TN 7 (04-13)

HI 01120.005 Life Changing Events

A. Description of life changing events

There will be cases when a beneficiary or the spouse of a beneficiary experiences one or more of the life changing events (LCE) listed in HI 01120.005C in this section, causing a significant reduction in modified adjusted gross income (MAGI). A “significant” reduction in MAGI is a reduction that decreases or eliminates the income-related monthly adjustment amount (IRMAA) for a specific tax year. A beneficiary who has experienced an LCE causing a significant reduction in MAGI may request us to make a new initial determination using a more recent tax year, than the tax year used previously to impose IRMAA.

When a beneficiary states the LCE caused the significant reduction in income, process the request for a new initial determination based on the beneficiary's statement. As part of processing the request for a new initial determination, the beneficiary must attest under penalty of perjury that all statements made are true and correct. If the beneficiary attests under penalty of perjury that the LCE caused the significant reduction in income, we accept that statement. We do not develop the types of income that make up the MAGI, just that the MAGI decreased and that the LCE occurred prior to the decrease in MAGI, regardless of how far in the past the LCE occurred.

NOTE: A report of an LCE with a significant reduction in MAGI applies only to the beneficiary reporting. If a beneficiary reports an LCE with a significant reduction in MAGI that could affect a spouse or ex-spouse, we do not extend its findings to the nonreporting spouse. If the LCE affects the nonreporting spouse, it is his or her responsibility to contact us.

If the beneficiary has not filed a tax return for the current premium year, the beneficiary must provide us with an estimate for the more recent tax year. The beneficiary also has the option to give a second tax year estimate for the next premium year if the LCE also affects it. If he or she gives an estimate for the current premium year, but not for the next premium year, use the current year estimate for the next premium year.

EXAMPLE: If a beneficiary provides an estimate for tax year 2007 for premium year 2007, he or she can also provide an estimate for premium year 2008. If he or she gives no estimate for premium year 2008, you must input the 2007 tax year estimate for 2008. You must make two separate premium year inputs for all LCE's (with the exception of non-qualifying life-changing events (NQE)).

NOTE: Beneficiaries may use the optional Form SSA-44 (Medicare Income-Related Monthly Adjustment Amount – Life-Changing Event) to report a life-changing event with a significant reduction in income. If you receive an SSA-44 without a second tax year estimate, contact the beneficiary to request a second year estimate. Inform the beneficiary that if there is no second year estimate, we use the first year estimate for the next year as well.

B. When a beneficiary can request a new initial determination based on an LCE and when the decision is effective

Based on the following conditions, a beneficiary can request a new initial determination after an LCE, when the decision is effective.

  1. A beneficiary may request a new initial determination any time after an LCE and a significant reduction in MAGI has occurred. The LCE may have occurred at any time in the past.

  2. Ordinarily, we do not make a determination retroactive to a prior premium year on a new initial determination, unless the LCE 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.

    EXCEPTION: We accept a late request, if there is good cause for late filing, as explained in GN 03101.020.

  3. The new initial determination is effective the year the LCE occurred or any year after. The effective year of the new initial determination cannot be before the LCE has occurred.

  4. If Part B enrollment was effective for the entire year that the beneficiary made the request, the effective date of the new initial determination is January of that year. If the beneficiary did not have Part B entitlement for the entire year, the effective date is the first month of Part B entitlement in that year.

For IRMAA for prescription drug coverage (IRMAA-D), if enrollment in a prescription drug plan was effective for the entire year that the beneficiary made the request, the effective date of the new initial determination is January of that year. If the beneficiary did not have prescription drug coverage for the entire year, the effective date is the prescription drug coverage start date that year.

NOTE: If a beneficiary has Medicare Part B or Medicare prescription drug coverage only, enrolls in the other program later in the same premium year, and we made a new initial determination, e automatically apply it to the subsequent enrollment.

  1. The effective date of a beneficiary's request to use a more recent tax year because of an LCE depends on the following three factors:

    • when the LCE affected the beneficiary's MAGI or tax filing status or both; and

    • when the beneficiary made the request; and

    • when the LCE occurred.

The following chart shows when the use of a most recent tax year is effective.

When the use of a more recent tax year is effective
If…Then…

the beneficiary had an LCE affecting MAGI or tax filing status, or both in the current year

  • the new initial determination for Part B is effective January (or the first month of Part B entitlement) of the current year. The new initial determination for IRMAA-D is effective January (or the prescription drug coverage start date, if later).

  • for instructions on processing the request, see HI 01120.010 through HI 01120.043.

The beneficiary had an LCE in the past and alleges the LCE affected the MAGI in a more recent tax year (Premium Year minus 1 or the current premium year)

  • the new initial determination for Part B is effective January (or the first month of Part B entitlement) of the current year. The new initial determination for IRMAA-D is effective January (or the prescription drug coverage start date, if later).

  • for instructions on processing the request, see HI 01120.010 through HI 01120.043.

  • the beneficiary claims an LCE happened between October 1 and December 31 of the prior year and affected MAGI for that year, and

  • the beneficiary made the request between January 1 and March 31 of the current year, or there is good cause for late filing of the request

  • the new initial determination is effective January (or the first month of Part B entitlement) of the prior year. The new initial determination for IRMAA-D is effective January (or the prescription drug coverage start date) of the prior year.

  • for instructions on processing the request, see HI 01120.010 through HI 01120.043.

the beneficiary claims an LCE happened in the current year, but expects the event will not affect MAGI until the following year

  • the new initial determination for IRMAA B is effective January of the following year. The new initial determination for IRMAA-D is effective January of the following year, if the beneficiary still has prescription drug coverage.

