Original Medicare parts A and B are not free. When you work in the US, there is a deduction in your paychecks for Medicare taxes. Unfortunately, that doesn’t make Medicare free once you turn 65. The truth is, they are not free. In fact, if you’re earning a higher income in the years before being eligible for Medicare, you could owe even more. This is IRMAA or the Income Related Monthly Adjustment Amount. Here I will review the Medicare IRMAA appeal process and how it works.
For most people Medicare part A will be free. If you’ve worked in the US for more than 10 years you don’t pay for taking part A. If you’re married and you haven’t worked for more than 10 years, you may also be eligible for premium-free part A through your spouse’s work history. For people who worked for less than 10 years, but more than 7.5 years (30 quarters) your premium is $259 in 2021. If you’ve worked less than 7.5 years (30 quarters) your premium is $471 in 2021.
Part B has a cost for anyone not receiving Medicaid benefits. Most people pay the standard part B premium of $148.50 per month in 2021. They can deduct this from your social security payments if you’re taking them, or it’s billed directly. If you choose only part B, they will bill you every quarter. If you buy part A, or you’re subject to IRMAA, they will bill you monthly. The first bill sometimes comes late and may include additional months to catch up.
IRMAA calculation comes from your Modified Adjusted Gross Income from two years ago. Based on this amount, the government will adjust the cost of your Part B plan. For 2021 IRMAA costs, they will be looking into your 2019 tax return. Depending on if you file a joint tax return or an individual tax return, they will use this chart to determine your cost. IRMAA affects both your Part B and Part D costs. The part B costs reflected in the chart are total costs. For part D, they will take the cost of the cost of the prescription drug plan you choose and add the IRMAA penalty on top.
They look at taxes filed in 2019 when calculating your IRMAA. Many people experienced “life-changing events” that inflated their income for 2018. This might not be the correct way to determine your average annual income. That’s why there are ways to appeal. You should use the IRS form SSA-44 if you’ve had a major life-changing event that has resulted in a decrease in your income. These are things such as:
- Death of a spouse
- Work stoppage or reduction
- Loss of income-producing property (involuntary)
- Loss of pension income
- Employer settlement payment
This form doesn’t include a section if you recently sold a home and received income from that sale.
For more specific information I would highly recommend reviewing the exact instructions on the SSA-44 form. Don’t hesitate to contact us about a Nevada Medicare plan.