What is IRMAA?
IRMAA stands for Income Related Monthly Adjustment Amount. It is a Medicare surcharge program that is used to help fund Medicare Part B and Part D premiums. It is a means-tested program that requires individuals with higher incomes to pay more for their health care coverage. IRMAA is determined annually and will apply to those making above a certain income level. For 2021 and 2022, the income level thresholds will remain unchanged.
How Does IRMAA Work?
The income related adjustment amount is based on the modified adjusted gross income (MAGI) of the individual or couple filing taxes. The amount of the adjustment is calculated based on the difference between the MAGI and the income brackets. The higher the income, the higher the adjustment. For 2021 and 2022, the income thresholds remain unchanged.
The IRMAA brackets for 2021 and 2022 are as follows:
- Individuals with an income of $88,000 or less will not be subject to IRMAA.
- Individuals with an income between $88,001 and $111,000 will be subject to a 15% surcharge.
- Individuals with an income between $111,001 and $138,000 will be subject to a 20% surcharge.
- Individuals with an income between $138,001 and $165,000 will be subject to a 25% surcharge.
- Individuals with an income over $165,000 will be subject to a 30% surcharge.
What is the Impact of IRMAA?
The impact of IRMAA on individuals and couples with higher incomes can be significant. The surcharge can add hundreds or even thousands of dollars to the total cost of Medicare coverage each year. For those who are already struggling to pay for health care, the additional cost can be a significant burden.
What Can You Do About IRMAA?
If you find that you are subject to IRMAA, there are steps you can take to reduce the amount of the surcharge. First, you should review your taxes and determine if there are any adjustments that can be made to reduce your MAGI. Additionally, you should look into Medicare Advantage plans that may offer lower premiums and more comprehensive coverage than traditional Medicare. Finally, you should speak with a financial advisor to review your options and determine the best course of action.
IRMAA for 2023
It is important to note that the IRMAA brackets for 2023 have not yet been announced. The Centers for Medicare and Medicaid Services (CMS) typically releases the brackets in the fall of the year prior to the start of the new year. In other words, the brackets for 2023 should be released in the fall of 2022.
Conclusion
IRMAA is an important program that helps to fund Medicare Part B and Part D premiums. It is a means-tested program that requires individuals and couples with higher incomes to pay more for their health care coverage. The income thresholds for 2021 and 2022 remain unchanged, but the brackets for 2023 have yet to be announced. If you find that you are subject to IRMAA, there are steps you can take to reduce the amount of the surcharge.