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

INmail: Is your clients’ MAGI information up to date?
The IRMAA surcharges outlined in notification letters apply only to 2021 Medicare premiums based on 2019 tax returns.
DEC 14, 2020

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.

Latest News

JPMorgan tells fintech firms to start paying for customer data
JPMorgan tells fintech firms to start paying for customer data

The move to charge data aggregators fees totaling hundreds of millions of dollars threatens to upend business models across the industry.

FINRA snapshot shows concentration in largest firms, coastal states
FINRA snapshot shows concentration in largest firms, coastal states

The latest snapshot report reveals large firms overwhelmingly account for branches and registrants as trend of net exits from FINRA continues.

Why advisors to divorcing couples shouldn't bet on who'll stay
Why advisors to divorcing couples shouldn't bet on who'll stay

Siding with the primary contact in a marriage might make sense at first, but having both parties' interests at heart could open a better way forward.

SEC spanks closed Osaic RIA for conflicts, over-charging clients on alternatives
SEC spanks closed Osaic RIA for conflicts, over-charging clients on alternatives

With more than $13 billion in assets, American Portfolios Advisors closed last October.

William Blair taps former Raymond James executive to lead investment management business
William Blair taps former Raymond James executive to lead investment management business

Robert D. Kendall brings decades of experience, including roles at DWS Americas and a former investment unit within Morgan Stanley, as he steps into a global leadership position.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.