Today I’m answering questions from two Consumer Rescue readers about unexpected charges from Medicare. These charges are costing both of them money they did not expect to pay. If you’re on Medicare, you need to understand how their situations could affect you.
“George” wrote to Consumer Rescue asking why the numbers in a Medicare bill didn’t add up. To protect the privacy of his healthcare and financial information, I’m not using his actual name or city.
I have a short payment issue with a claim with United Healthcare for a Plan F claim that United Healthcare short-paid by $70.05.
As described in my letter to United Healthcare dated April 9, 2024, United Healthcare should have paid (healthcare provider) $324.50, not $254.45.
Last week United Healthcare sent an updated claim summary with no changes.
Please let me know what I can do if anything. Thank you.
George T
The background about these Medicare charges
Last summer, George suffered a dramatic accident. His injuries required hospitalization and surgeries. The day before Thanksgiving, he went to a walk-in clinic because of stomach pains. The clinic staff sent him to their ER for scans to diagnose the problem. After seeing the scans, the ER doctor sent him to a hospital by ambulance.
His bills were significant. The Medicare Summary Notice (MSN) ran 50 pages.
The MSN is a statement that lists all of the treatment and provider claims submitted to Medicare for you in the prior quarter. Medicare Advantage and prescription drug plans have a similar form called an Explanation of Benefits. (I explained in more detail how to read the MSN and why it’s important in an article about an unexpected prescription drug charge)
George included copies of relevant pages from the MSN. He also included a past due bill for $70.05 from the provider.
Did his Medicare supplement plan make a mistake?
His hospitalization costs were covered by Medicare’s Part A and his supplement plan. The unpaid charges are among services that were submitted to Part B (outpatient coverage).
Medicare Part B pays the provider 80% of the contract amount for covered services and the patient is responsible for the other 20% as copays. He has a Medicare supplement (Medigap) plan F, which is supposed to cover his coinsurance (copays) and deductibles.
The supplement plan didn’t pay that $70.05
To understand, look the top part of page 43 of his MSN below:
The first column shows the service and billing code submitted by the provider. In this case, either the walk-in clinic or the ER used a billing code for a service or item that they believed Medicare would not cover under Part B. I told George I thought those codes might be for medications or pills they gave him and which might be covered under his Medicare Part D drug plan instead of Part B. That’s the same issue that the person in my earlier prescription drug story faced.
The second column shows clearly that Medicare did not approve payment of the five charges shown in the third column (Amount Facility Charged) which total $70.05. If you see the word “NO” in bold capital letters in the column labeled “Service Approved?”, don’t assume Medicare made a mistake that will self-correct.
Those same costs appear in the column labeled “Maximum You May Be Billed.” The last column headed “See Notes Below” shows the letter G next to each of those charges. The notes explanation at the bottom of the page (which I did not show here) says that the letter G indicates that Medicare does not pay for that item or service.
I won’t go into how the other bottom-line numbers were derived. What’s important is that the column labeled “Maximum You May Be Billed” totals $324.50. If you subtract 70.05 you get $254.45 which is the exact amount that the supplement plan paid.
I explained to George that medigap plans will only cover the co-pays for Medicare-approved services. If it’s not an approved charge then the supplement will not pay. He now understands and will be sending a check for $70.05 to the provider.
After our conversation, he contacted the clinic and they told him those charges were indeed for pills they gave him. They promised to send him a detailed statement of those charges and he will submit those to his drug plan for reimbursement.
Surprise! You have to pay IRMAA
That same article about the surprise drug charges led to a comment by reader “stephen_nyc.” He learned that he has to pay an extra Medicare assessment known as IRMAA and realized he misunderstood how it’s calculated. He suggested that I explain it.