  • for instructions on processing the request, see HI 01120.010 through HI 01120.043.

C. List of life changing events

A Life-Changing Event (LCE) can be one or more of the following eight events:

  1. Death of spouse (HI 01120.010);

  2. Marriage (HI 01120.015);

  3. Divorce or annulment (HI 01120.020);

  4. Work reduction (HI 01120.025;)

  5. Work stoppage (HI 01120.030);

  6. Loss of income-producing property (HI 01120.035);

  7. Loss of employer pension (HI 01120.040); or

  8. Receipt of settlement payment from a current or former employer (HI 01120.043).

D. Examples of non-qualifying life-changing events

Our list of LCEs for IRMAA purposes is exclusive. Beneficiaries may experience losses of MAGI or income that are not LCEs. Some examples of events and reductions in MAGI or income that are not LCEs are:

  • Ordinary loss of dividend income;

  • Higher medical expenses;

  • Higher living expenses;

  • Loss of child support;

  • Loss of alimony; or

  • Voluntary sale of income-producing property.

NOTE: Loss of dividend income due to criminal theft could qualify for an LCE, as explained in HI 01120.035.

There are situations where a beneficiary may request the use of a more recent tax year for a new initial determination because a one-time event caused an increase in his or her income for the tax year we are using to impose IRMAA. Consider this type of event as a non-qualifying event. Some examples of one-time income that cause an increase and are non-qualifying events (NQEs) include:

  • Capital gains from the sale of property;

  • Lottery winnings;

  • Casino winnings;

  • Conversion of an IRA; or

  • Cashing bonds.

E. Procedure for handling a report of a non-qualifying LCE

If…Then…

a beneficiary requests a new initial determination based on an event other than one listed in HI 01120.005C in this section

  • review all the information and documents the beneficiary provides.

  • investigate further to see if there is a valid LCE involved.

  • if no valid LCE for IRMAA purposes is involved, advise the beneficiary that the event does not qualify and explain what events qualify as LCEs.

  • if the beneficiary insists, he or she may still file an appeal on the IRMAA determination, as explained in HI 01140.005B.

a beneficiary requests a new initial determination based on an event other than one listed in HI 01120.005C in this section, and insists on us processing a new initial determination request

  1. Review all the information and documents the beneficiary submits.

  2. Investigate further to see if there is a possibility of a valid LCE.

  3. If no valid LCE for IRMAA purposes is involved, access the IRMAA screens (See screen details in MSOM T2PE 008.001 through MSOM T2PE 008.019).

  4. On the IRMN screen:

    • Enter the Beneficiary's Own SSN.

    • In the “Select the Desired Option” field, select “1” Establish.

    • Input the premium year for the new initial determination request.

    • In the “Select the Desired Function” field, select “1” Life Changing Event.

    • Input the Tax Year the beneficiary requests we use to determine the IRMAA.

    • Press Enter.

  5. The PYTY screen appears when there is data on file for the tax year requested and it displays under the Highest Probative Value Data Field. (For an explanation of Highest Probative, see MSOM T2PE 008.019).

    • If you select “1” Use Highest Probative Data, the system processes the determination using the data on file. The data propagates to the IRMA screen.

    • If you select “2” New Tax Data, the system processes the determination using the new information provided, as long as the value of the data is a higher value than the information on file.

    • Press Enter.

  6. On the IRLC screen:

    • In the “Select Life Changing Event” Field, select “8 Non-Qualifying Event.”

    • In the “Date of Life Changing Event” field, enter the date the beneficiary alleges the non-qualifying event (NQE) occurred.

    • In the Remarks field, describe the NQE that the beneficiary is claiming (i.e., sale of property).

    • Show Proof as “1” Proven. Press Enter.

  7. On the IRMA screen:

    • Input the beneficiary's alleged adjusted gross income and tax exempt income for the tax year the beneficiary is requesting to use.

NOTE: If you select “1” Use Highest Probative Data on the PYTY, the information propagates into this field and you cannot change it.

  • On the “Select Type” field, select the appropriate tax source based on the information the beneficiary provides. See details on the tax information screen in MSOM T2PE 008.005.

  • On the “Select Filing Status” field, enter the appropriate filing status for the beneficiary.

  • Show Proof as “1” Proven.

  • Press Enter.

  1. Process the dismissal on the IRMAA Results (IRRE) screen.

    • The system automatically sends the dismissal notice.

    • After completing all screens, record evidence submitted on the EVID screen in Shared Processes (See instructions for completing evidence screens in GN 00301.286 through GN 00301.300 and MSOM EVID 001.003).

NOTE: The IRMN Screen displays an alert to go to the EVID screen to document proofs submitted for the event reported. Pressing any “PF” key or the “Enter” key from the IRMN screen takes you to the Shared Processes Menu.

a beneficiary requests an appeal based on an event other than one listed in HI 01120.005C in this section

  • review all the information and documents the beneficiary submits.

  • investigate further to see if there is a valid LCE involved.

  • if no valid LCE for IRMAA purposes is involved, advise the beneficiary that the event does not qualify and explain what events qualify as LCEs.

  • if after the explanation the beneficiary still insists on filing an appeal, process the appeal according to instructions in HI 01140.005B.


To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/0601120005
HI 01120.005 - Life Changing Events - 08/05/2014
Batch run: 08/05/2014
Rev:08/05/2014