How Medicare enrollees can appeal IRMAA surcharges after income changes

You open the mail, and your face gets flushed.  Your Medicare Part B premium just jumped by hundreds of dollars. What gives?

You're likely paying an Income Related Monthly Adjustment Amount (IRMAA) premium surcharge based on income from two years ago—income that no longer reflects your current circumstances after retirement, divorce, or another major life change.

This is exactly the kind of problem-solving opportunity our licensed health insurance agents excel at.

Understanding IRMAA and why appeals matter

IRMAA is a premium surcharge that affects Medicare beneficiaries whose Modified Adjusted Gross Income (MAGI)—essentially their adjusted gross income plus tax-exempt interest—exceeds certain thresholds. For this purpose, MAGI is calculated using tax information from two years prior, which creates a timing problem when someone's financial situation changes dramatically.

Here's the nuts and bolts: Medicare uses a two-year lookback period for IRMAA calculations. If your 2023 tax return shows high income, you'll pay an IRMAA surcharge in 2025, even if your income dropped significantly in 2024.

The premium surcharge applies to both Medicare Part B and Part D, and the additional costs can range from roughly 40% above standard premiums to over 200% for the highest income brackets. For many retirees, these surcharges represent a significant, unexpected expense that continues month after month until corrected.

Recognizing IRMAA appeal opportunities

The Social Security Administration recognizes eight specific life-changing events that may qualify someone for an IRMAA appeal:

Income reduction events:

• Work stoppage - An employee either retired fully or suffered complete job loss
• Work reduction - An employee faced a reduction in hours or salary
• Loss of income-producing property - You suffered a loss of real estate or other property due to arson, disaster,   fraud, or theft; sale of the property does not count for this event
• Loss of pension income - You lost their pension payments, or the plan was reorganized

Family status changes:

• Marriage - You entered a legal marriage
• Divorce or annulment - Your legal marriage ended, and a joint return will not be filed for the year
• Death of spouse - Your spouse died, removing their income from calculations

Settlement payments:

• Employer settlement payments - You received a one-time payment, due to either bankruptcy or reorganization, that artificially inflated the previous year's income

The key insight is that these events must have occurred after the tax year used for the current IRMAA calculation and must have resulted in a significant reduction in the client's MAGI.

The practical appeal process

When you identify a potential appeal opportunity,  there are some steps to take:

Step 1: Gather documentation

Collect evidence of your life-changing event and its income impact. This might include:

• Retirement letters or final pay stubs
• Divorce decrees
• Death certificates
• Medical records (for disability-related work stoppage)
• An insurance adjustment's statement of loss
• Pension termination letters
• A copy of your tax return or an estimate of their MAGI

Step 2: Complete Form SSA-44

The Medicare Income-Related Monthly Adjustment Amount – Life-Changing Event form is the official appeal document. The form requires specific information about the life-changing event and current income projections.

Step 3: Submit supporting evidence 

Include documentation, gathered in step one,  that proves both the occurrence of the life-changing event and its impact on income. Social Security needs to verify that the event happened and understand how it affected the client's financial situation.

Step 4: Follow up appropriately

Appeals typically take 30-90 days to process. If approved, IRMAA adjustments may be retroactive to the date of the event, often resulting in refunds for overpaid premiums.

The technical considerations

Timing matters:  You can appeal IRMAA at any time, but the sooner the better. Delaying the appeal means continued overpayment of premiums.

Income projections: The appeal process requires either a copy of a tax return or an estimate of the current year's MAGI.  Social Security wants realistic projections, not optimistic hopes. Base estimates on actual circumstances—retirement income, Social Security benefits, investment income, etc.

Documentation standards: Social Security requires official documentation, not just client statements. A letter from HR confirming retirement carries more weight than a client's word alone.

Multiple-year impacts: Some life-changing events affect multiple years. If you retired in mid-2023, you might appeal both your 2024 and 2025 IRMAA calculations if your income remains significantly lower.

Common mistakes to avoid

Don't delay Medicare enrollment: Some clients mistakenly think they can avoid IRMAA by delaying Part B enrollment. This creates late enrollment penalties that are typically more costly long-term than the temporary IRMAA surcharge.

Don't assume automatic adjustments: Social Security doesn't automatically adjust IRMAA when life changes occur. The appeal process is required even for obvious situations like retirement or divorce.

Don't appeal frivolous cases: Appeals should be based on genuine, significant income reductions. Minor decreases or temporary fluctuations typically won't qualify for IRMAA relief.

How we put this knowledge to work

IRMAA reviews are part and parcel of our appointments with all clients.  When reviewing your situation each year, we make sure to ask about income fluctuations. Many clients don't realize appeals are possible or assume the process is too complicated.

But, we know better. Saving your clients hundreds -- or thousands -- of dollars in premiums each year can go a long way toward building and maintaining the life you want for yourself in your Medicare years.

Next steps

Download the official SSA-44 form and get to know its contents. And, if you're interested in filing an appeal, we can help. Contact us today for no-obligation assistance.