Have you gotten an IRMAA determination letter? If you have, you might be wondering how to reduce (or avoid) your IRMAA surcharges. If you have recently experienced a life-changing event, you may be able to use Form SSA-44, (also known as Medicare Income-Related Monthly Adjustment Amount – Life Changing Event) to lower or eliminate your IRMAA.
In this article, we’ll walk you step through
How the SSA-44 works
When you might consider using the SSA-44
Key information you can find on the SSA-44
How to fill out the SSA-44
What documentation you may need to send with your filled out SSA-44
How to submit the SSA-44 for consideration
Before we go on, it is important to note that virtually all of this information is available on the Social Security Administration’s (SSA) website. Most of this information is actually on the Form SSA-44 itself. While this information is straightforward, government paperwork can be daunting. This article will attempt to simplify the SSA-44 so that it’s easier to understand.
Please note: If there are two spouses on Medicare, you’ll probably each receive an IRMAA determination letter. If that’s the case, then you’ll need to do this for each spouse.
How the SSA-44 works
IRMAA (also known as Income-Related Monthly Adjustment Amount) is an increase in Medicare premiums based on income. In other words, the Social Security Administration (SSA) uses your tax returns to determine whether you should pay more for Medicare than the standard premium (for Part B and Part D). If so, you’ll receive a letter known as an “Initial Determination Notice.”
These notices are usually sent in advance of the following year. For example, 2020’s IRMAA letters were sent towards the end of 2019. However, those determinations were mostly based upon 2018 tax returns, simply because 2019 hadn’t even finished. Because of this process, IRMAA determinations are (at best) based upon tax information that is two years old.
And a lot could have changed in your life between 2018 and 2020 that might have lowered your income. For example, many people retire and their income goes down. In recognition of this, the SSA defines specific events that may have impacted your income as ‘life-changing events.’
Key Information You Can Find on SSA-44
Virtually everything you need to successfully complete the SSA-44 is found on the SSA-44 itself. However, it’s worth pointing out some of the useful things you can find on the form:
IRMAA table: You don’t have to google this, you don’t have to look it up anywhere. It’s right here on the form. From here, you can figure out not only what SSA is billing you, but what you should be paying, based upon your life-changing event.
For example, if your 2018 MAGI (modified adjusted gross income—more on that below under Step Two & Three) was $100,000 and you were single, then you would fall under the first IRMAA tier. This means that you would be expected to pay an additional $57.80 in Part B & $12.20 in Part D premiums monthly. Let’s say you got married in 2019, but your income wasn’t expected to increase. That means you could be reconsidered as if you were married, filing jointly (which you probably would end up doing when you file your 2019 tax returns). In that case, your $100,000 MAGI would be under the IRMAA threshold and you wouldn’t pay any additional premiums.
In other words, you can use this table to have a pretty good estimate of where you’ll end up before you start filling out the paperwork.
Instructions: It’s important to note that the SSA-44 not only contains details of each step, but clear instructions (starting on page 5 of the SSA-44) to give you guidance.
When You Might Consider Using the SSA-44
If a life-changing event has impacted your income, then you would use the SSA-44 to request a reconsideration of the new facts for a new IRMAA determination. We wrote an article if you want more information on life-changing events. That way, you can decide for yourself if you should go forward with the SSA-44.
Submitting an SSA-44 is not an appeal—it’s actually much simpler. An SSA-44 asks the SSA to consider new income-related facts as if they were part of the initial determination.
How to fill out the SSA-44
There are five steps to filling out the SSA-44. We will break down each step of the SSA-44 so you can clearly understand what is required.
Step One: Type of Life-Changing Event
This is the type of life-changing event that happened in your life, and when it occurred. The eight types of life-changing events that SSA will consider in their IRMAA determination are:
Marriage-You entered into a legal marriage
Divorce/Annulment-Your legal marriage ended, and you will not file a joint return for the year.
Death of your spouse-Your spouse died.
Work Stoppage-You or your spouse stopped working.
Work Reduction-You or your spouse reduced your work hours
Loss of Income-Producing Property-You or your spouse experienced a loss of income-producing property not under your control. Examples of this would include disaster, losing property due to arson, fraud or theft
Loss of Pension Income-You or your spouse experienced some sort of disruption (cessation, termination, or reorganization) of an employer’s pension plan.
Employer Settlement Payment-You or your spouse receive a settlement from your employer/former employer because of bankruptcy.
