A client recently contacted us because her husband had just been laid off due to coronavirus. She wanted help making Medicare decisions now that he was losing his employer-provided health insurance. As we worked through the many Medicare enrollment considerations related to a temporary layoff, the client expressed outrage about their Medicare costs.

"We used to pay about $150 a month for our health insurance. I can't believe that we're going to have to pay more than $1,000 a month for Medicare while my husband isn't working. It is so unfair."

Let's take a moment to understand why the client's premiums are so high and, more importantly, what they can do to get these amounts reduced or eliminated.

who pays Higher Medicare Premiums?

To determine who will be subject to IRMAA, Social Security looks at a person's tax return from two years prior to the current year and adds two line items — tax-exempt interest and adjusted gross income. If the total is greater than $87,000 for a single filer or $174,000 for a couple filing jointly, the individual will be subject to paying higher monthly Medicare premiums — adding $57.80 to $347 per month for Part B and $12.20 to $76.40 per month for Part D.

In our client's case, $231.40 would be added to the standard Part B premium and $50.70 to the Part D premium for each individual — a total of $564.20 each month for the couple.

people laid off can reduce — or even eliminate – higher Medicare premiums

Today, most people still do not know that IRMAA exists. And, even fewer know that beneficiaries can take steps to have these premiums reduced or eliminated.

When people experience a life-changing event that significantly reduces income, they can complete a submit and form to Social Security (the government agency in charge of IRMAA determinations), requesting that the premiums be adjusted accordingly.

Social Security recognizes the following life-changing events:

marriage
divorce or annulment
death of a spouse
work stoppage
work reduction
loss of income-producing property (beyond the beneficiary’s control)
loss or reduction of pension income (plan failure or termination, or scheduled cessation)
employer settlement payment (as a result of an employer or former employer’s closure, bankruptcy, or reorganization)

Our client's husband has been laid off, leading to a significant reduction in the couple's income. This work stoppage is a life-changing event She and her husband should take immediate action and file a life-changing event form, requesting an adjustment in premiums, saving them over $500 per month.

LAID OFF SENIORS — TAKE ACTION NOW!

Here's the most important take-away. You MUST complete the life-chaning event form immediately (or soon after) the occurance of the event. DO NOT DELAY!

Medicare beneficiaries who have life-changing events but do not complete the life-changing event form or do not complete the form in a timely manner should not assume that they will be able to get their money refunded.

According to Social Security, “Ordinarily, we do not make a determination retroactive to a prior premium year on a new initial determination, unless the life-changing event causing the reduction occurs in the last three calendar months of the immediately prior premium year and we receive the request for a new initial determination for the preceding premium year by March 31, of the current premium year.”

In other words, file the life-changing event form as soon as you can.

Our client believed that, in order to get her IRMAA reduced, she'd have to wait to file her 2020 tax return. If she had waited that long, she likely would not be able to recoup the excess payments made this year.

Find more information on IRMAA, including an interactive calculator and guidance on completeing life-changing event notices, in the i65 Medicare software suite. Click here to schedule a demo.