Income-related monthly adjustment amounts (IRMAAs) are based on a person’s adjusted gross income and may affect their Medicare premiums.
When a person makes more than the allowed income, Medicare adds a charge to the Part B premium, Part D (Medicare prescription drug coverage) premium, or both.
A person will get a notice about the adjusted amount and may make an appeal.
The IRMAA charge can apply to a person who has enrolled in either Medicare Part B or Part D, or in both parts.
Medicare is a federal insurance plan for people aged 65 and over. Younger people may be eligible if they have a disability or end stage renal disease (ESRD). Medicare parts include:
- Original Medicare, which includes Part A and Part B. Medicare Part A pays hospital costs. Medicare Part B pays outpatient doctor visits, provider services, durable medical equipment, and some home health care.
- Medicare Part C, also called Medicare Advantage. This policy combines the benefits of Medicare Part A and Part B. People pay a premium for Medicare Part B and for Medicare Advantage.
- Medicare Part D, a prescription drug plan. Some Medicare Advantage plans also include prescription drug plans.
- Medicare Supplement Insurance, also called Medigap. These are policies that help pay out-of-pocket costs of original Medicare.
Private insurance companies supply Medicare Advantage, Medicare Part D, and Medigap.
Once the IRMAA calculations are complete, CMS inform the Social Security Administration (SSA). The SSA determine whether a person must pay more than the standard premium.
People must pay a premium for Medicare Part B and Part D. In 2021, the standard premium for Part B is $148.50. Medicare Part D premiums vary depending on the plan a person chooses.
The amount of an individual’s Part B premium, Part D premium, or both, may change based on their modified adjusted gross income (MAGI), which their Internal Revenue Service (IRS) tax return will report.
How IRMAA is applied
The SSA use the tax return from the IRS to decide whether there is a reason for an IRMAA. A person’s income from 2 years prior determines the surcharge.
Medicare may add an extra charge to the individual’s Medicare Part B basic premium charge, the Part D premium, or both.
A person will then get a written notice about the adjusted amount. The letter specifies the amount that the SSA will charge. A person has the right to appeal the adjustment.
Individuals who are eligible for supplemental security income (SSI) or Extra Help are exempt from getting an IRMAA notice.
SSI is a program that the SSA administer. It is a monthly benefit. People qualify if they:
- have a low income
- have a disability
- are blind
- are aged 65 and over
Extra Help is a program to help pay some of the out-of-pocket costs of Medicare Part D premiums. To get Extra Help, a person must:
- have Medicare Part A, Part B, or both
- live in the United States
- have income and assets below specified limits
People get a cost-of-living adjustment notice explaining the IRMAA in detail.
In the notice, a person will find the following information:
- what information the CMS used to determine the IRMAA
- what the individual can do if the tax information is wrong
- what the individual can do if the SSA used the wrong tax year
- how to appeal if a life-changing event reduced reported income from the relevant tax year
An individual’s IRMAA calculation is based on the person’s MAGI, together with their tax filing status. Since MAGI gets reported each year, the IRMAA can change every year.
Tax filing levels
The calculation for IRMAA covers five income levels. There are also three tax filing status levels. The charts below show the five different IRMAA levels for each of the three tax filing status levels for 2021. The examples use the tax year 2019.
Tax filing status level 1 includes head of household, single, or widow/er with dependent child. Or, people who are married, filing separately, and were living apart for the whole year.
|If MAGI is:|
|1||greater than $88,000 to $111,000|
|2||greater than $111,000 to $136,000|
|3||greater than $138,000 to $165,000|
|4||greater than $165,000 to $500,000|
|5||greater than $500,000|
Tax filing status level 2 includes those married and filing jointly.
|If MAGI is:|
|1||greater than $176,000 to $222,000|
|2||greater than $222,000 to $276,000|
|3||greater than $276,000 to $330,000|
|4||greater than $330,000 to $750,000|
|5||greater than $750,000|
Tax filing status level 3 includes those married and filing separately who have lived together for some part of the year.
|If MAGI is:|
|4||greater than $88,000 to $412,000|
|5||greater than $412,000|
Medicare may add the IRMAA surcharge, plus any late filing charges, to the Part B premium, Part D premium, or both.
If a person is enrolled in Medicare Advantage, there may be a reduction in the total charge.
The Office of Medicare Hearing and Appeals handle all appeals for Medicare Part B premiums. Individuals have the right to appeal if they believe that the adjusted premium is incorrect.
Several situations may indicate that an individual qualifies for a new determination. These include:
|Tax return is inaccurate||a person filed an amended return for the tax year used to make the IRMAA determination|
there was a mistake in the IRS data
the IRS sent old data to the SSA
there was a major life-changing event that reduced the person’s income
|7 life changing events||marriage |
death of a spouse
reduction in work hours or termination/retirement
loss of income-producing property
loss of some types of pension income
The first step is to request a reconsideration of the determination. People can do this by calling the SSA at 800-772-1213.
The CMS calculates the IRMAA. When a person makes more than the allowed income amount, Medicare may add an IRMAA to the Part B premium, Part D premium, or both.
The amounts are based on a person’s adjusted gross income, and Medicare adds them every month. This amount can change each year based on a person’s income.
If a person believes that there is a mistake with the assessment, they can go through an appeal process. An oral request for a reconsideration of the determination is the first step of an appeal.