Savvy Living

I currently have high Medicare premium surcharges due to my past income. My income has dropped since I retired and I can no longer afford the premium surcharges. Is there a way to appeal my Medicare premium surcharges?

If you are paying higher premiums for Medicare Part B and Part D and you have experienced a life-changing event that affects your adjusted gross income (AGI), you should contact Social Security. After verifying your change in income, Social Security may make an adjustment to your premium which can reduce your monthly cost. Here is what you should know.

Medicare Surcharges

Many retirees do not realize that monthly premiums for Medicare Part B (coverage for doctor's services and outpatient care) and Part D (prescription drug coverage) are based on your modified AGI from two years earlier. To determine your 2023 Medicare premium, Social Security uses the income from your 2021 tax return. In the intervening two years, however, your life can change. Sometimes, those changes are enough to convince Social Security that your Medicare premium should be reduced.

Part B's standard monthly premium in 2023 is $164.90 for individuals earning $97,000 or less or joint filers earning $194,000 or less. Anyone whose income exceeds the thresholds pays a higher premium, known as an Income-Related Monthly Adjustment Amount (IRMAA).

The higher monthly premiums rise steadily from $230.80 to $560.50 through five income tiers. The same tiers apply to IRMAAs for Medicare Part D, with enrollees paying an extra $12.20 to $76.40 per month depending on their income.

About 7% of higher-income Medicare beneficiaries pay a surcharge on their monthly Part B or Part D premiums.

Reasons for Appealing

In certain situations, outlined below, Social Security will recalculate your premiums – known as a redetermination – for Part B and Part D, particularly if the agency based the cost on a tax return that was later amended.

Otherwise, there are seven life-changing events that qualify for a redetermination if they impact your income, including the following: marriage, death of a spouse, divorce or annulment, reduced work hours or retirement, involuntary loss of income-producing property, the loss or reduction of some types of pension income and an employer settlement payment due to the employer's bankruptcy or reorganization.

How to File a Claim

To request Social Security for a redetermination, you must complete Form SSA-44 (SSA.gov/forms/ssa-44-ext.pdf) and include supporting documents, such as the death certificate for a spouse or a letter from a former employer stating that you are now retired. If you filed your federal income tax return for the year that your income was reduced, you will also need to provide a signed copy.

A decision usually takes a few weeks. If your request is approved, Social Security will refund you for the additional premiums paid by adding it to your next benefit payment. If you are on Medicare but have not started collecting Social Security, you receive a credit on a future invoice.

If your request for a redetermination is denied, there are three levels of appeals available to you: the Office of Medicare Hearings and Appeals, the Medicare Appeals Council and the federal district court where you reside.

For more information on the premium rules for high-income beneficiaries see SSA.gov/benefits/medicare/medicare-premiums.html.