Couple has frustrating fight with Social Security.
Sometimes problems have very simple solutions, but it's infuriating when red tape and bloated bureaucracies can't find the easy fix.
We're talking about Social Security and Medicare.
When a senior qualifies for Medicare, the cost of premiums depends on a beneficiary's income. Those premiums, for many, are deducted from Social Security benefits.
The premiums are reviewed every year, and could change if the senior's income changes.
Barbara and Steve Rozett learned in November 2013 that their Medicare premiums would be going up for the 2014 year.
But the Clifton couple says that was a mistake. They've been trying to get a refund of what they say were a year's worth of Medicare overpayments -- $649.20 for Barbara and $504 for Steve.
And that's where the red tape comes in.
This all started when back in June 2012, fire ravaged the couple's summer home in Little Egg Harbor. They received an insurance settlement and decided not to rebuild, and they sold the property "as is" in January 2013.
The interior of the Rozett's fire-damaged summer home. Their insurance payment and proceeds from the home sale were wrongly marked as income on their tax return, which led to their Medicare premiums going up. The couple has been trying to get Social Security to recognize their amended tax returns. "When our accountant prepared our taxes, he included all the monies we received plus the money for the sale of the property as income for 2012," she said.
But that was wrong. Those funds should not have been included as income.
The Rozetts didn't realize the error until they got the notice about the higher Medicare premiums. Once they knew, they worked with a new tax preparer to amend and correct the returns.
The amended returns put the couple's income back in the range for the lower Medicare premiums.
The Rozetts called Social Security in the beginning of December 2013.
"We were advised to send the a request for reconsideration," Barbara Rozett said.
So on Dec. 23, they submitted a request for reconsideration, expecting the feds to look at the new returns with the correct income level and lower the Medicare premiums.
They were denied on Jan. 13, 2013.
Over many months, the couple appealed with additional requests in writing and in visits to a local Social Security office, and they were all denied.
They visited the office again on Dec. 9, 2014.
"We went in person and filled out another request for reconsideration and attached copies of all our amended returns," Barbara Rozett said.
They said they were told to complete a form that referenced a "life changing event." This was important because a so-called life changing event is one of the reasons Medicare premiums can be lowered.
"I crossed out 'life changing event' and they got mad at me," Barbara Rozett said. "I said it didn't apply."
Rozett wrote on the form that there was no life changing event but that the request was because of the income correction on the amended tax return.
A few weeks later, on Dec. 24, the couple received a call from Social Security.
"They said they did not have copies of our amended returns so we brought them again," Rozett said.
The decision came on Dec. 31.
"We cannot make a new decision in your case because you did not have a qualifying life changing event," the denial letter said.
We make new decisions when your modified adjusted gross income (MAGI) goes down enough to reduce your income-related premium amount and..."
The statement also defined a "qualifying life changing event," which includes marriage, divorce or becoming widowed, or changes to employment.
"No one seems to understand that this was a mistake and we corrected it with the amended returns," Barbara Rozett said. "The last worker at the office listened to our problem and agreed that they owed us money but also stated that we would not get it."
Frustrated is a gentle way to describe how the couple feels.
"After a while, it wasn't the money anymore. We knew we were right and we couldn't get through to anybody," Barbara Rozett said. "If they found out we did not pay enough, they would surely come after us to make the payments. I am doing the same thing to them but don't know where else to turn. They have stolen this money from us."
The couple asked Bamboozled for help.
SLICING AWAY RED TAPE
We reviewed the couple's reconsideration requests and the letters they received from Social Security.
Then we reached out to the agency, knowing it wouldn't discuss the specifics of any individuals for privacy reasons. But it did explain the rules.
"Beneficiaries with a higher income pay an additional premium amount for Medicare Part B and Part D," spokesman John Shallman said.
It's part of a provision known as the Income-Related Monthly Adjustment Amount, or IRMAA.
Shallman said Social Security uses tax information from the Internal Revenue Service (IRS) to adjust medical insurance premiums for beneficiaries with higher incomes. Although the federal government subsidizes all Medicare Part B and D premiums, Shallman said, Social Security lowers the subsidies for beneficiaries with higher incomes.
This is all based on a beneficiary's modified adjusted gross income and tax filing status, he said, from the most recent federal tax return provided to Social Security by the IRS. Generally, it's "for the tax year that is two years prior to the effective year of the IRMAA determination," he said.
That's why for the Rozetts, the 2012 tax return resulted in higher premiums in 2014.
Shallman said Social Security beneficiaries who use the "married filing jointly" tax status with modified adjusted gross incomes of over $170,000 receive reduced Medicare Part B and D premium subsidies. For singles and other filers, the threshold is $85,000.
That means beneficiaries in both of those groups pay higher Medicare premiums.
Then we got to the meat of it.
"SSA will accept an amended federal income tax return as a correction to modified adjusted gross income or as evidence of modified adjusted gross income in conjunction with a life changing event," Shallman said. "However, the amended return must be accompanied by a receipt letter from IRS or a transcript or copy from IRS."
Ah-ha!
That's it.
"No one asked for that info after all the times I went there and contacted them," Barbara Rozett said.
So this whole mess could have been avoided if just one Social Security employee told the couple they were simply missing a receipt letter from the IRS. The couple never needed the info on the "life changing event," which didn't apply to their case. They only needed the IRS receipt for the amended return.
We put the Rozells in touch with our contact with Social Security, who set up a meeting at the local Social Security office on the same day.
"He said he doesn't see any reason why this should have been a problem," Barbara Rozell said.
The couple brought yet another copy of their amended return and this time, the IRS receipt. They came back with good news.
"We are all resolved with Social Security. They were sooooooo nice to us," Barbara Rozett said in an email. "They said we should have all our money back within a month if not sooner."
Rozett said after the paperwork was complete, a rep sat with the couple to ask what Social Security could do to prevent this kind of hullabaloo from happening again.
"I stated that they should instruct their people to ask others if they do not have the answer rather than just saying no to everything," she said. "Again, they could not be nicer to us. Like we were special. It was great."
The Rozetts will let us know when the check comes in.
Have you been Bamboozled? Reach Karin Price Mueller at Bamboozled@NJAdvanceMedia.com. Follow her on Twitter @KPMueller. Find Bamboozled on Facebook. Mueller is also the founder of NJMoneyHelp.com.