BASIC (10-07)

HI 01130.005 Description of the Medicare IRMAA Annual Verification Process

A. Background

Each year when SSA asks the Internal Revenue Service (IRS) for modified adjusted gross income (MAGI) data to determine the next year’s IRMAA, SSA will also ask IRS for MAGI data to verify the current year IRMAA for certain beneficiaries. SSA will make any necessary adjustments to the beneficiary’s IRMAA based on the MAGI information that IRS provides to SSA.

This Annual Verification process is automated.

B. Process

The following describes how SSNs are selected for verification, what tax year MAGI is requested from IRS, how MAGI is received from IRS, and how the IRMAA system processes the MAGI received from IRS.

1. Selection of Records Sent to IRS

a. The IRMAA system will not Select Records

The IRMAA system will not select records to be verified if a beneficiary:

  • Was not determined to have IRMAA imposed at any time during the current year, or

  • Submitted an amended return with an IRS acknowledgment of receipt, or

  • Submitted a tax correction letter from the IRS or

  • Submitted only a change in living arrangement for Married Filing Separately--Lived Apart All Year.

b. The IRMAA System Selects the SSNs

The IRMAA system selects the SSNs of beneficiaries who were or are entitled to Medicare Part B or enrolled in a Medicare prescription drug plan with any of the following characteristics in the Medicare Data Base record for the current year:

  • Used PY-3 to determine the IRMAA, or

  • Beneficiary supplied tax returns for PY-2 or PY-1 MAGI, or

  • Beneficiary provided estimate for PY-2 or PY-1, or

  • Beneficiary provided statement attesting to no need to file a tax return or IRS transcript indicating no tax return was filed.

If

Then

Why

SSA used PY-3 to determine the current year IRMAA

SSA will ask IRS for PY-2 MAGI and adjust current year IRMAA if necessary.

Law requires SSA to use PY-2 MAGI information; PY-3 information may be used only temporarily.

SSA used a PY-2 or PY-1 MAGI estimate provided by the beneficiary to determine the current year IRMAA after SSA originally used PY-3

SSA will ask IRS for PY-2 and PY-1 MAGI (if appropriate) to verify the information being used for the current year.

The law usually requires SSA to use PY-2 MAGI to set the premium. However, SSA can use a more recent tax year if there has been a life-changing event, which results in a significant reduction in MAGI. SSA needs to know the PY-2 MAGI in order to determine if the use of a more recent tax year meets the “significant reduction” requirement.

SSA used a more recent MAGI estimate provided by the beneficiary to determine the current year IRMAA after SSA originally used PY-2

SSA will ask IRS for the MAGI for the tax year of the estimate.

IRS data is the standard in the law.

SSA used a signed copy of the beneficiary’s tax return for PY-2 when IRS returned PY-3 information.

SSA will ask IRS for PY-2 MAGI.

IRS PY-2 data is the standard in the law.

SSA used an amended tax return (with proof of IRS acceptance) received from the beneficiary to determine the current year IRMAA

No verification takes place.

IRS verification of the amended return was obtained at the time the beneficiary submitted the return (HI 01120.045)

SSA used IRS corrected MAGI information (with proof from IRS) received from the beneficiary to set the current year IRMAA

No verification takes place.

IRS verification of the corrected tax data was obtained at the time the beneficiary submitted the correction (HI 01120.050).

NOTE: If we receive information from IRS during verification of the beneficiary supplied data that results in IRMAA equal to or higher than the result of using IRS provided PY-2 data, the IRMAA system will use PY-2 for the IRMAA determination.

2. How MAGI data is received from IRS

IRS electronically returns MAGI information to SSA if it is above the threshold for the tax year requested. If IRS has no MAGI information for the tax year requested, or if the MAGI is below the threshold, IRS returns only an SSN to SSA. If a beneficiary has been paying IRMAA and IRS returns only an SSN, IRMAA will be removed.

3. How the IRMAA System Processes the MAGI information returned from IRS

a. Information is different but does not affect IRMAA (no change)

If IRS returns MAGI different from what SSA has been using, SSA will not send a notice or make a change unless the new IRS MAGI results in a change in IRMAA for the current year.

b. Arrearage – Amounts of Medicare premiums owed by the beneficiary

  • If Annual Verification results in an arrearage, the IRMAA system will send an informational IRMAA Annual Verification Predetermination notice giving the beneficiary the opportunity to review the information SSA received from IRS and contest it within 10 days from the date of the letter. This notice does not contain appeal rights.

  • The IRMAA system will set up a tickle date.

  • If SSA does not hear from the beneficiary within 20 days from the date of the notice, the IRMAA system sends an IRMAA Annual Verification Correction notice. The IRMAA Annual Verification Correction notice is an initial determination with appeal rights.

  • Payment Change Notices

    • Title II beneficiaries--At approximately the same time (but not before mailing the IRMAA Annual Verification Correction notice), the T2Redesign (T2R) system will process the action and send a T2R notice advising the beneficiary of the amount of past due IRMAA that will be withheld from the Social Security benefit.

    • Other beneficiaries--Although SSA will send the Annual Verification Predetermination and Correction notices to all Medicare beneficiaries including those who are Railroad Retirement Board (RRB) or Civil Service Retirement System (CSRS) annuitants, the T2R system will not send an arrearage notice to Medicare beneficiaries who are RRB or CSRS annuitants, or those who are directly billed by the Centers for Medicare & Medicaid Services (CMS). The notices to those beneficiaries regarding the amount of Medicare Part B premiums to be collected and how collection will occur will be sent by the respective agencies.

c. Overage – Amounts of Medicare premiums due the beneficiary

  • If Annual Verification results in an overage, the IRMAA system will send an IRMAA Annual Verification Overage notice. The IRMAA Annual Verification Overage notice is an initial determination with appeal rights.

  • Title II beneficiaries--The T2R system will then process the action and send a T2R notice advising the beneficiary of the amount of the refund that they will receive.

  • Other beneficiaries--Although SSA will send the Annual Verification Overage notice to all Medicare beneficiaries including those who are RRB or CSRS annuitants, the T2 Redesign System will not send an overage notice to Medicare beneficiaries who are RRB or CSRS annuitants, or those who are directly billed by CMS. The notices to those beneficiaries regarding any IRMAA-B or IRMAA-D refund will be sent by the respective agencies.


To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/0601130005
HI 01130.005 - Description of the Medicare IRMAA Annual Verification Process - 04/19/2012
Batch run: 04/19/2012
Rev:04/19/2012