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Some older Americans may be all too familiar with the sticker shock when it comes to their health insurance premiums.
In other words, instead of paying the standard premium for Part B (outpatient care coverage) and Part D (prescription drug coverage), their income is high enough that the “income-related adjustment amounts”, or IRMAA, come into force. However, the supplement is usually based on their tax return two years earlier, which may not accurately reflect their current financial situation.
“For some clients, their income two years ago is significantly higher than it is today or will be when they retire,” said Elizabeth Gavino, Founder of Lewin & Gavino and Broker independent and general agent of Medicare plans.
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The good news for these recipients is that they can appeal for IRMAA.
“Most people don’t want to wait two years for their low income to catch up to them in order to get a downward adjustment or removal of the IRMAA,” said Danielle Roberts, co-founder of insurance company Boomer Benefits. .
Of the 63.3 million Medicare beneficiaries, about 7%, or 4.4 million people, pay these supplements monthly, according to the Centers for Medicare & Medicaid Services. This is due to various legislative changes over the years which have forced higher incomes to pay a greater share of the costs of Medicare.
The reason a tax return from two years earlier is used is that it is usually the most recent available when the Social Security Administration performs the ARIAA determination before each new year.
For this year, the IRMAA goes into effect for individuals if your modified adjusted gross income is greater than $ 88,000 (details for 2022 have yet to be officially announced). For married couples filing joint income tax returns, the supplements start at over $ 176,000 this year. Additional fees increase at higher income thresholds.
The standard monthly premium for Part B this year is $ 148.50, which most Medicare beneficiaries pay. (Part A, which provides hospital coverage, is usually premium free.) The top earner supplement this year ranges from $ 59.40 to $ 356.40, depending on income. This translates into monthly premiums ranging from $ 207.90 to $ 504.90.
For Part D, the supplements this year range from $ 12.30 to $ 77.10. This is in addition to any premium you pay, whether through a stand-alone drug plan or a Medicare Advantage plan, which typically includes Part D coverage. Although premiums vary for prescription coverage, the average for 2021 is about $ 33.
The process of proving that your current income is lower is to ask the Social Security Administration to reconsider its assessment. You must complete a form and provide supporting documents.
“The best way to appeal is to file your form with as much evidence as possible,” Roberts said.
Appropriate proof may include a more recent tax return (if applicable), a letter from your former employer stating that you have retired, more recent pay stubs, or something similar showing proof that your income has gone down. .
The required form includes a list of “life-changing” events that constitute reasons to reduce or eliminate AHRI, including marriage, death of a spouse, divorce, loss of pension or the fact. whether you have stopped working or reduced your hours.
If your efforts don’t work out, you can appeal the decision to an administrative judge, although the process may take time and you would continue to pay these surcharges in the meantime.
Plus, your situation is reassessed every year, which means the IRMAA (or if you pay them) may change every year, depending on how volatile your income is.