IRMAA is a Medicare acronym that stands for income-related monthly adjustment amount. In short, individuals who have higher income will have to pay a higher Medicare premium for Part B and Part D. Before you start to panic, IRMAA affects less than 5% of Medicare recipients.
For people who are not affected by IRMAA, Medicare pays approximately 75% of the cost of Part B premiums, and the beneficiary pays about 25% of the premiums. In 2020, the standard Part B premium amount is $144.60 per month. For the people who are impacted by IRMAA, they pay a higher percentage of the total premiums (35%, 50%, 65%, or 80%) based on where they fall on the IRMAA scale.
Higher-income beneficiaries will also pay higher Medicare Part D premiums, and that higher amount is applied regardless of which company the individual chooses to provide a Part D healthcare plan.
How do you know if IRMAA affects you? Social Security will send you a notification called an initial determination to tell you. Their decision is based on the most recent tax return provided by the IRS, so whatever your income was two years ago will determine whether IRMAA applies to you. IRMAA uses a sliding scale to determine your Modified Adjusted Gross Income (MAGI); it currently starts at $85,000 for an individual and at $170,000 for a married couple filing jointly.
IRMAA is calculated every year, so some years you may be affected, and others you may not. Part B premiums are added automatically, and the total amount will be reflected in your monthly premium bill. For this reason, most people have their premiums automatically deducted from their monthly Social Security benefits payment. Part D premiums are made separately and directly to Medicare; you must pay them even if a third party or your employer pays your Plan D premiums.
Since 2011, there are six Medicare Part B income tiers that determine how much you will pay in premiums, depending on your income. The following tiers are based on an individual income tax filing in 2018: 1) If you made less than $87,000 in 2018, you will pay $144.60 each month; 2) If you made more than $87,000 but less than or equal to $109,000, you will pay $202.40 each month; 3) If you made more than $109,000 but less than or equal to $136,000, you will pay $289.20 each month; 4) If you made more than $136,000 but less than or equal to $163,000, you will pay $376.00 each month; 5) If you made more than $163,000 but less than or equal to $500,000, you will pay $462.70 each month; and 6) If you made more than $500,000, you will pay $491.60 each month.
There are some instances in which you can appeal a Social Security IRMAA determination. You may appeal the decision if, among other things, you recently married, you recently divorced, your spouse recently died, you stopped working or your hours at work were reduced, or you lost income-producing property. You might also be able to make the case that Social Security used outdated or incorrect information if you had to file an amended tax return to the IRS, or you have a more recent tax return that shows you are receiving less income than previously reported.
If you believe one of these situations applies to you, you can start your appeal by going to Social Security’s website at www.ssa.gov or call them at 1.800.772.1213. You need to have appropriate documentation to prove your claim, and you will have to submit a Medicare IRMAA Life-Changing Event form or schedule an appointment at your local Social Security Administration office.
While there is no guarantee that Social Security will approve your appeal, it is worth trying. Please note, however, that there is no timeline by which Social Security must respond to your request for appeal.