The income-related monthly adjustment amount (IRMAA) applies to people enrolled in Medicare who have incomes above a certain amount.

In 2021, the income thresholds were more than $88,000 for an individual and more than $176,000 for married couples filing jointly.

This article explains Medicare and the IRMAA. It also looks at how Medicare calculates the IRMAA, who must pay it, and how to appeal against the decision.

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The IRMAA is a surcharge, based on a person’s annual income, that Medicare adds to the basic Medicare Part B and Part D premiums. The IRMAA depends on someone’s income bracket and whether they filed their taxes individually or jointly.

The Centers for Medicare & Medicaid Services (CMS) work out the IRMAA each year and publish it in the Federal Register.

The Social Security Administration (SSA) will then calculate a person’s IRMAA based on information from the Internal Revenue Service pertaining to the person’s modified adjusted gross income.

They will take the income tax information from tax returns the person filed 2 years previously. The calculations are designed to show whether or not a person must pay an IRMAA in addition to the basic premiums for Medicare Part B and Part D.

A person can appeal the decision, but only if there is an error in the tax information the SSA used or because of a life changing and income reducing event in the individual’s life.

The federal government provides health insurance through the Medicare program. People aged 65 years and above, and those younger than this but with certain health conditions, can receive Medicare benefits.

These benefits include inpatient and outpatient care, preventive services, and prescription drug coverage.

According to the CMS, in 2020, more than 63 million people in the United States were enrolled in Medicare.

Medicare has four different parts covering different areas of healthcare services, and each part has a monthly premium (though the Part A premium is zero for most people).

Medicare may adjust the monthly premium that someone pays according to their income.

Medicare Part A

Part A is hospital insurance covering inpatient stays in hospitals, skilled nursing facilities, and mental health facilities.

Most people do not pay Part A premiums because they paid Medicare taxes while employed.

However, the standard Part A monthly premium in 2021 is $471 for people who did not pay Medicare taxes for 30 quarters or more.

The IRMAA does not affect Medicare Part A.

Medicare Part B

Part B is medical insurance that covers outpatient health services, preventive care, and durable medical equipment, such as wheelchairs.

The IRMAA will affect Medicare Part B. The SSA will calculate the surcharge based on an individual’s annual income and add this to the standard Part B premium.

Learn more about original Medicare here.

Medicare Part C

Private insurance companies offer Medicare Part C, or Medicare Advantage, plans. These plans offer the same coverage as original Medicare (parts A and B), and they may also offer coverage for dental, vision, hearing, and prescription drugs.

The IRMAA does not affect Part C. The monthly premium for Medicare Advantage plans varies depending on the plan, the location, the insurance company, and, sometimes, a person’s age and health status.

Learn more about Medicare Advantage here.

Medicare Part D

Private insurance companies offer Part D plans that cover prescription drugs. It is an add-on plan available for people with original Medicare.

The IRMAA will affect Part D. As with Part B, the SSA will calculate the surcharge based on a person’s annual income and add this to the monthly Part D premium.

Learn more about Medicare Part D here.

The IRMAA applies to premiums for both Medicare Part B and Part D, though the calculations are different.

Medicare Part B

The SSA will use the income tax information from the tax return a person filed 2 years previously to calculate the IRMAA surcharge. Medicare will then add the additional cost to the standard monthly premium, which is $148.50 in 2021.

An individual’s income bracket and how they filed their taxes will both affect the IRMAA calculation.

The table below gives some examples of Part B surcharge amounts for 2021, using 2019 tax information.

Filed as individualFiled jointlyFiled as married, filing separately2021 Part B monthly premium
<$88,000<$176,000<$88,000$148.50
$88,001–$111,000$176,001–$222,000N/A$207.90
$111,001–$138,000$222,001–$276,000N/A$297.00
$138,001–$165,000$276,001–$330,000N/A$386.10
$165,001–$500,000$330,001–$750,000$88,001–$412,000$475.20
>$500,000>$750,000>$412,000$504.90

Medicare Part D

Unlike Part B, Medicare Part D plans do not have a standard monthly premium, and costs vary among plans.

As with Medicare Part B, the SSA will use the income tax information from the tax return a person filed 2 years previously to calculate the IRMAA surcharge. Again, someone’s income bracket and how they filed their taxes will affect the IRMAA.

Although private insurance companies administer Part D plans, a person must pay the additional surcharge to Medicare.

The table below gives some examples of Part D surcharge amounts for 2021, using 2019 tax information.

Filed as individualFiled jointlyFiled as married, filing separately2021 Part D monthly premium
<$88,000<$176,000<$88,000plan premium
$88,001–$109,000$176,001–$222,000N/Aplan premium + $12.30
$111,001–$138,000$222,001–$276,000N/Aplan premium + $31.80
$138,001–$165,000$276,001–$326,000N/Aplan premium + $51.20
$165,001–$500,000$333,001–$750,000$88,001–$412,000plan premium + $70.70
>$500,000>$750,000>$412,000plan premium + $77.10

The SSA will send the IRMAA predetermination notice in the mail, and it outlines the details of a person’s specific IRMAA.

Typically, these notices tell people how the SSA calculated the IRMAA. The notices also outline the steps that someone should take if they think the SSA used incorrect information to calculate the IRMAA, or if they now have a lower income or have experienced a life changing event that would affect their income.

The SSA review IRMAA surcharges annually. This means that they may add an IRMAA, update the amount, or remove the surcharge entirely depending on an individual’s income.

Around 20 days after the first IRMAA notice, a person will get an initial determination, which has more information about paying the surcharge and the appeals process.

If an individual agrees that they should pay the IRMAA, they do not need to do anything else. Medicare will automatically add the IRMAA surcharges to an individual’s monthly premium.

If a person disagrees with the IRMAA, they can appeal the decision within 60 days of receiving the notice. If someone delays their appeal, the SSA will evaluate whether or not they had a good reason for a late request.

Reasons for appeal

A person can appeal an IRMAA for several reasons.

One of these is if the tax information the SSA used to decide the IRMAA was incorrect due to using inaccurate or out-of-date figures to determine the surcharge.

Alternatively, a person may have had a life changing event, such as a change to their marital status, loss of work, or loss of other income types.

Documents

The appeal requires documentation. The exact documentation will depend on the reasons for the appeal and could include:

  • federal income tax return documentation
  • marriage, divorce, or death certificates
  • copies of pay stubs
  • a signed employer’s statement showing work reduction or stoppage
  • a statement showing a loss or reduction of a pension
  • a statement from an insurance adjuster showing loss of income-generating property

To begin an appeal, a person will need to contact the SSA at 800-772-1213. They may also need to complete the Medicare IRMAA: Life-Changing Event form.

Decision

If the SSA approve the appeal, they will adjust the person’s monthly Medicare premiums. If they deny the appeal, they will explain why, generally in a hearing.

The IRMAA is a surcharge that Medicare can add to an individual’s Part B and Part D monthly premiums. The surcharge amount relates to a person’s annual income that they filed with the SSA 2 years previously.

A person can appeal an IRMAA decision under certain circumstances. If an individual receives an IRMAA notice and disagrees with the decision, they should contact the SSA for more details.

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