IRMAA surcharge appeal process

[daver]

Hi all,

Trying to better understand the IRMAA surcharge appeal process. Our situation is as follows:

- I will start Medicare 10/2021 and DW 2022, we file MFJ.
- MAGI for 2019, 2020 place us in IRMAA Tier-2
- MAGI for 2021 will place us in IRMAA Tier-3 due to 6/2021 retirement package that includes severance and PTO payouts.
- DW will retire early 2022 and our MAGI for the next few years should keep us in IRMAA Tier-1

So, I have documentation for the life-changing event (work stopped in mid-2021) and what my monthly pension income amount will be. If accepted, does that waive the surcharge for 2021 only? What happens in 2022 and 2023?

TIA-daver

 

[RetiredHappy]

Medicare uses tax returns from 2 years back. For 2021, MAGI for 2019 is used. The change of life event happens in 2021, in which will affect 2023. You file the appeal in late 2022 when you receive the letter for 2023 IRMAA amount, with proof of change of income/retirement.

Each year the IRMAA amount is recalculated based on MAGI from 2 years prior. At end of 2023, you will receive a letter for 2024 IRMAA, based on 2022 MAGI.

If you are not happy with the IRMAA rate for 2022, you can file document to show that you retire in 2021. However, your wife's income is also in consideration and as she continues to work into 2022, your appeal may not be successful because household income will be looked at.

Basically your appeal for 2021 IRMAA won't be successful since you are still making alot of money in 2021. It is the year after you make beaucoup bucks that they may approve a drop in IRMAA.

 

[daver]

Thanks for the detailed explanation.

 

[Golden sunsets]

I would wait until January 2022 and file the appeal based on the life change. Your premium should be reduced and any IRMAA paid during the early months of 2022 will be returned to you. I think you may need to file the same form again in late 2022(or early 2023), once you have received the IRMAA notice for your 2023 premium based on 2021 earnings. You shouldn't need to file again after that.

 

[Marita40]

Following this, because I am in a similar situation, starting Medicare in one month and paying a higher premium due to 2019 earnings. I heard that it is "entirely up to them" whether premiums are actually reduced upon filing an appeal for work stoppage. I don't understand that. If you present proof (ie. tax filings) that your income indeed dropped below the $88,000 threshold in the year you left work, why wouldn't they approve your appeal? Just trying to wrap my mind around this.

 

[Midpack]

I'd be surprised if you were successful, but that's your decision. I am paying IRMAA penalties due solely to large Roth conversions which isn't income, otherwise our income is FAR below the lowest IRMAA threshold, but I know there's no way around the penalties while I am doing conversions. But best of luck.

Medicare already isn't solvent, in worse shape than Soc Sec, they have to raise funds somehow and IRMAA isn't nearly enough to do that...

 

[daver]

I would wait until January 2022 and file the appeal based on the life change. Your premium should be reduced and any IRMAA paid during the early months of 2022 will be returned to you. I think you may need to file the same form again in late 2022(or early 2023), once you have received the IRMAA notice for your 2023 premium based on 2021 earnings. You shouldn't need to file again after that.

Agree with your recommendation. The updated Form SSR-44 (2021) to be used in 2022 should be available in 12/2021. When does Medicare/SSA mail out the surcharge letter for 2022 (based on 2020 MAGI)?
Thanks daver

 

[RetiredHappy]

Surcharge letter is typically mailed out in Dec. You appeal then. Don't wait until January. However, if you appeal late and they approve, they will issue you a refund for the extra amount paid for all the months of that year that you have already paid.

Midpack, there are rules of situations where they approve an appeal. Retirement is one of them. You cannot appeal, or rather it won't be successful simply because your investment returns fluctuate year to year. That is not one of the accepted scenarios.

 

[RetMD21]

I also age into Medicare in October. I got my 2021 IRMMA notice about 6 weeks after signing up. I called SSA and just submitted my appeal based on life changing event and lower 2020 AGI. This should justify a one step reduction. I think my best bet for 2022 will be to submit an appeal with 2021 AGI from 1040. I should be able to go down another step.

 

[pb4uski]

Hi all,

Trying to better understand the IRMAA surcharge appeal process. Our situation is as follows:

- I will start Medicare 10/2021 and DW 2022, we file MFJ.
- MAGI for 2019, 2020 place us in IRMAA Tier-2
- MAGI for 2021 will place us in IRMAA Tier-3 due to 6/2021 retirement package that includes severance and PTO payouts.
- DW will retire early 2022 and our MAGI for the next few years should keep us in IRMAA Tier-1

So, I have documentation for the life-changing event (work stopped in mid-2021) and what my monthly pension income amount will be. If accepted, does that waive the surcharge for 2021 only? What happens in 2022 and 2023?

