PRINTER FRIENDLY
 

January means the start of a new year full of changes, but not all changes are for the better.  For example, some Medicare beneficiaries have recently received letters from the Social Security Administration (SSA) advising them that they will be paying a higher Medicare Part B premium than others in 2009. 

Since 2007, higher income beneficiaries have been paying increased Part B premiums based on the income they previously reported to the Internal Revenue Service (IRS).  Premium adjustments are based on a beneficiary's Modified Adjusted Gross Income (MAGI), which is a combination of adjusted gross income and tax exempt interest income.[1]  To determine premiums, the IRS sends Social Security information from a beneficiary's most recent tax return.  Most likely, this means that 2009 premiums will be based on 2007 income.  In 2009, beneficiaries filing singly are subject to increased premiums if their MAGI is over $85,000; married beneficiaries filing joint returns are subject to increased premiums if their MAGI is over $170,000.

As described below, beneficiaries are able to challenge premium adjustments in one of two ways, depending on the reason for the challenge.

1. Request for a New Initial Determination

There are five circumstances when SSA may make new initial determinations of Part B premiums based upon information provided by the beneficiary, without the need to file a formal appeal.  The five circumstances are:

• Life-Changing Event

If a beneficiary's income has gone down for a number of specified reasons since the filing of his last tax return and that reduction would affect the Part B premium calculation, he can ask Social Security to recalculate his Part B premium amount.  The specified reasons are: marriage; divorce or annulment; death of a spouse; work reduction; lost income from income-producing property due to disaster or other event beyond the beneficiary's control; or stoppage or reduction of benefits from the beneficiary's or spouse's insured pension plan. 

Beneficiaries who have experienced any of the life-changing events specified above should file a "Life-Changing Event Form" (Form SSA-44) which is available on Social Security's web site at www.ssa.gov/online/ssa-44.pdf, or may be requested at any Social Security office.  Evidence of the life-changing event should be attached to the form when it is returned to the beneficiary's local Social Security office.

• Amended Tax Return

At the beneficiary's request, SSA can use an amended tax return (with either a receipt letter or a transcript from the IRS or a copy of the amended return from the IRS) to determine the beneficiary's MAGI.  A request for SSA to use an amended return must occur within 3 calendar years following the close of the tax year the amended return was filed for.

• Correction of IRS Information

If erroneous information was provided to SSA by the IRS, the beneficiary may request a new Initial Determination.  Requests must be made within 60 days of the beneficiary's notice of premium adjustment by SSA and the beneficiary must provide proof of the error.  Generally, this means that the beneficiary must obtain from the IRS a letter documenting the erroneous information and the correction.  If a beneficiary alleges that the tax-exempt interest income the IRS provided to SSA is incorrect, the beneficiary only has to submit a signed copy of the tax return as proof of the error.

• More Recent Tax Return than SSA Used

A beneficiary may request a new Initial Determination when two year old tax data is available and SSA used three year old data provided by the IRS to determine the adjusted premium.  SSA will accept a signed copy of the beneficiary's filed Federal income tax return for the tax year that is two years prior to the premium year in support of the beneficiary's claim.

• Change in Living Arrangement

If a beneficiary files his tax return as "Married, Filing Separately," SSA assumes that the beneficiary lived with his spouse at some point during the tax year and bases its premium adjustment upon that fact.  If the beneficiary lived apart from his spouse throughout the entire tax year, he can ask for a new Initial Determination of his Part B premium.  SSA will accept an attestation to that effect, under penalty of perjury.

2. Appealing an Increased Premium

Beneficiaries who have not experienced any of the life-changing events or circumstances listed above or who are still unsatisfied with their new Initial Determination have the right to appeal the assessed Part B premium amount.  Appeals should be requested in writing within 60 days of receipt of Social Security's Initial Determination of the premium adjustment using a "Request for Reconsideration" (Form SSA-561-U2) which is available on Social Security's web site at www.ssa.gov/online/ssa-561.pdf, or may be requested at any Social Security office.  The beneficiary may also request a new initial determination if he wants Social Security to use different information about his modified adjusted gross income.

• Hearings before Administrative Law Judges

Beneficiaries who disagree with Social Security's Reconsideration decision, can ask for a hearing before a Medicare Administrative Law Judge (ALJ).  Hearing requests should be made within 60 days of receipt of the Reconsideration decision by completing a "Request for Hearing by Administrative Law Judge."  The form is found on-line at www.ssa.gov/online/ha-501.pdf or may be requested from any Social Security office.  Social Security will need to disclose the beneficiary's tax information to the ALJ for the hearing, which will necessitate the completion of another form, "Authorization for SSA to Disclose Tax Information for Your Appeal of Your Medicare Part B Income-related Monthly Adjustment Premium Amount" (Form SSA-54).  This form is also available on-line (www.ssa.gov/online/ssa-54.pdf) or through any Social Security office.

Conclusion

Beneficiaries who receive a letter from SSA informing them that their Part B premiums will increase based on their income should carefully examine their circumstances and documentation, and verify the information that SSA is using.  If there is any question about the decision to increase their premiums, individuals should appeal the decision.  In addition to the resources for appealing that have been outlined above, the Social Security Administration's Programs Operations Manual System (POMS) also has detailed information, with time frames for taking action, information to be submitted, and more, available at https://secure.ssa.gov/apps10/poms.nsf/subchapterlist!openview&restricttocategory=06011.  HI01120.0001 and H01140.0001 are particularly helpful.