2021 Medicare Parts A & B Premiums and Deductibles

2021 Medicare Parts A & B Premiums and Deductibles

Ask Bob: Can I Get a Refund of IRMAA?

A reader is wondering if, having skipped their RMD in 2020, they can get a reduction in their Medicare premiums.
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Question

My husband and I are retired, and have Medicare Part B. Each year we pay Medicare through Social Security and we have had IRMAA assessed as well.

The question is simple. Although not a “life changing event” as defined by Social Security, we had planned to take IRA distributions this past year. However, due to the change in the distribution rules resulting from the pandemic, we did not take out that money. Our income was significantly less than expected.

Will Social Security eventually return IRMAA money that was taken out at too high a level? We see all sorts of answers online, but nothing definitive stating that they will always correct IRMAA up or down, based on actual tax returns two years back. Is this the case? Do we have to file something?

Answer

The initial determination for Income-Related Monthly Adjustment Amount (IRMAA) is calculated annually based on your return two years ago, says Mindy Neira, CFP®, a senior financial advisor with Modera Wealth Management, LLC.

“A new initial determination request may be made, but as you mentioned, there would need to be a life changing event (LCE),” she says. Examples of LCE include reduction in Modified Adjusted Gross Income (MAGI) due to reduction in work or loss of income-producing property.

Unfortunately, a reduction in withdrawals from a qualified retirement plan, such as not taking a required minimum distribution (RMD), by itself would not qualify for a new initial determination. Neira says, “There has been no notice or guidance given by the IRS or Social Security indicating that there will be exceptions made due to the pandemic.”

“Social Security does assess your IRMAA determination each year and will adjust your amount accordingly,” explains Neira. “If the reduction in your income in 2020 was enough to move you to a lower IRMAA bracket, you may qualify for a reduction in 2022. I would suggest reaching out to Social Security toward the end of this year to discuss your determination for next year.”

“That said,” adds Neira, “it is worth noting that if you did lose your job or take a reduction in income due to the pandemic, you can request a new initial determination be made and possibly reduce your IRMAA for 2020.” She explains that you may request a reconsideration within 60 days of receipt of your determination notice. If you are beyond this timeframe, late exceptions may be made. Depending on your situation, you may need to file an appeal to get this done but depending on the reduction amount, it could be worth your time. To request a new initial determination, you must provide evidence of the LCE and a copy of your 2020 tax return. If you have not filed your tax return, you would need to provide a statement estimating your MAGI (modified adjusted gross income). When filing this request, you are filing solely for yourself as beneficiary. If your spouse or partner had a similar LCE, they would need to file their own request.

“In order to accurately complete this process,” advises Neira, “it is best to coordinate with Social Security directly and work with your accountant or tax advisor.” For more information on the new initial determination process, see the overview on the Social Security website.

Got questions? Get answers!

Email Robert.Powell@maven.io. 

Question

My husband and I are retired, and have Medicare Part B. Each year we pay Medicare through Social Security and we have had IRMAA assessed as well.

The question is simple. Although not a “life changing event” as defined by Social Security, we had planned to take IRA distributions this past year. However, due to the change in the distribution rules resulting from the pandemic, we did not take out that money. Our income was significantly less than expected.

Will Social Security eventually return IRMAA money that was taken out at too high a level? We see all sorts of answers online, but nothing definitive stating that they will always correct IRMAA up or down, based on actual tax returns two years back. Is this the case? Do we have to file something?

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