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Rus one option, if the letter has not changed from the 2008 version, is to call the Medicare folks. They even provided me the phone number. Under the rules of the game if you can show this event is a one time deal, you get a chance to change/avoid the increase.

See this:

Check out the Question "What is my income has gone down?" In 2012 your income did go down, if I understand your post.

My wife also had a one time event. When I asked, they agreed and lowered my Part-B premium.

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