If you are one of the millions of aging Americans who receive Medicare Part D or Medicare Part B, chances are you may be familiar with the Income related monthly adjustment or IRMAA for Medicare.
Medicare Part D provides coverage for prescription medications, while Medicare Part B covers the cost of outpatient care and healthcare providers. Also covered under Medicare Plan B are home health care, medical equipment, and some preventative care services.
If you have either of these plans, you could potentially have a monthly surcharge. The amount you are charged will ultimately depend upon your yearly income. This is called the IRMAA.
Individuals with an annual income that is higher than a certain amount are required to pay this surcharge, which is over the amount you pay for Medicare Part B and Medicare Part D premiums. The Social Security Administration (SSA) decides who must pay an IRMAA.
The amount you owe will be determined by the total amount you earn over a period of two years. In 2023, the SSA will examine your tax returns dating back to 2021. In 2023, the SSA will look at your tax returns from the past two years to determine if you need to pay an IRMAA.
IRMAA is analyzed each year. If your income is higher or lower in any given year, the amount you owe, if any, will be adjusted. If the SSA determines that you must pay IRMAA, you will get a notice informing you of what your new premium will be and a reason why you are required to pay that amount.
A single individual who earns $97,000 or less each year will only have to pay his or her plan’s premium. The amount you pay will ultimately depend upon your situation. Part B premiums are typically higher for those who are married and filing jointly. Those who are married and filing jointly can pay as much as $428.60 for a Part B premium.
Those who are married and filing separately can expect to pay up to $560.60 for a Part B premium. But how do you pay for Part B and Part D IRMAA? According to Humana, your Part B IRMAA is added automatically to the bill with your monthly premium.
There are four ways to pay this bill. If you have a secure Medicare account, you can pay online. You can also use your bank’s online bill pay system. You can also sign up for Medicare’s Easy Pay. You also have the option to send a check by mail to Medicare. The method you choose is a matter of preference, and sometimes paying online is a more convenient option.
A Part D IRMAA fee must be paid directly to Medicare, instead of to your employer or the plan you have. You are responsible for paying your IRMAA, “even if” a third party pays for your plan premiums. You will receive a bill from Medicare each month. You can pay your IRMAA in the same way you pay your Part B premiums.
However, there may be cases where you can file an appeal. According to experts, there may be cases where you don’t feel you should pay IRMAA. You can file an appeal if you believe that the SSA used outdated or incorrect tax information. You may also appeal an IRMAA if you’ve experienced a life change, such as the death of a spouse, a divorce, or marriage.
If a life-changing event reduces your yearly earnings, you may be able to appeal.
You can file an appeal up to 60 days after receiving a notice. You can begin the appeal process by calling 1-800-772-1213. The amount you pay for IRMAA is determined by your income bracket and how you have filed taxes.
The Internal Revenue Service (IRS) provides information about you to the SSA. You may receive a notice about the IRMAA at any time during a calendar year. If you receive a determination letter from the SSA, you will receive specific information.
The notice you receive will tell you how IRMAA was determined, what to do if incorrect information was calculated IRMAA, and how to handle an income reduction resulting from a life-changing event. Twenty days or more after you receive a predetermination notice you will receive your initial determination notice.
Included in this notice is information about IRMAA, how you can appeal it, and when it goes into effect. If your income goes down, IRMAA fees may be removed. If your income goes up, you may be charged more. There is also the potential to owe IRMAA for the first time.
Which parts of Medicare does IRMAA impact? According to experts, IRMAA does not impact Medicare Part A. Most people with Medicare Part A do not pay a monthly premium to have it.
Medicare Part B covers outpatient health services, medical equipment, and certain types of preventative care. However, be aware that IRMAA adds a certain amount to your Part B monthly costs. The monthly premium for Plan B in 2022 was $170.10. An additional IRMAA surcharge may be added to your payment.
If you have Medicare Part D, the company that issues the policy will decide how much you will pay as a monthly premium. If you decide to appeal an IRMAA determination, you should be aware of a few things. You will need to provide documentation proving that you deserve not to pay IRMAA costs.
You may need to provide federal income tax returns, a death certificate, marriage certificate, or notice of divorce or marital annulment. In addition, you may need to provide copies of your pay stubs, letters or statements proving you have stopped work or received a reduction in pay.
You may also need documentation proving the loss or reduction of a pension. According to Healthline, you may not even need to file an appeal. The SSA may perform another initial determination using updated information. If you are found ineligible for an updated evaluation, you may appeal this decision.
If you decide to file an appeal, the SSA can help you with that. The initial determination notice you receive will provide information on how to file an appeal. If your appeal is reviewed and approved, your monthly premiums may be adjusted. If your appeal is denied, the SSA can give you instructions for appealing the denial in a hearing.
IRMAA was instituted in 2003 as a result of the Medicare Modernization Act. Although this rule applied only to individuals with high incomes, it acquired new rules under the Affordable Care Act. The new rules applied to high-income earners who were enrolled in Medicare Part D.
IRMAA affects your Medicare in many ways. Because the government pays roughly 75 percent of your Part B coverage, you still must pay. You will need to pay a large amount to receive coverage. The larger amount you pay is your IRMAA. In addition to your IRMAA, you will have to pay a higher priced premium.
IRMAA isn’t part of your plan’s premium, and what you pay is the amount you’re required to pay after Medicare has covered its share. When added together, both payments equal your plan’s premium. If you have more money than you are allowed to have, the government asks for an IRMAA.
The government determines whether you are eligible for IRMAA by “calculating” what your modified adjusted gross income or MAGI is. Your monthly IRMAA is ultimately determined by your total income. MAGI is essentially an adjusted gross income (AGI), which has other costs factored into it.
The SSA often uses your AGI to decide what your income bracket is. Used for tax purposes, your AGI is your total yearly income, with some deductions taken out. Your MAGI changes when you add some deductions back to it. But what deductions can be added back to your MAGI?
According to experts, IRA contributions, student loan interest, deductions for tuition and fees, and taxable social security payments can be added back to your MAGI. Additionally, your income has a huge impact on the price of your premiums.
There are several different tiers when it comes to the cost of plan premiums. A Tier 1 individual typically has a MAGI with a cap of $97,000. Tier 1 plans also apply to married couples filing jointly. Married couples filing jointly typically have MAGIs that are $194,000 and below.
IRMAA may be an inconvenience for some. However, it is a huge part of the Medicare system. Only people who are single and earn more than $97,000 and couples earning more than $194,000 per year must pay IRMAA.
6 Sources
MedigapCoverage has strict sourcing guidelines to ensure our content is accurate and current. We rely on peer-reviewed studies, academic research institutions, and medical associations. We strive to use primary sources and refrain from using tertiary references.
https://www.medicare.gov/what-medicare-covers
https://www.humana.com/medicare/medicare-resources/irmaa
https://www.healthline.com/health/medicare/what-is-irmaa
https://www.usa.gov/social-security
https://www.healthline.com/health/medicare/what-is-irmaa#how-to-appeal
https://www.healthmarkets.com/resources/medicare/what-is-irmaa/