TN 3 (11-10)
HI 01101.030 IRMAA Determination Process
A. Policy for the income-related monthly adjustment amount (IRMAA) determination process
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.
B. Screening and requesting data from IRS
1. New filers
When a claimant files an application for benefits and meets Medicare entitlement criteria or is close to Medicare entitlement (e.g., within three months of age 65), SSA asks if the claimant wants Medicare Part B. If the claimant wants Part B and is not eligible or deemed eligible for Extra Help and not receiving or eligible for Supplemental Security Income (SSI), SSA sends the SSN to IRS to obtain MAGI information to determine if MAGI is above the threshold. SSA does not send the information to IRS until the beneficiary has actively requested to be enrolled in Medicare Part B or SSA receives information from the Centers for Medicare & Medicare Services (CMS) that the claimant is enrolled with a prescription drug plan (PDP) or Medicare Advantage Plan with prescription drug coverage (MA-PD).
GN 00205.095, RSDI Applications - Enrollment for Supplementary Medical Insurance Benefits (SMIB)
SSA sends the SSN to IRS to determine if MAGI is above the threshold two months before a Title II beneficiary attains Medicare entitlement if:
The beneficiary has not disenrolled from Part B; or
CMS informs SSA that the beneficiary is enrolled with a PDP or MA-PD; and
The beneficiary is not eligible or deemed eligible for Extra Help, or is not receiving or eligible for SSI.
NOTE: Attainers in Puerto Rico are not automatically enrolled in Part B; they must request enrollment and are considered New Filers. (See HI 00805.115, Enrolling Beneficiaries Who Reside in Puerto Rico.)
SSA selects all Medicare beneficiaries on our records who are entitled to Medicare Part B or enrolled in a prescription drug plan.
Medicare beneficiaries have to be entitled to Medicare Part B or enrolled with a PDP or MA-PD to be subject to IRMAA.
SSA deletes SSNs of all Extra Help and SSI eligible Medicare beneficiaries. See HI 03001.020, Eligibility for Extra Help (Prescription Drug Low-Income Subsidy).
Certain low income Medicare beneficiaries are not subject to IRMAA.
SSA sends a file of SSNs to IRS to request information about MAGI for Part B and prescription drug coverage beneficiaries.
MAGI is based on IRS data.
C. How IRS processes MAGI requests
IRS has tax data for PY-2 that is above the threshold.
Law requires us to use this tax year information, if available.
IRS has tax data for PY-2 but it is at or below the threshold.
PY-2 MAGI was below the threshold.
IRS does not have tax data for PY-2, but has data for PY-3, and it is above the threshold.
If PY-2 data is not available (e.g. the beneficiary has not yet filed a tax return for PY-2), the law requires us to use PY-3 MAGI.
IRS does not have data for PY-2, but finds data for PY-3 that is below the threshold.
PY-3 MAGI was below the threshold and no data existed for PY-2.
IRS does not have tax data for either PY-2 or PY-3.
We assume PY-2 MAGI was below the threshold.
NOTE: Until SSA receives the MAGI information from the IRS electronically, the standard premium (plus applicable surcharges, minus Medicare Advantage Reduction, if applicable) applies to Part B and no IRMAA is charged for Medicare prescription drug coverage. If applicable, all adjustments will be made retroactively. (See SM 03040.335, Medicare Advantage (MA) Part B Premium Reduction.)