A Medicare Surcharge That Might Surprise You If You’re Not Careful – IRMAA

by Brian Quick, CLU®, ChFC® | Originally posted on Kiplinger

You could get hit with much higher Medicare premiums today because of something that boosted your income two years before.

Who out there has heard of IRMAA?

Likely, not many. When I hold seminars and ask who’s heard of IRMAA, few people raise their hands. For those who haven’t and are getting closer to Medicare eligibility (age 65 is the earliest unless you have a disabling medical condition), it’s worth your while to pay attention. IRMAA — income-related monthly adjustment amount — is one of those unwelcome surprises that can confront you as you near retirement or are in the early stages of it.

For Medicare beneficiaries who earn over $91,000 and who are enrolled in Medicare Part B and/or Medicare Part D, IRMAA is important to understand. It’s a surcharge added to the Part B and Part D premiums.

This is how it works. If you are a single filer on your income tax return, the base premium for Part B of Medicare is $170.10 per month in 2022. But as soon as your modified adjusted gross income (MAGI) goes over $91,000, your Medicare premiums are going to start going up.

For those single filers in the MAGI range of over $91,000 to $114,000, that means your Part B premium is $238.10. For those in the over $114,000 to $142,000 bracket, the premium is $340.20. IRMAA surcharges for Part D (the Medicare prescription drug benefit) are also added to the regular premium for the enrollee’s plan.

You’ll receive a notice from the Social Security Administration if you’re being assessed IRMAA. What’s really confusing is that IRMAA is determined based on your income from two years earlier. In other words, for your 2022 Medicare premiums, your 2020 income tax return is used. The amount is recalculated annually.

There are five IRMAA-related MAGI brackets for Part B for those filing single as well as for those who are married filing jointly. In the latter filing scenario, Part B premiums are $238.10 for couples with a MAGI of over $182,000 to $228,000; $340.20 for couples filing jointly with a MAGI of over $228,000 to $284,000; and so on up to a maximum Part B premium of $578.30 for those married filing jointly with a MAGI of $750,000 or more. For single filers, the highest Part B premium is $578.30, which is for those with a MAGI of $500,000 or more.

You can appeal your IRMAA determination if you believe the calculation was erroneous. Also, if you’ve had a life-changing event and your income has gone down, you may use Form SSA-44 to request an IRMAA reduction.