A Savvy Guide to Reducing IRMAA Costs

Introduction

Medicare’s Income-Related Monthly Adjustment Amount (IRMAA) imposes surcharges on higher-income beneficiaries, increasing premiums for Medicare Part B and Part D. These surcharges, based on income reported two years prior, can present challenges for individuals whose income has dropped due to retirement or other significant life changes.

At Savvy, we understand how such unexpected costs can impact your financial plans. That’s why we’ve developed this guide as part of our Bounty of Wealth: Absorbing Financial Insights for P&G series to help you navigate the Medicare surcharge appeal process. Whether you're adjusting to retirement or managing a one-time income spike, this whitepaper will provide a clear roadmap for requesting an IRMAA reassessment and optimizing your healthcare costs.

Understanding IRMAA

Medicare premiums are calculated based on your Modified Adjusted Gross Income (MAGI). For beneficiaries whose MAGI exceeds certain thresholds, IRMAA adds surcharges to both Medicare Part B and Part D premiums.

For 2024, individuals with MAGI over $97,000 and married couples with MAGI over $194,000 face higher premiums, ranging from $70 to more than $500 per month.^{1 7.}

The Issue

IRMAA is based on income reported two years prior, which can result in unfairly high surcharges if your current income has significantly decreased due to retirement, downsizing, or other life events. Fortunately, Medicare offers an appeal process to address these discrepancies.

Qualifying Life-Changing Events

To appeal an IRMAA determination, your situation must align with one of these qualifying life-changing events:

1. Retirement: A major transition from full-time employment to retirement often leads to reduced income.
2. Work Reduction: Shifting from full-time to part-time work or reducing hours.
3. Loss of Income-Producing Property: Situations like rental property loss or diminished investment earnings.
4. Divorce or Death of a Spouse: These events often lead to a significant drop in household income.
5. Loss of Pension Income: A reduction or termination of pension benefits.
6. Settlement of a Taxable Event: A one-time taxable income event, such as selling a business or exercising stock options, may inflate prior MAGI inaccurately.

If any of these apply to your situation, you may be eligible for an IRMAA appeal.^{4 9}

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The Appeal Process: Step-by-Step

Step 1: Review Your Notice

After receiving your IRMAA determination notice from the Social Security Administration (SSA), review the income data to ensure it reflects your current financial situation accurately. ⁹

Step 2: Identify Your Life-Changing Event

Confirm that your situation qualifies as a life-changing event under SSA guidelines. Gather documentation to substantiate your claim, such as:

• Employer statements about retirement or work reduction.
• Tax documents reflecting current income.
• Divorce decrees or death certificates.⁹

Step 3: Complete Form SSA-44

Form SSA-44, “Medicare Income-Related Monthly Adjustment Amount - Life-Changing Event,” is the official document for initiating your appeal ^{6 9}. The form requires:

• A detailed explanation of your life-changing event.
• Estimates of your MAGI for the current year and possibly the next year.
• Supporting documentation.

Step 4: Submit Your Appeal

Mail or deliver Form SSA-44 and supporting documents to your local Social Security office. Retain copies of everything for your records.⁶

Step 5: Follow Up

The SSA typically responds within several weeks. If additional information is requested, provide it promptly to avoid delays. ¹⁰

Step 6: Receive a Determination

After processing your appeal, the SSA will notify you of their decision. If approved, your Medicare premiums will be adjusted, and any overpayments may be refunded.¹⁰

Pro Tips from Savvy

1. Start Early: Initiate the appeal process as soon as a life-changing event occurs to avoid unnecessary overpayments.
2. Document Everything: Keep meticulous records of all communications, forms, and supporting materials.
3. Consult Experts: Financial advisors, like those at Savvy, can help estimate MAGI, identify qualifying events, and prepare your appeal.
4. Be Realistic: Provide accurate income projections to avoid discrepancies in future IRMAA assessments. ¹⁰

Why This Matters to P&G Employees and Retirees

P&G employees and retirees often face unique income dynamics due to bonuses, stock options, and other compensation elements.⁵ Transitioning into retirement or managing taxable events from company stock can temporarily inflate MAGI, leading to IRMAA surcharges. At Savvy, we specialize in helping P&G families navigate these transitions effectively by:

• Identifying life-changing events like retirement or income reduction.
• Strategizing MAGI management to minimize IRMAA surcharges. ^{2 3}
• Proactively appealing Medicare determinations to ensure accurate premium calculations.

Our personalized approach ensures your financial plan remains efficient and aligned with your retirement goals.⁸ 

What to Expect After a Successful Appeal

A successful IRMAA appeal can result in:

1. Lower Monthly Premiums: Reduced surcharges can save hundreds to thousands annually.
2. Refunds for Overpayments: If overcharged, you may be eligible for a retroactive refund.
3. Peace of Mind: Your healthcare costs will align with your actual financial situation. ¹¹

Frequently Asked Questions

Can I Appeal IRMAA Retroactively?

Yes. If your income changed in a previous year and you were overcharged, the SSA may adjust premiums retroactively and issue refunds.¹¹

What if My Appeal is Denied?

You can file a reconsideration request using Form SSA-561. This triggers a second review of your case.⁶

How Often Can I Appeal?

You can appeal each year if necessary, provided you have a qualifying life-changing event. ¹¹

Conclusion: A Savvy Solution

IRMAA surcharges can strain your budget during retirement, but the appeal process offers a pathway to reduce costs and improve financial efficiency. At Savvy, we integrate IRMAA planning into our broader wealth management strategies to help P&G employees and retirees achieve peace of mind.

Through proactive planning, accurate documentation, and experienced guidance, we strive to ensure your Medicare premiums reflect your financial reality—not outdated data.

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This guide is part of Savvy’s Bounty of Wealth series, dedicated to helping P&G employees, retirees, and their families maximize their financial potential.

For personalized assistance with IRMAA appeals or other financial planning needs, contact Savvy today. Let’s navigate your retirement with clarity and confidence.