You may qualify for monthly Medicare premium refund

  • September 13, 2023
  • ShindelRock

Medicare premiums, Parts B and D, are based on a sliding scale of income known as, Income-Related Monthly Adjustment Amounts (IRMAA).  Premiums are determined generally using income from two years prior (2022 premiums are based on 2020 IRS-reported income).

If you have experienced a drop in income due to a life-changing event, you may be able to claim a refund of an incorrectly high premium.

Medicare premiums are calculated by the Social Security Administration based on income-tax records and deducted from Social Security payments.  Employees and their employers together pay 2.9% of wages into the Medicare trust fund, and self-employed taxpayers pay an equivalent tax. There’s a 0.9% surtax for higher earners as well. (When people enroll in Medicare, they typically owe premiums for Part B (for doctors) and Part D (for drug coverage).

Form SSA-44 Medicare Related Monthly Adjustment Amount – Life Changing Event is designed for people who have had changes in their more recent year’s income against the base year used by Social Security to calculate Medicare premiums.  There are seven reasons you may qualify for an Irmaa refund: death of a spouse; marriage; divorce or annulment; work reduction; work stoppage (such as retirement); loss of income from income-producing property; and loss or reduction of certain pension income.

What’s not a good reason? Among others: boosts to income because of taxable investment gains, Roth IRA conversions, and taxable gains on the sale of a home above the $250,000 or $500,000 exemption or a vacation home.

Even recent retirees may not qualify for an Irmaa refund due to too much rental income, Social Security, and/or dividends.  If you have questions or believe you may qualify for an Irmaa refund, please contact your ShindelRock tax professional.