- An IRMAA is a surcharge added to your monthly Medicare Part B and Part D premiums, based on your yearly income.
- The Social Security Administration (SSA) uses your income tax information from 2 years ago to determine if you owe an IRMAA in addition to your monthly premium.
- The surcharge amount you’ll pay depends on factors like your income bracket and how you’ve filed your taxes.
- IRMAA decisions can be appealed if there’s an error in the tax information used or if you’ve experienced a life changing event that reduced your income.
Medicare is a federal health insurance program for people ages 65 and over and those with certain health conditions. It’s made up of several parts. In 2019, Medicare covered about 61 million Americans and is predicted to increase to 75 million by 2027.
Many parts of Medicare involve paying a monthly premium. In some cases, your monthly premium may be adjusted based on your income. One such case might be an income-related monthly adjustment amount (IRMAA).
IRMAA applies to Medicare beneficiaries who have higher incomes. Keep reading to learn more about IRMAA, how it works, and the parts of Medicare that it applies to.
Medicare has several parts. Each part covers a different type of health-related service. Below, we’ll break down the parts of Medicare and review whether it’s affected by IRMAA.
Medicare Part A
Part A is hospital insurance. It covers inpatient stays at locations such as hospitals, skilled nursing facilities, and mental health facilities. IRMAA doesn’t affect Part A. In fact, most people who have Part A don’t even pay a monthly premium for it.
Part A premiums are usually free because you paid Medicare taxes for a certain amount of time while you were working. But if you haven’t paid Medicare taxes for at least 30 quarters or fail to meet some of the other qualifications for premium-free coverage, then the standard monthly premium for Part A is $458 in 2020.
Medicare Part B
Part B is medical insurance. It covers:
- various outpatient health services
- durable medical equipment
- some types of preventive care
IRMAA does affect Part B. Based on your annual income, a surcharge can be added to the standard Part B premium.
Medicare Part C
Part C is also referred to as Medicare Advantage. These plans are sold by private insurance companies. Medicare Advantage plans often cover services that original Medicare (parts A and B) don’t cover, such as dental, vision, and hearing.
Part C isn’t affected by IRMAA. The monthly premiums for Part C can vary widely based on factors like your specific Advantage plan, the company offering your plan, and your location.
Medicare Part D
Part D is prescription drug coverage. Like Part C plans, Part D plans are sold by private companies.
Part D is also affected by IRMAA. As with Part B, a surcharge can be added to your monthly premium, based on your yearly income. This is separate from the surcharge that can be added to Part B premiums.
In 2020, the standard monthly premium for Part B is $144.60. Depending on your yearly income, you may have an additional IRMAA surcharge.
This amount is calculated using your income tax information from 2 years ago. So, for 2020, your tax information from 2018 will be assessed.
Surcharge amounts vary based on your income bracket and how you filed your taxes. The table below can give you an idea of what to expect.
|Yearly income in 2018: individual||Yearly income in 2018: married, filing jointly||Yearly income in 2018: married, filing separately||Part B monthly premium for 2020|
|< $87,000||< $174,000||< $87,000||$144.60|
|> $500,000||> $750,000||> $413,000||$491.60|
There’s no standard monthly premium for Part D plans. The company offering the policy will determine its monthly premium.
The surcharge for Part D is also determined based on your income tax information from 2 years ago. As with Part B, things like your income bracket and how you’ve filed your taxes impact the surcharge amount.
The additional surcharge for Part D is paid directly to Medicare, not to your plan’s provider. The table below provides information on the Part D surcharge amounts for 2020.
|Yearly income in 2018: individual||Yearly income in 2018: married, filing jointly||Yearly income in 2018: married, filing separately||Part D monthly premium for 2020|
|< $87,000||< $174,000||< $87,000||your regular plan premium|
|$87,001–$109,000||$174,001–$218,000||N/A||your plan premium + $12.20|
|$109,001–$136,000||$218,001–$272,000||N/A||your plan premium + $31.50|
|$136,001–$163,000||$272,001–$326,000||N/A||your plan premium + $50.70|
|$163,001–$500,000||$326,001–$750,000||$87,001–$413,000||your plan premium + $70.00|
|> $500,000||> $750,000||> $413,000||your plan premium + $76.40|
The Social Security Administration (SSA) determines your IRMAA. This is based on information provided by the Internal Revenue Service (IRS). You could receive a notice from the SSA regarding an IRMAA at any time of the year.
