You may qualify for monthly Medicare premium refund

  • September 13, 2023
  • ShindelRock

Medicare premiums for Parts B and D are determined by the Income-Related Monthly Adjustment Amounts (IRMAA), which follow a sliding scale based on income. These premiums are typically calculated using income reported to the IRS from two years prior (e.g., 2022 premiums are based on 2020 income).

If your income has significantly decreased due to a major life event, you may be eligible to request a refund for any overpaid premiums.

The Social Security Administration calculates Medicare premiums using income-tax records and deducts them from Social Security payments. Both employees and employers contribute 1.45% each toward the Medicare trust fund, while self-employed individuals pay the equivalent tax. Higher earners also face an additional 0.9% surtax. When enrolling in Medicare, beneficiaries generally pay premiums for Part B (doctor services) and Part D (prescription drug coverage).

Form SSA-44, “Medicare IRMAA Life-Changing Event,” is intended for individuals who have experienced significant income changes compared to the base year used by Social Security to compute Medicare premiums. Qualifying life events include death of a spouse, marriage, divorce or annulment, reduction in work hours, retirement, loss of income from investments, and certain pension reductions.

However, income increases due to taxable investment gains, Roth IRA conversions, or gains on home sales exceeding the $250,000 or $500,000 exemption are generally not considered valid reasons for an IRMAA refund.

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.