SSA uses Federal income tax return information from the Internal Revenue Service (IRS) about beneficiaries' modified adjusted gross income (MAGI) to make Income- Related Monthly Adjustment Amount (IRMAA) determinations.
SSA requests MAGI information from IRS for the tax year that is two years prior to the premium year, for certain Medicare beneficiaries. If IRS does not have data for that tax year, it will send us data for the tax year that is three years prior to the premium year if it is available and above the threshold. When SSA uses data from three years prior, we will make a correction when data from two years prior becomes available. If data from two years prior and three years prior is not available for an individual or MAGI is at or below the threshold, IRMAA will not be imposed.
Note: Data from two years prior will usually be the most recent income tax return the beneficiary has filed with the IRS. Example--for Medicare beneficiaries in 2007, Medicare Part B costs (including IRMAA) were set during 2006 for premium year 2007. The most recent completed tax return was for tax year 2005, which equals two years before the premium year (PY-2).
When SSA receives MAGI information from IRS, we will use the appropriate Sliding Scale table to determine the IRMAA. Beneficiaries will receive notification with information about SSA's determination and their appeal rights.
When SSA uses MAGI received from the beneficiary in conjunction with a request for a New Initial Determination (§2506), SSA will later verify the MAGI data with IRS. SSA will make any necessary adjustments to the beneficiary's IRMAA based on the MAGI information that IRS provides to SSA.
Last Revised: Aug. 10, 2011