A tax by another name
IRMAA is the acronym for the Income-Related Monthly Adjustment Amount. It’s been a part of the Social Security law since 2006 where it’s called a “Reduction in Premium Subsidy Based on Income.” It’s an additional assessment added to the Medicare Part B and Part D premiums and is calculated on a sliding scale based on modified adjusted gross income (MAGI) and filing status. Think of it as an additional tax to help pay for Medicare benefits.
How MAGI and IRMAA are determined
Your most recent federal tax return is the basis for determining these amounts. Line 11 of tax form 1040 shows “adjusted gross income”. But Social Security “modifies” that amount by adding back any tax-exempt interest reported on line 2a. The total is your MAGI.
Here is the simple IRS definition of tax-exempt interest:
Tax-exempt interest income — interest income that is not subject to income tax. Tax-exempt interest income is earned from bonds issued by states, cities, or counties and the District of Columbia.
IRS
Social Security compares your MAGI to a table of income brackets and then “adjusts” your Part B and Part D premiums.
The base Part B premium that all beneficiaries pay in 2024 is $174.70 per month. But if a Medicare couple filing jointly, for example, has a MAGI of more than $206,000, each would pay a monthly part B premium of $244.60.
The income brackets and IRMAA are based on complex formulas and, by law, must be recomputed each year. This is the current table for a married couple filing jointly. You can find the full set of IRMAA tables on the Social Security website.
Some things to be aware of:
- You can’t avoid paying IRMAA by being in a Medicare Advantage plan. Even if the plan has a zero premium or includes “free” prescription drug coverage, IRMAA will still be added to your costs if your income qualifies.
- This chart is based on tax returns filed in 2023 for income in tax-year 2022. Once the IRS processes your 2024 tax return (filed for income in 2023), Social Security can recalculate your IRMAA assessment to reflect increased earnings. They won’t necessarily wait until the new calendar year to bill you.
Appealing and the bottom line
You can appeal an assessment due to certain life events, such as divorce or loss of a job, among others. The appeal process is explained in the IRMAA notice.
Some people get hit with IRMAA because of one-time events such as reporting the gain on the sale of an asset or cashing out stock options upon retirement. Appeals in those cases aren’t always successful. And even if an appeal is denied, as stephen_nyc’s was, the IRMAA does get recalculated each year. So if a big one-time income bump occurred in 2023, your IRMAA could be reduced or eliminated.
As a registered Medicare counselor in the national State Health Insurance Assistance (SHIP) program for more than eight years, I’ve helped hundreds of seniors and their family members navigate the complexities of the Medicare system. I draw on my background as a journalist to help make Medicare more understandable to Consumer Rescue readers.
Do you have a Medicare question? Send it to me here at Consumer Rescue and I’ll try to help you understand what’s going on, too. (Abe Wischnia, Consumer Rescue)
Thanks again for a v.informative column about the many “faces” of the Medicare issues. Also as I understand plan F as supplemental is not the best to chose for someone on Original Medicare….the v.best one is no longer available (plan F), and the next best one is plan G.
I understand all this are v.confusing for Medicare beneficiaries, including myself, but at least once a year, we need to overlook again and again what will help us better in the coming year, paying our medical bills and reduce the OOP expenses.
Whether Plan F is the best depends on the individual’s circumstances. It’s only available to those who became Medicare eligible before 2020. The only difference between the F and G plans is that F covers the Part B annual deductible ($240) while G does not. However, beyond a certain age, the higher cost of the F plan premiums can be much greater than any savings on the Part B deductible. But switching from F to G to save money can require one to go through underwriting, depending on where they live.
Thanks again for your clear explanations!
I have a Medicare Advantage program paid for by my former employer as part of my retirement package. It’s so far has been very good with great coverage. The advantage plan is put out by the hospital and all the doctors are employed there. Several years ago after I retired I was hospitalized with pneumonia. They gave me my daily meds along with my vitamins that were listed through my doctor. Upon leaving I was presented with a bill for the vitamins that would equal at least a 90 day supply. From that point on when I went to the hospital I told them no vitamins. Since that time I’ve haven’t had a problem.