Washington, DC - IRMAA and Medicare Premiums - Social Security Matters: 

Ask Rusty - IRMAA and Medicare Premiums

Dear Rusty:  Due to my adjusted income in 2015 my wife and I (70 & 66) now have over $400 taken from our monthly Social Security fixed income to pay for our share of Medicare. I was let go from my last company of 27 years while I was on medical leave. I had to pull out money from my 401k to live on and that showed as an increase to my 2015 income. Why do seniors get punished for trying to survive and not lose all they have worked for?  I never heard of this type of action taken against retired seniors before. Was it an ACA (Obamacare) regulation so the government can steal from the elderly?  Signed:  Frustrated

Dear Frustrated:  Well, no, it's not some kind of Government conspiracy against senior citizens, but rather it's a consequence of the Medicare Modernization Act of 2003 (which took effect in 2007) affecting Medicare Part B premiums, and of the ACA, which took effect in 2011 affecting Part D premiums. Both of these laws targeted higher income beneficiaries by causing them to pay higher Medicare Part B and Part D premiums, depending upon their filing status and income level.  I'm afraid what you have come up against is something called "IRMAA", or the Income Related Medicare Adjustment Amount.  And since Medicare premiums are usually deducted from Social Security benefits, those affected see their benefit check get smaller.

Without getting into all the different income levels and higher premiums for each filing status, I'll just focus on your personal situation.  Since you are married and, I presume, filing jointly on your income taxes, as long as your combined Modified Adjusted Gross Income (MAGI) is under $170,000 there is no surcharge to either your Part B premium or your Part D premium.  If your MAGI is more than $170,000, your Part B premium increases to anything from $187.50 monthly to $428.60 monthly depending upon your income level, and a supplement of from $13.30 to $76.20 is added to your Part D premium (all dollar values are for 2017).  It sounds as though the 2015 withdrawals from your 401(k) were enough to push you over the income limit, causing Medicare premiums for both you and your wife to increase for 2017 (Note that Medicare reviews tax returns from two years prior to make the income determination).

Now for a little light at the end of the tunnel: Medicare recognizes that beneficiaries sometimes have a major "life-changing event" which can cause their income level to be unusually high for a given year, thus activating Medicare's IRMAA clause.  You can request that Medicare review your situation and base your Medicare premium on a subsequent year's lower income (e.g., 2016), but you will need to prove to Medicare that your IRMAA should be less.  To do this, you may start by using Form SSA-44 found at https://www.ssa.gov/forms/ssa-44.pdf or you can make an appointment at your local Social Security office and request reconsideration of your IRMAA amount in person.  Even if the initial review results in rejection, you have several appeal options available to you, starting with submitting form SSA-561 "Request for Reconsideration" which can be found at https://www.ssa.gov/forms/ssa-561.pdf , and continuing if necessary to a review by an Administrative Law Judge, by the Medicare Appeals Council, and even by the Federal District Court, if necessary.  And if you are successful, you might be getting a letter from Social Security notifying you that you'll be getting a refund of the excess of those higher IRMAA-related Medicare premiums which you've been paying.