Medicare IRMAA Surprises: Why Last Year’s Income Still Matters (And when an appeal may be available)

Many retirees are surprised to learn that Medicare premiums are based on income from two years ago — not last year.

That lookback can create higher premiums even when your income has already dropped.

This income-based adjustment is called IRMAA (Income-Related Monthly Adjustment Amount).

Here are three important things to understand before you file.

What is the two-year lookback?

Medicare uses your modified adjusted gross income from two years prior to determine your current premium.

That means:

• a Roth conversion

• a business sale

• a large distribution

• or a one-time income event

can affect your Medicare costs long after the income itself is gone.

When an appeal may be available

If your income dropped because of certain life-changing events, you may be able to request a Medicare premium adjustment using Form SSA-44.

Common qualifying events include:

• retirement or work stoppage

• work reduction

• marriage, divorce, or death of a spouse

• loss of income-producing property

• employer pension plan termination

Not every income change qualifies, but many retirees are eligible and never realize it.

Why timing matters

IRMAA appeals are time-sensitive.

If your income changed and your premiums are based on outdated information, waiting until later in the year can delay relief.

A short review before your return is finalized can help determine whether an appeal is worth pursuing and what documentation is needed.

A quick IRMAA self-check

Before you file, ask yourself:

• Did my income drop meaningfully after the year Medicare is using?

• Was the change caused by a one-time or permanent life event?

• Am I paying higher Medicare premiums than expected?

If you answered yes to two or more, it may be worth a brief review.

Get help reviewing your Medicare premium situation

In a 30-minute Pre-Filing Review, we will:

• review your income history and life-changing events

• identify whether an IRMAA appeal may be appropriate

• coordinate with your tax professional as needed