What is the IRMAA Appeal Process

If you are like over 5 million Medicare beneficiaries, you most likely have received a notification from the Social Security Administration stating:

“The law requires some people to pay higher premiums for their Medicare Part B (Medical Insurance) and Part D (Prescription Drug Plan) because of their income. These increases in the premiums are called the Income Related Monthly Adjustment Amounts. We use information from the Internal Revenue Service (IRS) to decide if you will need to pay IRMAA”.

The question that may be racing through your mind after reading this may be what you should do next, but before you do anything at all, even possibly appealing this, you should really understand what IRMAA is and how you are involved in it. Then, after that an appeal may be the best solution if there are any at all.

Medicare’s Income Related Monthly Adjustment Amount or IRMAA is simply a tax on income through Medicare for those who make too much money in a given. 

The Federal Code of Regulations defines IRMAA more eloquently as it states that it is:

“An amount that you will pay in addition to the Medicare Part B standard monthly premium plus any applicable increase in that premium for your Medicare Part B coverage when your modified adjusted gross income is above a certain threshold”.

Basically, the more money you have that the Internal Revenue Service can see and tax the more you will pay for your Medicare coverage.

When it comes to income that is used for IRMAA it is all about your Modified Adjusted Gross Income or MAGI,

The Social Security Handbook defines MAGI as everything “lines 2a and 11 of the 2021(2) IRS form 1040”.

Some examples of income used from IRMAA are:

Taxable Social Security benefits, Wages, Interest, Capital Gains, Pension and Rental Income, Dividends and distribution from any tax-deferred investment like a Traditional 401(k), IRA or 403(b).

When it comes to IRMAA and your MAGI there is a specific set of thresholds designed by Congress that will determine exactly how much you will pay in terms of added surcharges.

Yes, having more money that IRS can see got you into IRMAA, but having even more of it will increase how much you will actually pay.

The IRMAA Thresholds, according to the Centers for Medicare Services (CMS), in 2023 are:

Besides having too much money that the IRS can see there are other qualifying terms of who can be in IRMAA which, according to Program Operations Manual System (POMS) of Social Security, are:

“Beneficiaries enrolled in Medicare Part B, Medicare Part B and a Medicare Advantage Plan with prescription drug coverage (MA-PD), Medicare Part B and a Medicare prescription drug plan (PDP), or a Medicare prescription drug plan (PD)”.

Figuring out who lands in IRMAA all really depends on when and where a Medicare beneficiary is in terms of the program.

New enrollees into Medicare: Once there is an indication that a person wants to enroll into Medicare the Social Security Administration requests, electronically, from the IRS their MAGI information by sending them their Social Security Number (SSN).

If the person’s MAGI does meet an IRMAA threshold the IRS informs the SSA of that by sending both their MAGI information and their SSN. If their MAGI does NOT meet an IRMAA threshold only their SSN is sent back to the SSA.

Existing Medicare beneficiaries: 2 to 3 months prior to the upcoming new year the SSA requests MAGI information from all but those Medicare beneficiaries who are not receiving financial help by sending the IRS their SSN.

If they have reached an IRMAA threshold the IRS will send back both their MAGI information and their SSN. If the SSA receives just their SSN then it means they did not reach IRMAA.

According to Social Security’s Program Operations Manual System (POMS) when determining IRMAA a person’s MAGI information is from “two years prior (PY-2) to the premium year. If IRS does not have MAGI for the PY-2 tax year, or if the MAGI is below the threshold, it sends us data for the tax year that is three years prior to the premium year (PY-3) if MAGI is available and above the threshold”.

If the MAGI information is from 3 years prior to the premium year, according to POMS, the SAA will “make a correction when PY-2 data becomes available”. If you find yourself in this situation you will have to notify the SSA that you have a more recent tax return.

PLEASE NOTE: According to the Federal Code of Regulations:

“If you fail to file an income tax return for any year after 2004 and IRS informs us that you had modified adjusted gross income above the threshold applicable 2 years after the tax year when you failed to file an income tax return, we will impose the highest income-related adjustment percentage applicable to your income filing status for the effective year.

If we later determine that the amount of the income-related monthly adjustment amount imposed was inconsistent with your modified adjusted gross income, we will correct it”.

Should you or should you not appeal IRMAA is all based on your own personal situation. For many who are new to Medicare the answer will be a resounding yes you should, but for those already enrolled into Medicare that answer may be a very hard no.

According to Social Security there are few reasons to appeal an IRMAA decision which are:

1. You believe the wrong tax-return was used. The IRS provided a tax return from 3 years prior instead of using the latest
2. You can produce a more up to date tax return that may have been amended or corrected.
3. You have experienced a qualifying life changing event, which are:
   1. Tax status change
      1. Married, Divorced, Widowed or Annulment
   2. Work stoppage or reduction
      1. You retired from your employment
   3. Loss of income producing property
      1. Any real or personal property that generates income which lost due to circumstances out of your control.
   4. Reduction or Loss of Pension Income
      1. Receiving a pension from an employer that is going to end
   5. Employer Settlement Payment
      1. Receiving a pension or payout that will abruptly stop due to employer no longer being able to fund it.

So, what should you do, appeal or not appeal?

For those who are new to Medicare:

The answer is of course you should appeal. 

Remember the process and keep in mind the reasons to appeal. The SSA is asking the IRS for your MAGI from 2 years prior, which is when you were working.

The SSA has already given you a built-in reason to appeal which is “Work Stoppage or Reduction”. All you need to do from this point to get out of IRMAA is fill out an SSA-44 Form from the SSA, which can be found here.

For those who are not new to Medicare and have received an IRMAA notification: 

The hard answer is that appealing may lead to much bigger problems for you later. 

Instead of remembering the process, at this point you need to remember how someone can reach IRMAA in the first place. 

IRMAA is based on your MAGI that is determined from any income that you generate from Wages, Taxable Social Security benefits, Capital Gains, Pension and Rental Income, Dividends AND DISTRIBUTIONS FROM ANY TAX-DEFERRED INVESTMENTS LIKE A TRADITIONAL 401(k).

The SSA is asking the IRS for your tax information from 2 years prior which is most likely when you started to take your required minimum distribution (RMD) from that Traditional 401(k).

Not only does that RMD count as income towards IRMAA, but it is also used to ensure that 85% of your  Social Security benefit becomes taxable.

That RMD from your Traditional 401(k), unfortunately, creates income for IRMAA on its own, but it also aids and abets in making your Social Security benefit taxable, which is then used to create even more income that counts towards IRMAA.

The icing on the cake of your Traditional 401(k): it still gets taxed as ordinary income too…after ensuring you pay more Medicare and receive less in Social Security benefits.

So, without a qualifying life event when it comes to appealing IRMAA and all you are doing is challenging the MAGI which is provided from the IRS to avoid IRMAA it is strongly recommended that you do NOT file an appeal…ever!

At this point any appeal you make is telling a federal government agency, the Social Security Administration, that your tax information, which is provided by the IRS, is in fact wrong.

This means you are stating to a government agency that the tax information you provided to the IRS is not accurate and that the IRS is wrong.

With 87,000 newly hired IRS agents this may not be the wisest decision to make, but if you are going to file an appeal there are couple of way to do that.

You have made your decision and you are going to file an appeal of IRMAA now what you do comes down to how you want to appeal.

For Medicare enrollees with a qualifying life changing event:

All that needs to be done is for you to fill out the SSA-44 form by competing the first 3 pages and then submit it with your corresponding proof of your life changing event to your local SSA office.

You can find your local SSA office here.

Once the paperwork is submitted all correspondence about your appeal will be mailed to you from the SSA. If the result is not satisfactory you can request a hearing which can also be done through your local SSA office.

For Medicare enrollees without a qualifying life changing event but who want to appeal based on an updated tax-return or income discrepancy:

Appealing is even simpler than have a qualifying life changing event as all that is needed to be done is for you to request an appeal at your local SSA office.

Explain to the local Field Representative that you have a received an IRMAA notification and that you like to appeal based on updated tax information.

A case number will be assigned to you as well as Field Agent, which could be the person at your local office, so always be nice and any correspondence about your case ill be mailed to you by the SSA.

If the result is not satisfactory you can always request a hearing at your local SSA office too.

At the point of request your local agent will be able to submit your appeal and a case number at that moment should be assigned to you. As your case is evolving you will have to provide documentation that disproves the information that the IRS has provided which can be a corrected or amended tax-return or even a more update one