INmail: Is your clients’ MAGI information up to date?

Barbara: One of my clients just received her Social Security benefit letter and it references her 2018 modified adjusted gross income instead of her 2019 MAGI when determining her 2021 Medicare high-income surcharge. Her 2019 MAGI was significantly lower than her 2018 MAGI. What do you recommend she do to get her Medicare income-related monthly adjustment amount corrected?

MBF: She should contact the Social Security Administration immediately as directed in the IRMAA notification letter. The letter notes, in part: “If you disagree with our decision about your IRMAA, you have the right to … request a new decision using more recent tax information if you have amended or corrected tax information from 2019 or if we used tax information from 2018.”

Next year, most Medicare beneficiaries will pay the standard Part B premium of $148.50 per month. Part B pays for doctor fees and outpatient services. But single individuals, heads of household and qualifying widows and widowers pay more for Medicare Part B and Medicare Part D drug plans if their MAGI for 2019 exceeded $88,000. Married couples are subject to high-income surcharges if their joint income for 2019 exceeded $176,000.

There are five income brackets with surcharges ranging from an additional $59.40 per month to an additional $356.40 per month per person. Part D surcharges, which are based on the same income brackets, range from an additional $12.30 to an additional $77.10 per month per person.

In addition to using updated tax information to appeal an IRMAA determination, Medicare beneficiaries can request a new decision about Medicare surcharges if their income decreased due to a life-changing event such as marriage, divorce, widowhood, or retirement or reduced work hours for themselves or their spouse.

However, the IRMAA notification letter notes: “We cannot make a new decision if your income has changed for a reason other than the life-changing events listed above, such as receiving one-time income from capital gains.”

The IRMAA surcharges outlined in notification letters apply only to 2021 Medicare premiums based on 2019 tax returns. SSA updates IRMAA information each year.

Mary Beth Franklin, a certified financial planner, is a contributing editor for InvestmentNews.