Welcome to Medicare School Daily, where we help you understand Medicare, save money,
avoid mistakes, and above all else, get the most out of your Medicare benefits. Today's
topic is how to understand and appeal Medicare IRMAA. There are many of you that are watching
us today that would be considered high income by Medicare, and you're going to have to deal
with this whole issue of IRMAA. IRMAA stands for income related monthly adjusted amount.
So it’s an acronym that applies to those that have high income. And I'm going to you
today in this video how you can appeal the IRMAA if indeed you are assessed one. So first
off, let's deal with going onto Medicare. You're going to notice that as you get involved
in the Medicare system, they're actually 4 major parts to Medicare.
Medicare A is pretty much everything that would be related to what we would say would
be inpatient services. B is pretty much everything outpatient services, as well as all the doctor
services that you would receive. C plans are called advantage plans, and D plans are prescription
drug plans. All right? So those are the four major parts of Medicare. And there's only
one of these four that actually is zero premium. And that would be the A of Medicare. As long
as someone has paid into the Medicare tax system for at least 40 quarters, which is
10 years worth of the work, then there will be no premium assessed to you for Medicare.
But folks, everything else is going to carry a premium. Now, what happens with the B of
Medicare, this actually comes out of your Social Security check or they bill you for
this quarterly, but the monthly amount this year in 2020 is $140.60. The C plans, those
are called advantage plans, they range in premium anywhere from about zero to forty-nine
dollars a month, depending upon what plan you're on. And then drug plans range anywhere
from about 13 dollars to about 79 dollars a month. Again, depending on the plan that
you're with. So these are the premiums that are associated with these different parts
of Medicare. Now, watch this. Ninety-three percent of the Medicare population pays what
we call the base premium. Base premium. That means these premiums that are attached to
these particular plans.
But seven percent of the Medicare population is going to have to pay an IRMAA. Again, this
income related monthly adjusted amount, this surcharge that is added because of your high
income. So I’m going to show you how IRMAA’s are calculated. So IRMAA’s are going to
be based upon our income. And if I'm starting Medicare in 2020, the income that they're
going to look at is 2018. So we apply for Medicare, Medicare notifies the IRS that you're
going on Medicare, and the IRS will look at 2018 numbers and get those back to Medicare
to determine whether you have an IRMAA or not. And so, again, if I'm starting in 2020,
they're gonna look at 2018 and the number they're looking at is called our modified
adjusted gross income. So our adjusted gross income is then modified by adding back in
tax free interest income. So if you're an investor in municipal bonds, you don't pay
federal taxes on those, but you do report that number on your return. And so you're
tax free interest income, the line from that on your return is added to your AGI; that
becomes your modified adjusted gross income. That will determine whether you have an IRMAA
or not. So they always look back two years. So if I'm starting in 2020, they're looking
at 18. If I'm going to start 2021, they look back at 19. So every two years they look back.
And so you're going to notice we have a schedule here based upon whether you're a single person,
you file an individual return or a couple and you file a joint return. And so if our
income modified adjusted gross is $87,000 or less,
I just pay the base premium. This is what I was saying earlier. Ninety-three percent
of all people would pay $144.60. If I'm a married couple and we have $174,000 or less,
each of us would pay $144.60 for our part B and then we're gonna have a drug plan and
we only have to pay whatever that drug plan is charging for that plan. There's nothing
added to it. So at these income levels, I'm going to stay right here on that line. Now,
again, that's ninety-three percent of you, but seven percent of you are going to be considered
high income. Now, we aren’t going to look at the whole chart, but let's just take as
our example, this line right here. So let's just say you're an individual, single person
and you make $130,000 a year modified adjusted gross or a couple, well let’s call it $230,000
a year. And so if that's your income level, you're going to have an IRMAA and the IRMAA
amount this year is $144.60. Exactly double what the base is. So for your B, you're not
going to pay $144.60, You've got an IRMAA attached to it so you're B is going to cost
you $289.20. If you're married, each of you would pay that amount. But then also notice
your high income affects what you're going to have to pay for your Part B plan.
They're going to add to that as well. And so with these income levels, they would add
$31.50. So someone at this income level, whether it's single or a married couple, is going
to pay an extra $175 every month for their Part B and their Part D IRMAA’s, these additional
surcharges. And so it is common for people to be paying these amounts, but then sometimes
people will retire or they've had a life changing event and these numbers no longer really reflect
the reality of their income. And so then they can appeal the IRMAA’s. So let me show you
how you can appeal your IRMAA and possibly drop off these IRMAA charges. Now, in order
to appeal the IRMAA, we have to have a qualifying life changing event. And there are eight of
them and folks only eight, and these are the criteria where Medicare says if you have one
of these life changing events, it qualifies; they will consider dropping off the IRMAA’s.
And this is the appeal process. Now, there’s eight of them. I'm not going to go into all
of them because of the sake of time, but the most common would be work stoppage. That means
you have retired or work reduction, maybe you have sem-retired. And so what you're saying
is no longer look back two years, I've had a life changing event and I want to give you
a different tax year. And so if it's 2020 and they're looking back at 18, what we can
do is we can project for 2020, we can get more income.
So we have to first off, give them the date we had this life changing event, so let's
say it's 7/1/2020, and let's say that if they're looking back at 18, a married couple and they
see on our numbers $230,000, if they look at $230,000, they're going to charge us an
IRMAA. But if we give them 2020, let's say that income has come down and now it's just
$160,000. Remember, folks, anything below $174,000, now you can appeal it. So they look
at $160,000 and let's say we don't invest in municipal bonds, so we have no tax exempt
interest. So we'd put a zero there and we're married so we would let him know we file jointly.
And now they're not looking back two years. They're actually a look back and they're going
to look forward at 2020. And so as long as we're accurate with this number, what's going
to happen in this situation is you will win your appeal. They will process this and they
will drop off your IRMAA charges. So you'll no longer have to pay extra for your B or
for your drug plans. All right? So this is something that some of you are going to need
help with. We understand that. And one of the services that we provide with our company
is we'll help you appeal the IRMAA, so that you can successfully win this and get those
IRMAA charges dropped off.