What Is a Medicare Income Related Monthly Adjustment Amount (IRMAA)?
An income-related monthly adjustment amount, or IRMAA, increases your Medicare Part B and Part D premiums based on income. You can appeal an IRMAA if your income is lower as a result of a life-changing event or incorrect tax information.
How Is IRMAA Determined?
If you recently retired from a high-paying job, you may be surprised at the cost of your Medicare premiums.
That’s because high-income earners pay more for two different monthly Medicare premiums.
An income-related monthly adjustment amount, or IRMAA, is an extra Medicare cost added to your Part B and Part D premiums.
The Social Security Administration determines whether you’re required to pay an IRMAA based on the modified adjusted gross income reported on your IRS tax return from two years prior.
This additional health insurance cost rises on a sliding scale as income increases.
Of Medicare’s 62 million beneficiaries, about 7 percent — 4.3 million people — face higher Medicare premiums as a result of their income, according to CNBC.
If you’re one of those beneficiaries, you’ll receive two letters from the Social Security Administration.
The first is an IRMAA predetermination notice. It will encourage you to contact the Social Security Administration within 10 days if you believe the IRMAA information is incorrect.
If you don’t respond, you’ll receive a second letter — known as an IRMAA initial determination notice — 20 days or more after the first letter.
- You experienced a life changing event that significantly reduced your modified adjusted gross income.
- You filed an amended tax return for the year used to calculate your IRMAA, and the IRS accepted it.
- Social Security used tax return information from three years prior instead of two years prior.
- There was an error in the information provided by the IRS, and you can supply proof from the IRS that the mistake was corrected.
Unlike late enrollment penalties, which can last as long as you have Medicare, the IRMAA is calculated each year. Depending on your income, an IRMAA can be added, increased, decreased or removed each year.
IRMAAs don’t apply to Part A premiums or Medicare Advantage plans without prescription drug coverage. IRMAAs also don’t impact your Medicare deductibles.
Part B IRMAA Premiums
In 2021, the standard premium for Medicare Part B — which covers doctor visits, outpatient services and durable medical equipment — is $148.50 a month.
Most people pay the standard Part B premium amount.
The 2021 Medicare IRMAA surcharge kicks in when modified adjusted gross income exceeds $88,000 for single taxpayers or $176,000 for married couples filing jointly.
The extra charge for Part B starts at $59.40 per month for those in the lowest income-adjustment bracket. This can add up to $712.80 more a year for Part B — in addition to the standard Part B premium you already pay.
The highest IRMAA bracket applies to married couples with incomes of $750,000 or more and single filers with incomes of $500,000 or more.
The maximum surcharge for the highest income earners in 2021 is $356.40, bringing the total cost for Part B to $504.90 a month — or $6,058.80 a year — for beneficiaries in that bracket.
Part D IRMAA Surcharges
Medicare prescription drug coverage is also affected by IRMAA. Like the Part B IRMAA, the Part D surcharge is based on your income tax information from two years prior.
The extra Part D charge starts at $12.50 a month for single filers earning $88,000 to $111,000 a year and married couples filing jointly who earn $176,000 to $222,000 a year.
The highest Part D IRMAA is $77.10 a month in 2021 and affects single filers who earn $500,000 or more a year and married couples filing jointly who earn $750,000 or more a year.
These IRMAAs apply whether you receive coverage through a standalone Part D plan or a Medicare Advantage plan that includes drug coverage.
The surcharge for Part D is paid directly to Medicare, not to your plan provider.
Most people have their Part D IRMAA taken out of their Social Security check. If it isn’t deducted from your check, you’ll receive a separate bill from Medicare.
If you don’t pay the Part D IRMAA, you’ll lose your Part D coverage.
Appealing IRMAA Determinations
The Medicare surcharge is based on your tax return from two years prior — which may not accurately reflect your current financial situation.
Filling out a readjustment form can resolve the problem and save you money.
