What is Medicare IRMAA?
The Income-Related Monthly Adjustment Amount (IRMAA) is an additional charge applied to Medicare premiums for individuals with higher incomes. IRMAA applies to both Medicare Part B (medical insurance) and Medicare Part D (prescription drug coverage). It’s not a separate charge, but rather an adjustment that increases the standard premiums for these parts of Medicare based on income.
Who must pay IRMAA?
IRMAA is charged to Medicare beneficiaries whose modified adjusted gross income (MAGI) exceeds certain thresholds. These income thresholds are determined by the IRS based on your tax return from two years prior (so, 2024 premiums are based on 2022 income).
If your MAGI is over a set amount, you will have to pay an IRMAA in addition to your standard Medicare Part B and Part D premiums.
How does IRMAA affect Medicare Part B premiums?
Medicare Part B has a standard monthly premium that most beneficiaries pay, but those with higher incomes are required to pay an extra surcharge on top of the standard premium due to IRMAA. The higher your income, the more you will pay.
For 2024, the standard Part B premium is $174.70 per month. IRMAA tiers range from an additional $66.60 to $396.00 based on your income level.
How does IRMAA affect Medicare Part D premiums?
Similar to Part B, Medicare Part D (prescription drug coverage) also has an IRMAA surcharge based on your income. This surcharge is added to your monthly Part D premium (which varies depending on the specific drug plan you choose).
For 2024, the IRMAA for Part D ranges from $15.20 to $100.90 per month, depending on your income.
What are the income thresholds for IRMAA in 2024?
For 2024, the income thresholds (based on your 2022 tax return) and premiums (with surcharges) are as follows:
How is modified adjusted gross income (MAGI) calculated?
Your MAGI is your adjusted gross income (AGI) from your federal tax return, plus certain deductions and tax-exempt income, such as:
• Tax-exempt interest (e.g., municipal bond interest)
• Foreign earned income exclusion
• Deductible contributions to a traditional IRA or certain other retirement accounts
Your AGI can be found on line 11 of IRS Form 1040.
How do I know if I have to pay IRMAA?
The Social Security Administration (SSA) determines if you are required to pay IRMAA. They review your income from two years prior (e.g., 2024 IRMAA is based on your 2022 tax return) and send you a notice if IRMAA applies to you. The notice will detail your Part B and Part D premiums, including any IRMAA surcharges.
Can I appeal IRMAA if my income has changed?
Yes, you can appeal IRMAA if your income has decreased due to a life-changing event such as:
• Retirement or reduced work hours
• Divorce or marriage
• Death of a spouse
• Loss of income-producing property
• Loss of pension income
To appeal, you can file Form SSA-44, Medicare Income-Related Monthly Adjustment Amount – Life-Changing Event. You will need to provide documentation to support the claim of a reduced income.
How do I pay for IRMAA?
If you receive Social Security benefits, your IRMAA for Part B and Part D will be automatically deducted from your monthly benefit check. If you’re not yet receiving Social Security benefits, the SSA will bill you quarterly.
Is IRMAA permanent?
IRMAA is not permanent. It is recalculated every year based on your income from two years prior. If your income falls below the IRMAA threshold in a future year, the surcharge will be removed, and you’ll only pay the standard Medicare premiums.
Is IRMAA a tax or a Medicare premium adjustment?
IRMAA is not a tax. It is an adjustment to your Medicare premium based on your income. However, since it increases your Medicare premiums, it effectively functions like an additional cost for higher-income individuals.
What if I have additional questions?
Please consult with a Certified Financial Planner™ or a licensed health insurance agent.
Contact us today with any questions about your Medicare premiums.
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