TIA-daver

So your Medicare premiums for 2021 will based on your 2019 tax return and your Medicare premiums for 2022 will be based on 2020 tax return.

Since you quit working in 2021 I would think that you would have a decent shot at having the 2020 income that will be used to set your 2022 Medicare premiums reduced to exclude your work earnings and add in your pension benefits.

It probably wouldn't hurt to apply for 2021, but I'm not sure that since you know that your 2021 income will exceed the level for Tier 1 if that will be accepted.

https://www.ssa.gov/forms/ssa-44-ext.pdf

 

[Golden sunsets]

I've done this successfully and I don't think the decision is whimsical as suggested by one poster above. If the life change standard is met the filer will succeed.

 

[RetiredHappy]

I've done this successfully and I don't think the decision is whimsical as suggested by one poster above. If the life change standard is met the filer will succeed.

... and so have we. We submitted the statement for the sale of our business to show that we were done working from that year onwards.

 

[daver]

OP here,

DW and I received our 2022 IRMAA premium letters dated 11/24/2021. The plan is for each of us to appeal by submitting form SSA-44 with supporting evidence. The SSA website still shows Form SSA-44 (12-2020) for use in 2021 appeals. Form SSA-44 (12-2021) should come online this month, 12/2021. We have 60 days from receipt of letter to file the form. I guess we can wait bit and see if the newer form becomes available or just use the older form if needed.

 

[Marita40]

Daver: same here. I just used the old form and crossed out the dates and substituted the new ones.


I retired this year and turned 65 two months ago. I successfully appealed the IRMAA for the two months of 2021, and it is kind of a pain to have to file it again now for 2022. I just sent in this second appeal. It takes our local office at least a month to process appeals, so I'm looking at paying my full Pt B and D bill for January and hopefully getting a refund for the IRMAA once my appeal comes through.

 

[daver]

Daver: same here. I just used the old form and crossed out the dates and substituted the new ones.

Might do the same. Did you submit in person at a local SSA office or by mail?
Most local SSA offices are still closed, also I think you can appeal online, not sure if you can upload the evidence documentation...

 

[RetMD21]

... and so have we. We submitted the statement for the sale of our business to show that we were done working from that year onwards.

Hi RetiredHappy, I was successful in getting them to use 2020 income for the 2021 calculation since I retired in 2020. For 2022 I would prefer that they use the 2021 AGI. For my life event letter should I dust off the one that says I retired in 2020 or get one for 2021 saying that I was not an employee at all having retired in late 2020? My impression is that if the proper boxes are ticked it will go through. To have a 2021 AGI figure I'll have to wait until after filing.

 

[RetiredHappy]

Hi RetiredHappy, I was successful in getting them to use 2020 income for the 2021 calculation since I retired in 2020. For 2022 I would prefer that they use the 2021 AGI. For my life event letter should I dust off the one that says I retired in 2020 or get one for 2021 saying that I was not an employee at all having retired in late 2020? My impression is that if the proper boxes are ticked it will go through. To have a 2021 AGI figure I'll have to wait until after filing.

Whichever year is more favorable in terms of reduced income. In our case we went from making 7 figures from sale of the company to essentially 0 earned income and something like $25K interest income. The following year, we simply dusted off the old letter and made minor updates and sent in the appeal letter again.

 

[daver]

Whichever year is more favorable in terms of reduced income.

I retired in 2021, however 2021 income will still be high due to 6/2021 retirement package that includes severance and PTO payouts.

The instructions for SSA-44 Step-2 are a bit confusing on what year to use. I researched a few sites and found info that states if you are appealing to reduce your 2022 premium then enter your “estimated” 2022 income in Step-2. This should work since it meets the Step-2 requirements that: The year must be more recent than the year SSA used (2020) and shows reduction in income. I can’t use 2021 income since it shows no reduction.

 

[RetiredHappy]

I retired in 2021, however 2021 income will still be high due to 6/2021 retirement package that includes severance and PTO payouts.

