Dear Rusty: My wife and I have taken a Social Security “Cut” — no 3.2% raise for us, due to something called “IRMAA,” based on our income. We actually took, together, a $400 a month cut. As far as I can tell from what they told me, we are means tested and were too successful, so our Medicare premiums were much higher, which resulted in our reduced Social Security for 2024. Have you sorted this out? And, if so, can I appeal this disgusting situation?

Thank you in advance for your service as a Social Security Advisor.Signed: Baffled Senior

Dear Baffled: We’re very familiar with the “Income Related Monthly Adjustment Amount” – not so affectionately called “IRMAA.” IRMAA catches many Social Security beneficiaries by surprise, not only higher earners such as you, but also those who make large withdrawals from a tax-deferred account, who sell property, or who have any other kind of sudden large bump in their taxable income. Essentially, if your income is over certain thresholds for your IRS filing status, you pay a higher “IRMAA” premium for your Medicare Part B (coverage for outpatient services) and your Part D (prescription drug coverage). And since your Medicare premium is automatically deducted from your Social Security payment, your net monthly Social Security payment goes down.

Any COLA added to your Social Security benefit is often consumed by an IRMAA increase to your Medicare premiums. And, to further complicate matters, your Medicare premium for the current year is determined by your income from two years prior, which means your 2024 Medicare premiums were determined by your 2022 income.

The IRMAA thresholds are different depending on your income tax filing status, but assuming you file your taxes as “married/jointly,” your combined 2022 income had to be more than $206,000 to cause IRMAA to apply in 2024. With income between $206,000 and $258,000, each of your Part B premiums would be $244.60 (instead of the standard $174.70), and your Part D premium (if you have Part D) would incur another $12.90 on top of your regular Part D premium amount. IRMAA premiums further increase on a sliding scale, and those with income of $750,000 or more would pay a maximum Medicare Part B premium of $584/month and would incur another $81 per month added to their normal Part D premium. Thus, as you have noted, Medicare premiums are, indeed, “means-tested.”

Can you appeal “this disgusting situation?” Well, you can always appeal any Social Security determination, but appealing IRMAA will only be successful if you can prove that the income they used to determine your 2024 Medicare premium was incorrect, or if you can convince them to use a more recent year with a lower income to calculate your Medicare premium. If you believe you can be successful, you should call Social Security (1-800-772-1213) to formally appeal the IRMAA premium, or you can submit form SSA-44 to appeal based on a “life-changing event.”

I know that understanding how IRMAA works won’t soften your dismay, but I can only explain the rules and how they work. Your 3.2% COLA increase for 2024 was used to offset some of the IRMAA Medicare premium increase caused by your higher income, and it is IRMAA which caused your net Social Security payment to go down. FYI, your Medicare premiums are recalculated each year, so if your income goes down to below the IRMAA threshold for your tax filing status, then your Medicare premium will revert to the standard amount for each year.

I hope this clarifies why your Social Security payments went down and why you didn’t see your COLA increase, but the AMAC Foundation is always available to answer any questions you may have about Social Security.

This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website (amacfoundation.org/programs/social-security-advisory) or email us at ssadvisor@amacfoundation.org.