IRMAA stands for Income-Related Monthly Adjustment Amount, and what it means is that you are being charged more on your Medicare Part B premium and your Medicare Part D Drug Plan premium based on your income. If your Modified Adjusted Gross Income, or MAGI, is over $87,000 as a single person or over $174,000 as a couple, you will have this surcharge added to your monthly premiums. It goes up incrementally as your income rises to an additional $347.00 on Part B and $76.40 for Part D if you are in the highest brackets (above $500,000 for individuals or $750,000 for couples). The amount is added to the standard premium which is $144.60 for 2020. The good news is that it doesn’t affect what you pay for a supplemental or advantage plan.
Only about 5% of people on Medicare pay the extra charge which was implemented on Part B in 2003 and on Part D in 2011 as a way to save the federal government money on the burgeoning cost of the Medicare program. What can be even more frustrating is that Medicare looks at income tax records from two years prior. That means if you sign up for Medicare in 2020, your IRMAA will be based on your 2018 tax records. Most people are making less money once they retire and go on Medicare, so what can you do if you are in this situation? You can appeal the extra charges to Medicare directly. By filing form SSA-44, Medicare may adjust the amount you owe to reflect your current income levels. If you don’t appeal, your income is re-evaluated yearly, so you won’t be paying the higher premiums forever if your income does decrease.