This step also asks for the date that the event took place, because it must be in the same tax year or an earlier tax year than the one you ask SSA to consider. For example, if your 2020 IRMAA was calculated using 2018 tax information, but you got married in 2019, then you could use the 2019 information instead.
Step Two: Reduction in Income
This is where you fill in the modified adjusted gross income (MAGI) for the tax year that was evaluated. For most people, the 2020 IRMAA calculation would have been done using 2018 tax data. MAGI is calculated using two lines on your tax return:
Adjusted Gross Income (Line 7 of Form 1040 from your tax return)
Tax-Exempt Interest (Line 2A of Form 1040 from your tax return). An example of tax-exempt interest would be municipal bond interest.
You’ll simply fill in this information, as well as the tax filing status for that year. Be sure that you simply report what was already reported on your tax return. Don’t change anything here. That will be in Step 3.
Step Three: Modified Adjusted Gross Income
This is where you estimate your income to be based upon your life-changing event. This step has three parts:
Will your MAGI be lower next year than the year in Step 2?
If the answer is ‘Yes,’ then you’ll complete the rest of Step 3.
If the answer is ‘No,’ then you’ll skip to Step 4.
- Note: It doesn’t always have to go down. For example, if you got married, but your income didn’t change, then you would answer ‘No’ and move to Step 4.
Fill in the Tax Year, estimated AGI, and estimated tax-exempt interest. If you work with a financial advisor or a tax professional, then they can run a tax projection for you based upon your life-changing event. If not, then you might have to do this yourself. You don’t have to be exact, but you’ll want to make a decent effort.
Expected Tax Filing Status. If your tax filing status hasn’t changed, then this should be straightforward. However, if you got married or divorced, or became a widow(er), then this might be a little difficult. Below is a little background.
Marriage/Divorce. According to the IRS, your filing status is based upon your marital status as of December 31 of the year on your tax return.
Marriage: If you got married before December 31, then you can file as married (either jointly or separately). If you get married on January 1 of the next year, then you would file as single (unless you are filing jointly with a deceased spouse for the year in question).
Divorce: If your divorce decree is finalized before the end of the year, then you would file as Single. If it’s finalized on January 1 or later, then you would file as married (either separately or jointly).
Deceased Spouse: If your spouse died, then you can file a joint tax return for the year in which they died. After that, you’ll either file as single (if you didn’t remarry), married (if you did remarry), or qualifying widow(er) (if you have a dependent child). If you are able to file as a qualifying widow(er), that privilege exists for the two tax years after your spouse’s death.
The IRS has a page where you can determine your filing status: What is my Filing Status? It takes about 5-10 minutes to walk through.
Step Four: Documentation
In this step, you’ll collect the required documents (or certified copies of those documents), depending on your life-changing event. You can find this list on page 8 of the SSA-44.
Hint: If you only have one copy of the document, you may want to get a copy so you can keep the original. In the case of a work stoppage or reduction, you simply need to sign a statement (under penalty of perjury) that you’ve partially or completely stopped working, or that you took a job with less compensation. While the SSA returns all submitted documents, you should keep a copy for your own records.
Step Five: Signature
You’ll sign the document under penalty of perjury. In other words, you will be held accountable for efforts to defraud the government, so this form should only be completed if you’re sincere.
You’ll also want to provide a copy of your tax return, which will help speed up the determination process.
How to submit the SSA-44 for consideration
You can call your local Social Security office for instructions on how to submit the SSA-44 and supporting documentation. To find the closest Social Security office to you, go to the Social Security Office Locator and type in your zip code.
During the COVID-19 pandemic, Social Security offices are closed to the public, but still serving via remote means. By calling the local office, you’ll receive guidance on the best way to send your SSA-44.
Sometimes, dealing with the government can be a daunting and frustrating task. This is especially true when you’re facing an IRMAA bill you don’t believe that you should be paying. However, the Social Security Administration has taken great steps to simplify the process outlined on the SSA-44.
If you’re still stuck, then talk with your financial advisor about helping you with the paperwork. At Lawrence Financial Planning, we review IRMAA determination letter for all our clients to see if they qualify for a new determination based upon life-changing events.
If you don’t have an advisor but have considered working with one, then contact us at Lawrence Financial Planning. We’ll be more than happy to schedule a complimentary phone call to see how we may be of service to you.