The Social Security Administration (SSA) uses Federal income tax return information
from the Internal Revenue Service (IRS) about beneficiaries’ modified adjusted gross
income (MAGI) to make IRMAA determinations (see HI 01101.010A for a definition of MAGI).
SSA requests MAGI information from IRS for the tax year that is two years prior to
the premium year (PY-2), for certain Medicare beneficiaries (see HI 01101.030B for the policy on the IRMAA determination process). If IRS does not have MAGI for
the PY-2 tax year, or if the MAGI is below the threshold, it sends us data for the
tax year that is three years prior to the premium year (PY-3) if MAGI is available
and above the threshold.
When SSA uses PY-3 MAGI information, we make a correction when PY-2 data becomes available.
If PY-2 or PY-3 data is not available for a beneficiary or MAGI is at or below the
threshold, IRS returns only the social security number (SSN) to SSA.
NOTE: PY-2 is usually the most recent income tax return the beneficiary has filed with
the IRS. For example, for premium year 2007 Medicare costs (including IRMAA) were
set during 2006. The most recent completed tax return would have been for tax year
2005, which equaled two years before the premium year (PY-2).
If the beneficiary experiences a life-changing event, SSA may use Federal income tax
return information from a year more recent than PY-2. See HI 01120.005 for an explanation of life-changing events.