Your Medicare costs depend on your income. In particular, Medicare will use your income taxes from 2 years ago to decide how much you will pay. If you retired or had a life-changing event, you may have have a right to appeal your Part B premium or Part D Income-Related Monthly Adjustment Amount (IRMAA), an amount that you pay on top of your Part D premiums, to get a lower rate.

Retirement

More than 64 million people are on Medicare. The majority of them go on Medicare when they retire. Until that time, they may rely on their (or their spouse’s) employer-sponsored health plan for health care.

Not everyone prepares for retirement the same way. Some people have a hard time making ends meet, even when they’re working, while others may be fortunate enough to a build up a nest egg. That said, most everyone will turn to Social Security Insurance for income when they retire.

Unless you have a 401K, IRA, or other non-SSI source of income, your financial situation is going to change quite a bit when you retire. Your income taxes from 2 years ago simply won’t match up with your income today. Those taxes could actually put you in an income bracket that increases how much you pay for Medicare.

Thankfully, Medicare recognizes retirement as a life-changing event. You have a right to appeal your Part B premium and Part D IRMAA if your current income significantly changed because you lost your job, you decreased your work hours, or you chose to retire. “Significantly changed” means that your current earnings put you in a lower income bracket.

Other Life-Changing Events

There are a number of other life-changing events that could affect your income. For example, you could get divorced or have an annulment. Your spouse could pass away. You could become the guardian of a child. All of these situations would have a direct impact on your income taxes and tax deductions.

It is also possible that you could lose other sources of income you used to rely on. For example, you could lose your pension or other retirement benefits could be reduced. You could exhaust your 401K or IRA withdrawals. If you no longer earned income from a rental property, you could also qualify for an appeal.

Again, an appeal is only appropriate if these events were significant enough to move you to a lower income bracket.

Inaccurate or Updated Tax Returns

Sometimes you do not have a life-changing event. Sometimes your taxes are just out-of-date or wrong.

The first thing you want to do is make sure that the IRS submitted the correct information to Medicare. Make sure the most up-to-date filing from that year was sent. Verify that the numbers match up with what you have in your records.

It could also be the case that you had to amend your taxes for the year in question. This can be done for a number of reasons, such as a change to your filing status, income, deductions, credits, or other tax liability. You could also disagree with adjustments the IRS made to your tax return. If any of these situations apply to you, you may need to speak to a tax specialist to discuss the need for a Form 1040-X (Amended U.S. Individual Income Tax Return) or Form 1045 (Application for Tentative Refund).

Amendments can also be made on your taxes if there was a delay in getting SSDI or RRB disability benefits. Most applications are denied on the first round and appeals can sometimes take years to get approved. When that happens, you may get retroactive SSDI benefits or SSDI backpay. Depending on how far back those benefits go, you may need to complete a Form SSA-1099 or Form RRB-1099 so that the money can be appropriately taxed on the years you would have otherwise been paid.

Filing an Appeal

Appeals are processed through the Social Security Administration, not through Medicare directly. To file an appeal, reach out to the SSA as soon as you can. This appeal is referred to as a reconsideration.

• Gather your tax information.
• Complete the SSA-44 form for a Medicare Income-Related Monthly Adjustment Amount – Life Changing Event.
• Call the Social Security Administration: 1-800-772-1213 (TTY 1-800-325-0778) or schedule a visit at your local SSA office.

About Form 1040-X, Amended U.S. Individual Income Tax Return. IRS.gov. https://www.irs.gov/forms-pubs/about-form-1040x

About Form 1045, Application for Tentative Refund. IRS.gov. https://www.irs.gov/forms-pubs/about-form-1045

CMS Data – Monthly Medicare Enrollment. CMS.gov. https://data.cms.gov/summary-statistics-on-beneficiary-enrollment/medicare-and-medicaid-reports/medicare-monthly-enrollment

Form SSA-44. Social Security Administration. https://www.ssa.gov/forms/ssa-44.pdf

Medicare Part B Premium Appeals. HHS.gov. https://www.hhs.gov/about/agencies/omha/the-appeals-process/part-b-premium-appeals/index.html

Publication 915 (2021), Social Security and Equivalent Railroad Retirement Benefits. IRS.gov. https://www.irs.gov/publications/p915