Appeals are processed by the Social Security Administration, not the U.S. Centers for Medicare & Medicaid Services.
You must either call the Social Security Administration at 800-772-1213 or request an adjustment in writing.
- If a life-changing event reduced your income
- If tax information needs to be corrected
Life-Changing Event Adjustment
If you believe your IRMAA should be adjusted due to a life changing event, you need to fill out Form SSA-44 and provide supporting documents to prove your income is lower.
The form includes a list of eight situations that may eliminate or reduce your income-based premium hike.
If you’ve retired or transitioned to a part-time job, you may qualify to have your Medicare premiums reduced due to work stoppage or work reduction.
- Death of a spouse
- Work stoppage
- Work reduction
- Loss of income-providing property due to a disaster or other event beyond your control
- Loss of a pension
- Employer settlement payment
Supporting documents may include a marriage certificate, a spouse’s death certificate and copies of your pay stubs.
If the Social Security Administration reviews and approves your appeal, your monthly premiums will be corrected.
If your request is denied, you have a right to appeal the denial in a hearing.
In other cases, you may disagree with the tax information used to determine your IRMAA.
- You believe the IRS provided incorrect tax data to the SSA.
- The SSA used older or out-of-date tax data to determine your IRMAA.
- You filed an amended tax return during the year that the SSA is using to determine your IRMAA.
In these situations, you may not need to fill out the life-changing event IRMAA form. Contact the Social Security Administration directly to verify.
Other documentation, such as a signed copy of your tax return or a transcript from the IRS, will be required.
If the Social Security Administration reviews and approves your appeal, your monthly premiums will be adjusted or eliminated.
If your request is denied, you have a right to appeal the denial in a hearing.
10 Cited Research Articles
- The Tax Institute. (2021, February 1). How does MAGI impact the cost of Medicare? Can a taxpayer appeal increase of Medicare premiums due to increased MAGI? Retrieved from https://www.thetaxinstitute.com/insights/tax-in-the-news/appeal-increase-of-medicare-premiums/
- Social Security Administration. (2021). Form SSA-44: Medicare Income-Related Monthly Adjustment Amount – Life Changing Event. Retrieved from https://www.ssa.gov/forms/ssa-44-ext.pdf
- Centers for Medicare & Medicaid Services. (2020, November 6). 2021 Part D Income-Related Monthly Premium Adjustment. Retrieved from https://www.cms.gov/files/document/2021-part-d-income-related-monthly-premium-adjustment.pdf
- Kaiser Family Foundation. (2020, October 14). An Overview of the Medicare Part D Prescription Drug Benefit. Retrieved from https://www.kff.org/medicare/fact-sheet/an-overview-of-the-medicare-part-d-prescription-drug-benefit/
- Daniels, A. (2020, October 5). Should you appeal your Medicare IRMAA charges? Retrieved from https://www.marketwatch.com/story/should-you-appeal-your-medicare-irmaa-charges-2020-10-05
- Carlson, B. (2020, May 19). Higher Medicare Premiums For 2021 Announced, Topping Out At $504.90. Retrieved from https://www.forbes.com/sites/bobcarlson/2020/11/19/higher-medicare-premiums-for-2021-announced-topping-out-at-50490/?sh=7a551af83ea6
- O’Brien, S. (2020, February 25). Here’s how to appeal higher Medicare premiums. Retrieved from https://www.cnbc.com/2020/02/25/heres-how-to-appeal-higher-medicare-premiums.html
- Medicare.gov. (n.d.). Initial IRMAA Determination. Retrieved from https://www.medicare.gov/forms-help-resources/mail-you-get-about-medicare/initial-irmaa-determination
- Medicare.gov. (n.d.). Monthly premium for drug plans. Retrieved from https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/monthly-premium-for-drug-plans
- Social Security Administration. (n.d.). Policy For IRMAA Determination Notices. Retrieved from https://secure.ssa.gov/poms.nsf/lnx/0601101035