If the SSA decides that an IRMAA applies to your Medicare premiums, you’ll receive a predetermination notice in the mail. This will inform you about your specific IRMAA and will also include information such as:
- how the IRMAA was calculated
- what to do if the information used to calculate the IRMAA is incorrect
- what to do if you had a reduction in income or a life changing event
You’ll then receive an initial determination notice in the mail 20 days or more after getting the predetermination notice. This will include information about the IRMAA, when it goes into effect, and steps that you can take to appeal it.
You won’t have to take any additional action to pay the surcharges associated with the IRMAA. They will be automatically added to your premium bills.
Each year, the SSA reevaluates whether an IRMAA should apply to your Medicare premiums. So, depending on your income, an IRMAA could be added, updated, or removed.
If you don’t believe you should owe an IRMAA, you can appeal the decision. Let’s take a closer look at how this process works.
When can I appeal?
You can appeal an IRMAA decision within 60 days of receiving an IRMAA determination notice in the mail. Outside of this time frame, the SSA will evaluate whether you have good cause for a late appeal.
In what situations can I appeal?
There are two situations when you can appeal an IRMAA.
The first situation involves the tax information used to determine the IRMAA. Some examples of tax situations when you might want to appeal an IRMAA include:
- The data used by the SSA to determine the IRMAA is incorrect.
- The SSA used older or out-of-date data to determine the IRMAA.
- You filed an amended tax return during the year the SSA is using to determine the IRMAA.
The second situation involves life changing events. These are events that significantly impact your income. There are seven qualifying events:
- divorce or marriage annulment
- death of a spouse
- reduction in work
- cessation of work
- loss or reduction of specific types of pensions
- loss of income from an income-generating property
What documentation will I need to provide?
The documents you need to provide as a part of your appeal depend on your situation. They might include:
- federal income tax returns
- marriage certificate
- decree of divorce or marriage annulment
- death certificate
- copies of pay stubs
- signed statement from your employer indicating reduction or stoppage of work
- letter or statement indicating a loss or reduction of a pension
- statement from an insurance adjuster indicating loss of an income-generating property
How do I submit an appeal?
An appeal may not be necessary. The SSA will sometimes perform a new initial determination using updated documentation. If you’re not eligible for a new initial determination, you can appeal the IRMAA decision.
You can contact the SSA to begin the appeals process. Your initial determination notice should also have information for how to do this.
Example of an IRMAA appeal
You and your spouse jointly filed your 2018 income taxes. This is the information that the SSA uses to determine IRMAA for 2020. Based on this information, the SSA determines that you need to pay a surcharge on the relevant Medicare premiums.
But you want to appeal the decision because you had a life changing event when you and your spouse divorced in 2019. The divorce lead to a significant reduction in your household income.
You could appeal your IRMAA decision by contacting the SSA, filling out the relevant forms, and providing the appropriate documentation (such as a decree of divorce).
Be sure to gather the appropriate documentation for your appeal. You may also need to fill out the Medicare Income-Related Monthly Adjustment Amount: Life-Changing Event form.
If the SSA reviews and approves your appeal, your monthly premiums will be corrected. If your appeal is denied, the SSA can provide you with instructions on how to appeal the denial in a hearing.
Resources for additional help
If you have questions or concerns about Medicare, IRMAA, or getting help with paying your premiums, consider using the following resources:
- Medicare. You can contact Medicare directly at 800-Medicare to get information on benefits, costs, and assistance programs like Medicare Savings Programs and Extra Help.
- SSA. To get information about IRMAA and the appeals process, the SSA can be contacted directly at 800-772-1213.
- SHIP. These are state programs that provide free assistance with your Medicare questions. You can find out more about your state’s SHIP program here.
- Medicaid. Medicaid is a joint federal and state program that assists people who have a lower income or resources with their medical costs. You can find more information or check if you’re eligible on the Medicaid site.
IRMAA is an additional surcharge that can be added to your monthly Medicare premiums based on your yearly income. It applies only to Medicare parts B and D.
The SSA uses your income tax information from 2 years ago to determine whether you owe an IRMAA. The surcharge amount that you may need to pay is determined based on your income bracket and how you filed your taxes.
In some cases, IRMAA determinations can be appealed. If you received a notice about an IRMAA and believe you don’t need to pay the surcharge, contact the SSA to learn more.