Certain life changing events may qualify for a reduction in taxpayer Medicare premiums
By Federal law, higher income taxpayers pay higher monthly premiums for Medicare insurance than do lower income taxpayers. The higher premium amounts apply to both Medicare Part B and Medicare prescription drug coverage.
Overview of how the Social Security Administration determines taxpayer income
Each year, the Social Security Administration (SSA) receives information concerning a taxpayer’s modified adjusted gross income (MAGI) directly from the Internal Revenue Service (IRS). The SSA uses this information to determine the amount of Medicare premiums a taxpayer must pay for Medicare coverage. Each November, the SSA will notify Medicare beneficiaries of the amount of their Medicare premiums for the following year. If an individual is currently receiving Social Security benefits, the Medicare premiums will be deducted each month from that individual’s Social Security payments.
SSA uses a sliding scale based on an individual’s MAGI to determine the amounts for Medicare premiums. For 2024, the increased premium amounts apply to single taxpayers with MAGI in excess of $103,000 and $206,000 for joint filers. The higher a person’s MAGI, the higher the additional Medicare premium amounts.
In many cases, the MAGI information received from the IRS may be one or two years old. The information received from the IRS may no longer be accurate especially if an individual experiences a decrease in income due to certain events, such as a divorce, retirement, or death of a spouse.
If a taxpayer’s income has declined, the SSA may make a new decision about your monthly Medicare premiums if certain life changing events have occurred.
Life changing events that may result in decreased Medicare premiums :
- Marriage, divorce or the death of a spouse;
- The individual retired or began working reduced hours;
- An individual or spouse lost income-producing property due to a natural disaster or other events beyond their control;
- An individual or spouse experienced a cessation, termination or reorganization of an employer’s pension plan;
- In a prior tax year, the individual or a spouse received a settlement from an employer or former employer due to the employer’s closure, bankruptcy, or reorganization.
How to request a reduction in Medicare premiums
If you experience one of these events or experience a reduction in MAGI, you can apply to the SSA for a redetermination of your Medicare premiums. The application is made by filing form SSA-44, with the Social Security Administration. In making an application, you will have to provide original documents or certified copies as evidence of the life changing event. The required documentation is detailed on the form and can include a death certificate, a letter from an employer or former employer, or a signed copy of a federal tax return that documents the reduction in MAGI.
It will generally take the SSA up to several weeks to make a redetermination. If you disagree with the SSA decision, you have the right to appeal the decision.
Keiter’s Family, Executive & Entrepreneur Advisory Services Team is your team of tax professionals dedicated to the unique and comprehensive needs of families with multi-generational wealth, executives and corporate officers, entrepreneurs and business owners.
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The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.