According to this article:
www.kiplinger.com/retirement/medicare/602937/you-can-appeal-a-medicare-premium-surcharge, there is a good chance that you can get your Medicare premium surcharge reduced or eliminated if your income has fallen in the last two years.
Here is the body of the Kiplinger article which contains all important details as follows:
Your modified adjusted gross income for the past two years is what determines your Medicare surcharge. The surcharge for 2022 is calculated based on your MAGI from 2020. MAGI is your adjusted gross income minus interest on tax-exempt municipal bonds. This can add up to a significant amount for many retirees. The less common items that are added back include income earned overseas that is not included in AGI or nontaxable income from the U.S. territories.)
However, a lot can happen within two years. If you can show Social Security that your income has changed, your premiums will be reduced or waived. Retirement is the most common life event that can lead to a reconsideration or reduction in the surcharge, according to Jim Blankenship, founder and author of A Medicare Operator's Manual: Your Guide To Medicare Benefits. If you were employed full-time in 2020, and had not yet retired, you may be eligible based on your income decline since you retired. If you work fewer hours than in 2020, or your spouse has retired, you may be eligible for a reduction in your premiums. You may also be eligible for a reduction of your premiums if you die or divorce your spouse.
However, if your surcharge was triggered due to a one-time income spike, you are probably out of luck. Blankenship states that one of the most common reasons that retirees are hit with a Medicare high income surcharge is a conversion to a Roth IRA. This will increase your MAGI. A large withdrawal from your traditional IRA can also lead to a surcharge.
You may also be subject to a surcharge if you have large capital gains or home sales that exceed the exclusion for capital gains. If a couple files jointly, they can exempt up to $500,000 from their taxes for the sale of their primary residence. For a single homeowner, it is $250,000. However, homeowners are seeing huge increases in their housing values and are now able to rake in more than the exclusion . (See How To Cut Your 2021 Tax Bill ). A business sale could also result in the surcharge.
It is good to know that Social Security recalculates income each year. However, this has a two-year delay. This means that a sudden increase in income won't be a problem forever. A large Roth conversion can lead to an increase of premiums in the future, but future withdrawals from Roth IRA will not affect the formula used for calculating the surcharges.
How to appeal
You should have received an initial notice from Social Security if you are subject to the surcharge. Complete Form SSA-4 and attach supporting documents to request a review. If you have lost income as a result of retirement, please include a copy the tax return from the year that your income decreased, and a letter from your former employer. Include a copy the death certificate if your income has declined due to your spouse's death. The form can be mailed to your local Social Security office, or you can bring it in person (though many offices are closed due to the pandemic).
If you are denied a redetermination, you have three options: the Office of Medicare Hearings and Appeals (or the Medicare Appeals Council), or the federal district court in your home. These appeals are mainly used by beneficiaries to appeal coverage decisions. If your claim is not based on one of these life-changing events, you can lose an IRMAA appeal. It's much harder to get approved if it's not on the list," Danielle Roberts, cofounder and CEO of Boomer Benefits insurance agency, which assists baby boomers with Medicare. Then, it's a difficult battle.
Barbara Hughes, a retired lawyer, successfully appealed two Medicare IRMAAs after she cut her hours in 2015, and again after she retired in June 2020. Hughes was required to submit a letter from her employer, a completed form SSA-44, and income tax information for both occasions.
If you need help with a Medicare issue, connect with Ted of Elder Care Insurance Solutions Inc. for assistance now.
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