What is IRMAA?
IRMAA stands for Income-Related Monthly Adjustment Amount. It is a surcharge applied to Medicare Part B and Part D premiums for those who have higher incomes. The surcharge is calculated based on the individual's income tax returns from two years prior to the current year. For example, for the year 2023, the surcharge amount is based on the individual's income tax filings in 2021.
How is IRMAA Calculated?
The IRMAA is calculated based on the Modified Adjusted Gross Income (MAGI) reported on the individual's tax return. The MAGI is calculated by subtracting certain deductions and adjustments from the Adjusted Gross Income (AGI) reported on the tax return. The MAGI is then compared to the threshold amounts set by the Centers for Medicare and Medicaid Services (CMS). If the MAGI is above the threshold, a surcharge is applied to the individual's Medicare Part B and Part D premiums. The amount of the surcharge is determined by the MAGI.
What are the Threshold Amounts for 2021?
The threshold amounts for 2021 are as follows:
- MAGI up to $88,000 for an individual or up to $176,000 for a married couple filing jointly - No IRMAA surcharge
- MAGI between $88,000 and $111,000 for an individual or between $176,000 and $222,000 for a married couple filing jointly - IRMAA surcharge of $54.90 per month
- MAGI between $111,000 and $138,000 for an individual or between $222,000 and $276,000 for a married couple filing jointly - IRMAA surcharge of $108.50 per month
- MAGI between $138,000 and $165,000 for an individual or between $276,000 and $330,000 for a married couple filing jointly - IRMAA surcharge of $169.10 per month
- MAGI above $165,000 for an individual or above $330,000 for a married couple filing jointly - IRMAA surcharge of $243.60 per month
What Can I Do If I Disagree With the IRMAA Amount?
If you believe that the IRMAA amount is not correct, you may submit an appeal to the Social Security Administration (SSA). To do this, you must complete and submit an IRMAA appeals form. The form can be found on the SSA website. You must also submit supporting documentation to show that your income is lower than what was reported on your tax return. This could include evidence of a decrease in income, such as unemployment benefits, or a decrease in investments.
What are the Alternatives to IRMAA?
There are several alternatives to the IRMAA for those who have higher incomes. For example, individuals may be eligible for the Low Income Subsidy (LIS), which helps to offset the cost of Medicare Part D premiums. Another option is to enroll in a Medicare Advantage plan, which typically has lower premiums than traditional Medicare. Finally, individuals may be able to qualify for Medicaid, which provides free or low-cost health coverage.
Conclusion
IRMAA is a surcharge applied to Medicare Part B and Part D premiums for those with higher incomes. The surcharge is calculated based on the individual's income tax returns from two years prior to the current year. Individuals may appeal the IRMAA amount if they believe it is incorrect. There are also alternatives to the IRMAA, such as the Low Income Subsidy and Medicare Advantage.