The instructions for SSA-44 Step-2 are a bit confusing on what year to use. I researched a few sites and found info that states if you are appealing to reduce your 2022 premium then enter your “estimated” 2022 income in Step-2. This should work since it meets the Step-2 requirements that: The year must be more recent than the year SSA used (2020) and shows reduction in income. I can’t use 2021 income since it shows no reduction.

See if I am addressing your question.
Year 2021 - you made alot of money and you retired in the same year.
Year 2022 Medicare IRMAA uses 2020 IRS returns and hits you with IRMAA penalty because you made "too much in 2020". You appeal 2022 IRMAA with proof of retirement in 2021. You income can be millions in 2021 but it does not matter because you are showing that your earned income will be dropped because of severance/retirement.
Year 2023 - Medicare hits you with IRMAA again because they use 2021 income and they don't look back at the 2022 appeal. You submit the appeal again to show that you retired in 2021.

Makes sense?

 

[daver]

See if I am addressing your question.
Year 2021 - you made alot of money and you retired in the same year.
Year 2022 Medicare IRMAA uses 2020 IRS returns and hit you with IRMAA penalty because you made "too much in 2020". You appeal 2022 IRMAA with proof of retirement in 2021. You income can be millions in 2021 but it does not matter because you are showing that your earned income will be dropped because of severance/retirement.
Year 2023 - Medicare hits you with IRMAA again because they use 2021 income and they don't look back at the 2022 appeal. You submit the appeal again to show that you retired in 2021.

Makes sense?

I think I’m following you. I you saying I should use year 2021 in Step-2 regardless of the income since the retirement letter shows 2021 life changing event? I can also then use year 2022 in Step-3 showing reduce income estimate.

Thanks for the help…

 

[Car-Guy]

OP here,

DW and I received our 2022 IRMAA premium letters dated 11/24/2021. The plan is for each of us to appeal by submitting form SSA-44 with supporting evidence. The SSA website still shows Form SSA-44 (12-2020) for use in 2021 appeals. Form SSA-44 (12-2021) should come online this month, 12/2021. We have 60 days from receipt of letter to file the form. I guess we can wait bit and see if the newer form becomes available or just use the older form if needed.

Good luck.... Finally after several years I'll be free from IRMAA beginning in January... Took some planning/sacrifice but I stayed "just" under the threshold in 2020.

 

[RetiredHappy]

I think I’m following you. I you saying I should use year 2021 in Step-2 regardless of the income since the retirement letter shows 2021 life changing event? I can also then use year 2022 in Step-3 showing reduce income estimate.

Thanks for the help…

Step 2 - yes, for 2022 IRMAA, submit 2021 life changing event/retirement.
I don't understand your statement "I can also then use year 2022 in step 3"?
It will be for year 2023 that you have to resubmit 2021 life changing event/retirement. If your year 2022 shows lower income, i.e. non-IRMAA, you can submit that, but again, the most important piece is that you should submit proof of retirement in 2021.

Do remember that drop in investment income does not qualify for appeal reasons. For instance, my managed portfolio incurred tremendous capital gains this year and again for next year due to maturity of an instrument, my husband who is Medicare age will be hit with IRMAA in 2023 and 2024 and there is nothing that we can do about it.

 

[Marita40]

Daver, I mailed it in and called a week or so after to make sure they received it. For me first appeal, I sent a letter from my former employer indicating my retirement and two final pay stubs as evidence. They had those on file so I didn’t have to include them again.

 

[daver]

Step 2 - yes, for 2022 IRMAA, submit 2021 life changing event/retirement.
I don't understand your statement "I can also then use year 2022 in step 3"?
It will be for year 2023 that you have to resubmit 2021 life changing event/retirement. If your year 2022 shows lower income, i.e. non-IRMAA, you can submit that, but again, the most important piece is that you should submit proof of retirement in 2021.

Do remember that drop in investment income does not qualify for appeal reasons. For instance, my managed portfolio incurred tremendous capital gains this year and again for next year due to maturity of an instrument, my husband who is Medicare age will be hit with IRMAA in 2023 and 2024 and there is nothing that we can do about it.

Step-3 is: Will your MAGI be lower next year than the year in Step-2 (yes or no)? I will answer “yes” and show 2022 estimate of reduced income.

Again Thanks!

 

[daver]

Daver, I mailed it in and called a week or so after to make sure they received it. For me first appeal, I sent a letter from my former employer indicating my retirement and two final pay stubs as evidence. They had those on file so I didn’t have to include them again.

Yeah my local SSA office said to mail it to them and they will process it...

Thanks..