The Centers for Medicare and Medicaid Services (CMS) recently announced the monthly premiums that Medicare Part B enrollees will pay during 2021. As explained below, the amount of the Part B monthly premiums that an enrollee will pay during 2021 depends on the enrollee’s 2019 modified adjusted gross income (MAGI). In general, the higher one’s MAGI, the larger one’s monthly Part B premium.
Some federal employees, and many federal annuitants, are enrolled in Medicare Part B. In looking over what they will have to pay in Part B premiums during 2021, employees or annuitants may realize that they will be overcharged because their income has been overstated for one reason or another. This column discusses what employees and annuitants can do to request a reconsideration of their 2021 Medicare Part B premiums for 2021.
The 2021 Medicare Part B monthly premiums that enrollees will pay are presented in the table below:
From the table, what a Medicare Part B enrollee will pay in monthly premiums during 2021 depends on:
(1) His or her tax filing status (individual – single or head of household, married filing joint, or married filing separate); and
(2) His or her modified adjusted gross income (MAGI) during 2019. In general, the higher one’s MAGI during 2019, the more one will pay in monthly Medicare Part B premiums during 2021.
Note that the standard Medicare Part B monthly premium amount in 2021 is $148.50. Most individuals enrolled in Part B will pay the standard Part B monthly premium amount during 2021. But if an individual’s 2019 MAGI is above a certain amount, the individual will pay the standard monthly premium amount and an Income Related Monthly Adjustment Amount (IRMAA). IRMAA is an extra charge added to an individual’s standard premium amount as a result of the individual’s higher income from two years ago.
Consequently, a retired married individual over age 65 who had MAGI during 2019 above $176,000 can expect to pay for Medicare Part B during 2021 the standard Part B monthly premium of $148.50 plus anywhere from $59.40 to $356.40 (times two in the case of a married couple and both spouses are Medicare Part B enrollees).
If IRMAA applies to a current Medicare Part B enrollee, then a letter outlining the cost will be sent by the Social Security Administration (SSA) to the enrollee during November or early December. The enrollee can appeal the additional cost due to IRMAA.
Perhaps the biggest reason for appealing an IRMAA letter is because one’s income has decreased due to certain life-changing events during the two-year time lag. For example, a Medicare Part B enrollee’s IRMAA surcharges applied to 2021 Medicare Part B premiums should not apply because there has been a significant decrease in the enrollee’s total income between 2019 and 2021.
Those federal and annuitants who are currently enrolled and who will be enrolled in Medicare Part B during 2021 and who want to appeal their Part B premiums for 2021 should use Form SSA-44 (Medicare Income-Related Monthly Adjustment Amount – Life Changing Event) to request a reconsideration using current income. SSA Form-44 can be downloaded at https://www.ssa.gov/forms/ssa-44-ext.pdf.
The SSA lists eight life-changing events that may qualify a Part B enrollee for reconsideration of the IRMAA, perhaps resulting in no IRMAA. These life-changing events are:
(3) Death of a spouse;
(4) Work stoppage;
(5) Work reduction;
(6) Loss of income-producing property (not due to a sale or transfer of the property);
(7) Loss of pension income; and (8) Employer settlement payment (due to employer’s bankruptcy or reorganization).
The following examples illustrate:
Example 1. Julie retired from federal service on March 28, 2020. She became age 65 in October 2020 and received an IRMAA letter for 2021, based on her 2019 income. During 2019, Julie was a full-time federal employee. Since Julie has since retired, her anticipated MAGI for 2021 will decrease. Julie should complete Form SSA-44 citing “work stoppage” as her reason for appealing the IRMAA assessment.
Example 2. William, age 67, is a federal annuitant enrolled in Medicare Part B. During 2019, William was married to Alice, also a federal annuitant. Earlier in 2020, Alice died without giving any survivor benefits to William. William receives an IRMAA letter in November 2020 for 2021 based upon his 2019 income. Since William’s anticipated MAGI for 2021 will be lower than his MAGI during 2019 because of Alice’s death, William should complete Form SSA-44, citing “death of a spouse” as his reason for appealing the IRMAA assessment.
Are there any other events that could be the basis for appealing an IRMAA letter? Perhaps a one-time windfall of income such as “winning the lottery” may result in a successful appeal citing the reason “one-time windfall” as the reason on Form SSA-44.
An example of an income-producing event that would most likely will not qualify as a reason for appealing an IRMAA letter is a Roth IRA conversion. The reason for a SSA denial of the appeal is that a Roth IRA conversion is not a “life-changing event”. Rather, a Roth IRA conversion is strictly a voluntary decision under the full control of the IRA owner, particularly with respect to its timing and the amount of the Roth IRA conversion that will affect the amount of income included in the converted Roth IRA owner’s income in the year of conversion.