Enrolled in Medicare? You may know that the program includes premiums that you may have to pay each year. In 2021, there are two types of Medicare premiums: premiums that are paid for Original Medicare, and premiums that are paid for Part B and Part D plans (Medicare Advantage).
In 2023, the Medicare Income-Related Monthly Adjustment Amount (IRMAA) premiums will be determined based on the adjusted gross income (AGI) reported on your federal tax return from two years prior. For example, your 2021 IRMAA premiums will be based on your 2019 tax return. Here’s what you need to know about these premiums.
How IRMAA Affects Your Medicare Premiums
IRMAA is an additional amount you may have to pay on top of your Medicare premiums. The additional amount is based on your income and is calculated by the Social Security Administration (SSA). People with higher incomes will pay higher IRMAA premiums than those with lower incomes.
In 2021, there are five IRMAA income brackets:
- $88,000 or less per year for an individual
- $176,000 or less per year for a married couple filing jointly
- $120,000–$146,000 per year for an individual
- $240,000–$292,000 per year for a married couple filing jointly
- Over $146,000 per year for an individual
- Over $292,000 per year for a married couple filing jointly
If your income is above the threshold for your filing status, you will pay an IRMAA premium. The amount you pay depends on the income bracket you fall into. In 2021, the IRMAA premiums are as follows:
- $148.50 for those in the highest income bracket
- $207.90 for those in the second highest income bracket
- $297.00 for those in the third highest income bracket
- $480.60 for those in the fourth highest income bracket
In 2023, the IRMAA premiums and income brackets may change. The SSA will determine the exact amounts closer to the start of the year.
What You Can Do if You Cannot Afford Your IRMAA Premiums
If you cannot afford your IRMAA premiums, you can request a “Part B Late Enrollment Penalty” waiver from the Centers for Medicare and Medicaid Services (CMS). This will allow you to reduce or eliminate your IRMAA premiums for the remainder of the year. To do so, you will need to provide CMS with evidence of your financial hardship.
You can also appeal the IRS’s decision to charge you an IRMAA premium. To do this, you will need to submit an appeal to the SSA. Make sure to include any evidence that your income is lower than the income reported on your tax return.
Conclusion
The Medicare IRMAA premiums for 2023 will be based on your 2019 tax return. If your income is above the threshold for your filing status, you will pay an IRMAA premium. The amount you pay depends on the income bracket you fall into. If you cannot afford your IRMAA premiums, you can request a “Part B Late Enrollment Penalty” waiver from the Centers for Medicare and Medicaid Services (CMS) or appeal the IRS’s decision.