.