What Medicare Consumers Need to Know about IRMAA

Medicare is a valuable resource providing essential healthcare coverage for millions of Americans aged 65 and older. However, some Medicare recipients may encounter unexpected costs associated with their coverage, like the Income-Related Monthly Adjustment Amount (IRMAA). Take a moment to learn about what IRMAA is, who it affects, and what to do if it impacts you.

Understanding IRMAA

What is IRMAA?

IRMAA stands for the Income-Related Monthly Adjustment Amount. It's an annually calculated surcharge added to your Medicare premiums if your income exceeds a certain threshold. Essentially, it's a way for Medicare to charge higher-income individuals more for their coverage.

Who Does IRMAA Affect?

IRMAA impacts Medicare Part B (Medical Insurance) and Part D (Prescription Drug Coverage) recipients with higher incomes. The government determines your IRMAA based on your Modified Adjusted Gross Income (MAGI). Your MAGI might include passive or active income, student loan interest, IRA contributions, rental losses, and other passive losses.

How Is IRMAA Calculated?

IRMAA is calculated based on your MAGI from two years ago. For example, your 2023 IRMAA will be based on your 2021 MAGI. The higher your income, the higher your IRMAA will be.

What are the IRMAA Thresholds?

IRMAA thresholds can change annually, so it's important to stay updated on the latest figures to plan accordingly. We post updates as the figures are released each year. Importantly, though, IRMAA affects a small percentage of the population – only about 7%. Generally, individuals will need to worry about IRMAA when their MAGI exceeds $100,000; married couples will need to start planning for IRMAA when they make about $200,000. Click here to check out the most up-to-date rates and thresholds.

How IRMAA Affects Your Medicare Costs

Part B IRMAA

IRMAA increases your monthly Part B premium. For example, in 2024, the standard Part B premium is $174.70, but with IRMAA, it can be significantly higher. To determine what you will pay monthly, add whatever adjustment rate applies to your MAGI bracket to the current year’s Part B premium. For example, if you and your spouse make $300,000 a year, and the Part B premium this year is $100, you would add the $30 of adjustment to the $100 premium to get a $130 Part B premium. You enroll in Medicare Part B on an individual basis, , so you and your spouse in total will pay $260 a month for Part B this year.

Part D IRMAA

If you have a Medicare Part D plan, IRMAA will also increase your Part D premium. An IRMAA surcharge may also be applied if you enroll in a Medicare Advantage plan – regardless of whether the plan itself charges a premium. A similar calculation can be made to guesstimate your Part D premiums with one change: since Part D premiums differ depending on carrier and plan, a national Part D average is used to calculate IRMAA instead.

Strategies to Manage IRMAA

Appealing IRMAA

If you believe your income has decreased, or if you qualify for other special circumstances, you can appeal your IRMAA. Speak to a licensed agent for guidance on this process.

Plan Ahead

Carefully monitor your income and plan accordingly to avoid or minimize IRMAA costs.

Seek Expert Advice

Navigating Medicare and IRMAA can be complex. Speaking to a licensed agent can help you make informed decisions to manage your Medicare costs effectively.

We can help you understand your options

Understanding IRMAA is essential for controlling your Medicare costs. If you have questions, need assistance with IRMAA appeals, or want to explore ways to optimize your Medicare coverage, don't hesitate to reach out to a licensed agent at Action Benefits. Our team of experts is here to guide you through the Medicare maze and help you make informed decisions that suit your unique needs.