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What is IRMAA

IRMAA Income and You

IRMAA stands for the Income Related Monthly Adjustment Amount. What it is, is a surcharge that is added to your monthly Medicare costs, that is based on the amount of income you are receiving in retirement. Everyone in retirement earns some sort of income whether it is pension, Social Security, W2 wages, investments or a combination of these different types. However all income is not created equal when it comes to measurement by Medicare.

According to Medicare.gov if you fall into the higher income categories while enrolled in Medicare, federal law requires an adjustment to your monthly Medicare Part B and Part D premiums (drug coverage premium). Medigap policies do not fall under these adjustments This surcharge is known as the income related monthly adjustment amount added to your Medicare Part b and Part D costs.

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How Medicare Defines Income for IRMAA:

Not all types of income are taken into consideration, however Medicare defines income for IRMAA to be “your adjusted gross income plus any tax-exempt interest you may have” or everything on lines 2a and 8b or the IRS form 1040 in tax-year 2020. Some examples of IRMAA income are:

Social Security BenefitsDistributions From:
WagesTraditional 401(k)
Pensions and Rental IncomeTraditional IRA
InterestTraditional 403(b)
Capital GainsTraditional Sep-IRA
DividendsQualified Investments and Annuities

Medicare IRMAA brackets for 2023:

Annually Medicare IRMAA brackets are reviewed and adjusted for both income levels and surcharge amounts for both Medicare Part B and Part D. Below you will find the current brackets and surcharges for both Medicare Parts B and D.

Individual MAGICouple MAGIPart BPart D (per/mo)
< $97,000< $194,000$164.90Premium (varies)
$97,000 - $123,000
$194,000 - $246,000$230.80Premium + $12.40
$123,000 - $153,000$246,000 - $306,000$329.70Premium + $32.10
$153,000 - $183,000$306,000 - $366,000$428.60Premium + $51.70
$183,000 - $500000$366,000 - $750,000$527.50Premium + $71.30
>$500,000 >$750,000$560.50Premium + $77.90

How is IRMAA Determined:

Medicare will look at your past two years tax returns, which they receive from the IRS. Based on those tax returns, income levels will be identified and it will be determined where you fall on the scale of IRMAA income categories. If your income is at a level that you do reach an IRMAA bracket you will be notified by Social Security that your premiums will be adjusted and you will be automatically bill charged at that level.

Please note: Medicare can only charge you on income that you earn while you are enrolled in Medicare.

If you feel as though as you should not be in an IRMAA bracket, there is always the option to appeal. >In retirement income is a must, but it must be the right kind of income.

 

How to pay your Part B and Part D IRMAA

Part B IRMAA is automatically added to your monthly premium bill. Here are 5 ways you can pay your Part B premium:

Part D IRMAA must be paid directly to Medicare—not your plan or employer. It’s your responsibility to pay it even if your employer or a third party (e.g., retirement system) pays your Part D plan premiums. You’ll get a bill each month from Medicare for your Part D IRMAA and can pay it the same way you pay your Part B premiums.5

Can I appeal the IRMAA determination?

You can appeal the IRMAA determination – filing for a redetermination – if you believe that your calculation is erroneous. In addition, if you have had a life-changing event such as a loss of income or divorce, then you can refile or you can file for a redetermination using Form SSA-44.

If you do not agree with a redetermination, there is a formalized appeal process – the third level of appeal – technically called the Decision by Office of Medicare Hearings and Appeals (OMHA). (Note that this a different procedure from the appeal or grievance procedure when you receive denials of service from Medicare Parts A, B, or D.)

What is IRMAA's Impact on Individuals

Millions of individuals in and entering retirement are now encountering these Medicare Part B and Part D surcharges. This could mean more conversations with IRMAA certified professionals. There are ways to help mitigate costs to reduce the expenses in retirement to ensure the plans you have ben making come to fruition.

IRMAA's Impact on Financial Professionals

Financial professionals will need to learn a bit more about this construct, how it works and how to mitigate it with their clients. With the correct education and information surrounding this topic, financial professionals can not only help current clients but also reach a completely new base of individuals to help guide them through learning “what is IRMAA”.

If you are a financial professional and would like to further your knowledge of this and become a leader in the industry, there is more information below in becoming certified.

Who is Healthcare Retirement Planner

At Healthcare Retirement Planner we have spent the last 10 years researching the impact of IRMAA on Medicare and individual retirement plans. Taking the knowledge and applying it to helping financial professionals service their clients better.

We also provide individual guidance, seminars and software to help both financial professionals and individuals illustrate costs, impact and how to mitigate moving forward.

Healthcare Retirement Planner has also partnered with IRMAA Certified Planner to help educate and certify financial professionals. Through this designation, financial Professionals will be able illustrate and navigate structuring retirement plans to mitigate issues arising from IRMAA.