Explaining IRMAA on Medicare

About

Medicare 101

Current Clients

Explaining IRMAA on Medicare

Senior couple going over their finances stock photo

By Daniel Petkevich

Dec 21, 2022

Paying more than you expected? Let's talk it through

When signing up for Medicare, you might see a higher monthly bill than expected. Depending on your income, you could pay a higher share of Medicare. This surcharge is known as IRMAA, and we are here to answer any questions you have on what it means for your budget.

Stay Up to Date on Medicare!

Introducing IRMAA and its purpose

Medicare Part B and Part D provide important coverage for many beneficiaries, but higher-income individuals may be required to pay an additional premium known as the Income-Related Monthly Adjustment Amount (IRMAA). The purpose of IRMAA is to ensure that those with higher incomes pay a larger share of their Medicare costs.

Who is affected by IRMAA and how is it calculated?

IRMAA is based on a beneficiary's modified adjusted gross income (MAGI), which includes any taxable Social Security, Railroad Retirement benefits, and other types of income. It is determined by the Centers for Medicare & Medicaid Services (CMS) each year and typically applies to individuals with incomes above certain thresholds.

How is IRMAA applied?

IRMAA is typically deducted from a beneficiary's Social Security benefits. However, suppose a beneficiary does not receive Social Security benefits, or their income exceeds the threshold set by CMS. In that case, they may be required to make an additional payment to cover the IRMAA. This amount is then applied to their Medicare Part B and/or Part D premiums.

How does the Social Security Administration determine if someone needs to pay an additional premium for Medicare Part B or Part D coverage?

The Social Security Administration uses the individual's modified adjusted gross income (MAGI) to determine if they must pay an additional premium for Medicare Part B or Part D coverage. MAGI includes any taxable Social Security, Railroad Retirement benefits, and other types of income reported on tax returns.

What are the income thresholds that trigger IRMAA payments?

The MAGI used to calculate IRMAA is based on prior-prior year taxes. See the charts below for the income thresholds in 2023, based on your 2021 taxes.

Here's Part B:

Medicare Part B IRMAA Chart 2023

And here's Part D:

Medicare Part D IRMAA Chart 2023

How can beneficiaries appeal their IRMAA determination?

If a beneficiary disagrees with their IRMAA determination, they can file an appeal. The process involves submitting documents to support lower income or filing status and/or providing proof of certain financial exemptions such as institutionalization or disability. It is important to note that the appeal must be filed within 60 days from the date on the letter received from the Social Security Administration. For more information on the appeals process, please visit the

Medicare website

Tips on reducing your Medicare premiums with IRMAA in mind

If your income is above the threshold for IRMAA and you want to minimize your out-of-pocket expenses, there are a few tips that may help reduce your Medicare premiums. First, consider switching to an Advantage plan if available in your area. These plans typically offer lower premiums and may be more cost-effective than Original Medicare. Additionally, consider speaking to a tax professional about ways to lower your taxable income so you can avoid or reduce IRMAA payments. Finally, if you are enrolled in Medicare Part D coverage, compare prices among plans to find the one with the lowest premium and best drug coverage.

Questions to ask when considering a Medicare plan with higher premiums due to IRMAA

If your income is above the IRMAA threshold and you are considering a Medicare plan with higher premiums due to IRMAA, here are some important questions to ask:

What additional coverage or services does this plan offer that would be beneficial?
Will my out-of-pocket costs be lower if I switch to this plan?
Are there any additional costs associated with the plan that I should be aware of?
Is it possible to switch plans if I decide this one is not right for me?

By asking these questions, you will be better informed when making your decision, so you can find a Medicare plan that meets your needs.

Conclusion

IRMAA is an additional premium that some Medicare beneficiaries are required to pay for their Part B and/or Part D plans to ensure those with higher incomes are paying a larger portion of their healthcare costs. If you are concerned about paying beyond your budget for your Medicare plan, talk to an expert at Fair Square Medicare. Our team of experts can help you find the best plan for your unique situation.

Stay Up to Date on Medicare!

Your Medicare One-Stop-Shop

Your guide to Medicare Parts A & B, Medicare Advantage, and Medigap. 100% free.

Get the Fair Square Bulletin

Medicare savings tips, helpful guides, and more.

888-572-6033

info@fairsquaremedicare.com

About

Medicare 101

Current Clients

Medicare Supplement Plans

Medicare Advantage Plans

Fair Square 2024

•

Notice of Privacy Practices

Virgil Insurance Agency, LLC (DBA Fair Square Medicare) and www.fairsquaremedicare.com are privately owned and operated by Help Button Inc. Medicare supplement insurance plans are not connected with or endorsed by the U.S. government or the federal Medicare program. This is a solicitation of insurance. A licensed agent/producer may contact you. Medicare Supplement insurance is available to those age 65 and older enrolled in Medicare Parts A and B and, in some states, to those under age 65 eligible for Medicare due to disability or End-Stage Renal disease. Virgil Insurance Agency is a licensed and certified representative of Medicare Advantage HMO, HMO SNP, PPO, PPO SNP and PFFS organizations and stand-alone PDP prescription drug plans. Each of the organizations we represent has a Medicare contract. Enrollment in any plan depends on contract renewal. The plans we represent do not discriminate on the basis of race, color, national origin, age, disability, or sex. Plan availability varies by region and state. For a complete list of available plans please contact 1-800-MEDICARE (TTY users should call 1-877-486-2048), 24 hours a day/7 days a week or consult www.medicare.gov. © 2024 Help Button Inc

We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.

MULTIPLAN_FairSquareMedicare_01062022_M

Explaining IRMAA on Medicare

Paying more than you expected? Let's talk it through

Stay Up to Date on Medicare!

Introducing IRMAA and its purpose

Who is affected by IRMAA and how is it calculated?

How is IRMAA applied?

How does the Social Security Administration determine if someone needs to pay an additional premium for Medicare Part B or Part D coverage?

What are the income thresholds that trigger IRMAA payments?

How can beneficiaries appeal their IRMAA determination?

Tips on reducing your Medicare premiums with IRMAA in mind

Questions to ask when considering a Medicare plan with higher premiums due to IRMAA

Conclusion

Stay Up to Date on Medicare!

Recommended Articles

More of our articles

Your Medicare One-Stop-Shop

About

Medicare 101

Current Clients

Medicare Supplement Plans

Medicare Advantage Plans