Original Medicare Costs
The Medicare Income-Related Monthly Adjustment Amount (IRMAA) is an amount you may pay in addition to your Part B or Part D premium if your income is above a certain level. The Social Security Administration (SSA) sets four income brackets that determine your (or you and your spouse’s) IRMAA. SSA determines if you owe an IRMAA based on the income you reported on your IRS tax return two years prior, meaning two years before the year that you start paying IRMAA. The income that counts is the adjusted gross income you reported plus other forms of tax-exempt income.
If you are expected to pay IRMAA, SSA will notify you that you have a higher Part B premium.
How is my income used in my IRMAA determination?
IRMAA is determined by income from your income tax returns two years prior. This means that for your 2021 Medicare premiums, your 2019 income tax return is used. This amount is recalculated annually. The IRMAA surcharge will be added to your 2021 premiums if your 2019 income was over $88,000 (or $176,000 if you are married), but as discussed below, there’s an appeals process if your financial situation has changed.
The income used to determine IRMAA is a form of Modified Adjusted Gross Income (MAGI), but it’s specific to Medicare. The Modified Adjusted Gross Income is different from your Adjusted Gross Income, because some people have additional income sources that have to be added to their AGI in order to determine their IRMAA-specific MAGI.
It’s important to understand that MAGI for calculating IRMAA isn’t the same as the normal MAGI that you might be accustomed to for non-healthcare purposes, nor is it exactly the same as MAGI for calculating premium tax credits and Medicaid/CHIP eligibility under the Affordable Care Act. Table 1 in this Congressional Research Service brief is useful in seeing how MAGI is determined for IRMAA calculations.
How much are Part B IRMA premiums?
If an individual makes $88,000 or more – or a jointly filing household makes $176,000 or more – then the IRMAA assessment increases the 2021 Part B premium to the amounts shows in Table 1.
|Table 1. Part B – 2021 IRMA|
|$88,000 or less||$176,000 or less||$148.50|
|> $88,000 – $111,000||>$176,000 – $222,000||$207.90|
|>$111,000 – $138,000||>$222,000 – $276,000||$297.00|
|>$138,000 – $165,000||>$276,000 – $330,000||$386.10|
|>$165,000 – $500,000||>$330,00 – $750,000||$475.20|
|Greater than $500,000||Greater than $750,000||$504.90|
How much are Part D IRMAA Surcharges?
For Part D, the IRMAA amounts are added to the regular premium for the enrollee’s plan (Part D plans have varying prices, so the full amount, after the IRMAA surcharge, will depend on the plan). Note that if you are a Medicare Advantage policy member – and that plan includes prescription drug benefits – then both Part B and Part D IRMAAs are added to the plan premium. The following income levels (based on 2019 tax returns) trigger the associated IRMAA surcharges in 2021 (note that the income amounts have increased since 2020, but the Part D IRMAA surcharges are slightly lower than they were in 2020).
|Table 2. Part D – 2021 IRMAA|
|$88,000 or less||$176,000 or less||Plan Premium|
|>$88,000 – $111,000||>$176,000 – $222,000||$12.30 + Plan Premium|
|> $111,000 – $138,000||> $222,000 – $276,000||$31.80 + Plan Premium|
|> $138,000 – $165,000||> $276,000 – $330,000||$51.20 + Plan Premium|
|> $165,000 – $500,000||> $330,000 – $750,000||$70.70 + Plan Premium|
|Greater than $500,000||Greater than $750,000||$77,10 + Plan Premium|
Can I appeal the IRMAA determination?
You can appeal the IRMAA determination – filing for a redetermination – if you believe that your calculation is erroneous. In addition, if you have had a life-changing event such as a loss of income or divorce, then you can refile or you can file for a redetermination using Form SSA-44.
If you do not agree with a redetermination, there is a formalized appeal process – the third level of appeal – technically called the Decision by Office of Medicare Hearings and Appeals (OMHA). (Note that this a different procedure from the appeal or grievance procedure when you receive denials of service from Medicare Parts A, B, or D.)