07 Dec My Medicare premiums just doubled. What can I do?

Q. I took money out of my IRA which increased my taxable income, and then I had a significant increase in my Medicare premium. It doubled. Can I get this to be changed?
— Retired

A. There is an appeals process.

But first, let’s go over the details.

Medicare insurance is divided into three primary sections.

Part A, Hospital Insurance, is free and covers hospital stays, care in a nursing facility and some home health care, said Claudia Mott, a certified financial planner with Epona Financial Solutions in Basking Ridge.

Part B, Medical Insurance, provides coverage for doctor’s visits and outpatient care. The premium which is $170.10 for 2022, is often deducted from the subscriber’s Social Security check. For 2023, the Part B premium will be $164.90, Mott said.

Prescription coverage is provided under Part D.

“Each Medicare participant has a plan premium which is an out-of-pocket cost,” Mott said. “However, these basic costs apply to those who fall below certain income thresholds.”

A single person can have modified adjusted gross income of up to $91,000, while a married couple can earn up to twice that or $182,000. The income limits will increase for 2023 to $97,000 for an individual and $194,000 for a couple, she said.

What you’re experiencing is called IRMAA, short for income-related monthly adjusted amount, which is a surcharge that is applied to both Medicare Part B and Part D insurance premiums when income exceeds the limits.

“There are a number of breakpoints that determine how much the surcharge will be using modified adjusted gross income (MAGI) from your income tax return two years prior to the current year,” she said. “For 2022, the 2020 tax year is being used. For Medicare purposes, modified adjusted gross income is defined as total adjusted gross income plus tax-exempt interest income.”

The distributions taken from a retirement account such as a traditional IRA, 401(k), 403(b) or 457 plan are treated as taxable income if the contribution was made with pre-tax dollars, Mott said. This would be reported on Form 1041 and would be included in the calculation of adjusted-gross income and would therefore be included in the calculation of the IRMAA surcharge, she said.

Now, that appeals process.

Mott said you would start with filing Form SSA 1-800 with the Social Security Administration.

But it’s the Office of Medicare Hearings and Appeals (OMHA) that reviews appeals related to IRMAA.

There are a number of specific requirements that must be met to request reconsideration. These can be found at hhs.gov on the OMHA page.

“The two main categories that a request must fall under are either inaccurate tax return information or a life changing event that affects gross income,” she said. “A one-time IRA withdrawal is not listed under the category of life-changing events.”

Social Security life-changing events to include the death of a spouse, marriage, divorce or annulment, you or your spouse stopping work or reducing the number of hours you work and losing a pension.

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This story was originally published on Dec. 5, 2022.

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