Medicare beneficiaries with MAGI (AGI plus tax-exempt interest) over a certain amount pay higher Medicare premiums. The amount of additional premium, called IRMAA (Income-Related Monthly Adjustment Amount) depends on the amount of MAGI over a threshold. Each year’s IRMAA is normally calculated based on the MAGI on the tax return from two years earlier.
My 2018 MAGI was unusually high because I had sold a lot of mutual fund shares with high capital gains. My 2019 MAGI was much lower—only 36% of 2018 MAGI.
But the Social Security Administration is basing my 2021 Medicare B and D premiums on my 2018 MAGI, thus pushing me into a higher IRMAA bracket than is warranted by my 2019 MAGI. This despite the fact that my 2019 tax return was filed last March.
Does anyone have any idea about why they are doing this?
Could it be due to the SSA not being able to get data from 2019 tax returns from the IRS?
The Social Security Administration says they use the most recent return information they’ve received from the IRS. Normally that’s the return filed in the previous year for the year before that, but for reasons that remain mysterious, it can go back an additional year.
If you paid higher premiums in 2020 based on the 2018 income, you shouldn’t have to do that again in 2021, having filed a return with lower income. They say you can call them to get them to update their records. For more information: