Retirement can bring many new changes to your life. One life-changing event many seniors experience is selling their homes. Many seniors choose to downsize in retirement to help save money on home expenses. Other seniors want to be snowbirds, which means you will travel to different areas frequently. Retirement allows you to make these lifestyle changes! But, does selling your home affect your Medicare costs? Here is what to know when selling your home while enrolled or about to enroll in Medicare.
Will my Medicare premiums increase when I sell my home?
Many seniors would not think about their Medicare premiums changing if they were to sell their homes. It might come as a surprise to you that there is a chance your premiums could increase when you sell your home.
The Social Security office pulls your tax returns from two years prior when determining your Part B and Part D premiums. For example, if you enroll in Medicare in 2021, Social Security will look at your 2019 tax returns. If your income is above a certain amount, then you’ll be subject to an Income Related Monthly Adjustment Amount (IRMAA). An IRMAA charge is an additional monthly payment you will pay on top of your monthly Part B and Part D premiums.
If your modified adjusted gross income (MAGI) is $88,000 or less and you file individually, then you will pay the standard Part B premium of $148.50 in 2021. However, if your MAGI exceeds $88,000 as a single filer or $176,000 as a joint filer (in 2021), you will be charged an IRMAA fee.
The more money you made two years ago, the more your IRMAA fee is. So, if selling your home puts you into a high-income bracket, expect to be charged with IRMAA in two years.
How long will I have an IRMAA charge?
Luckily, IRMAA charges aren’t always permanent. The Social Security office pulls the necessary tax returns every year to see if you have had a change in income. If your income drops below the IRMAA threshold, you will pay the standard Part B premium, and you will no longer pay the additional amount for Part D.
If Social Security pulls your tax returns and sees that your income has increased to a certain amount, then your IRMAA charge will reflect that income. You will receive a letter in the mail displaying your new amount and the reason for your determination. If you disagree with this, you can file an IRMAA appeal.
Appealing your high Medicare premiums
You can qualify to lower your Medicare premiums for numerous reasons, such as:
- Loss of income
- No longer working
- Working fewer hours as you retire
- Loss of income-producing property
- Changes or termination of pension
- Marriage, divorce, or widowed
If these above scenarios don’t apply to you, but you disagree with the MAGI information the IRS reported to the Social Security office, you will contact the IRS to correct the information before filing an IRMAA appeal.
You will need to print out an SSA-44 “Medicare Income-Related Monthly Adjustment Amount – Life-Changing Event” form from the Social Security website to file an appeal. The document includes step-by-step information on how to complete this form before you submit it.
Before you submit your SSA-44 form, you will need to gather documentation of your life-changing events, such as pay-stubs, bank statements, retirement or termination letters, or other financial statements that can help support your case.
Keep in mind that you will continue to pay your higher Part B and Part D premiums until your appeal has been approved. Once it is approved, it could be retroactive for the months you have already paid. If this is the case, your premiums will be credited and will apply to your upcoming premiums or you could be refunded the excess amount you had paid.
As if selling your home is not stressful enough, you will also want to keep in mind how it will affect your Medicare premiums. But you don’t have to go at this alone! If you work with a Medicare broker with a designated Client Service Team, many will be able to help guide you through the whole Medicare appeal process.