What Is IRMAA and How Does It Work?
If you’re a higher-income Medicare beneficiary, you may have heard of IRMAA – the income-related monthly adjustment amount. It’s a surcharge added to your monthly Medicare premium based on your income. IRMAA stands for Income-Related Monthly Adjustment Amount. It’s an extra fee tacked onto your Medicare Part B and Part D premiums if your modified adjusted gross income (MAGI) exceeds certain thresholds. Think of it as a “wealth tax” for Medicare.
Parts of Medicare Affected by IRMAA
IRMAA applies to both Medicare Part B (medical insurance) and Part D (prescription drug coverage). If you’re hit with IRMAA, you’ll pay a higher monthly premium for these parts of Medicare. The surcharge is based on a sliding scale – the more you make, the more you pay.
How IRMAA Is Calculated
The Social Security Administration (SSA) determines your IRMAA each year. They look at your tax returns from two years prior to make the IRMAA determination. Your MAGI is compared to the income brackets set by Medicare. If it’s above the base amount ($103,000 for singles, $206,000 for couples in 2024), you’ll owe an IRMAA surcharge on top of your regular monthly premium. The surcharge amount depends on which income bracket you fall into.
Income Brackets and IRMAA Surcharge Amounts for 2024
Medicare recently released the income brackets and corresponding IRMAA surcharges for 2024. If your modified adjusted gross income (MAGI) from 2022 falls into one of these brackets, you’ll owe the additional premium amounts listed. For single taxpayers, the income ranges and monthly surcharges are:
| Single | Part B | Part D |
|---|---|---|
| < $103,000 | 174.70 | Premium Varies |
| $103,000 - $129,000 | $244.60 | Premium + $12.90 |
| $129,000 - $161,000 | $349.40 | Premium + $33.30 |
| $161,000 - $193,000 | $454.20 | Premium + $53.80 |
| $193,000 - $500,000 | $559.00 | Premium + $74.20 |
| > $500,000 | $594.00 | Premium + $81.00 |
Married Filing Jointly Income Ranges and Surcharges
If you’re married filing jointly, the brackets are essentially doubled:
| Couple | Part B (per person) | Part D (per person) |
|---|---|---|
| < $206,000 | 174.70 | Premium Varies |
| $206,000 - $258,000 | $244.60 | Premium + $12.90 |
| $258,000 - $322,000 | $349.40 | Premium + $33.30 |
| $322,000 - $386,000 | $454.20 | Premium + $53.80 |
| $386,000 - $750,000 | $559.00 | Premium + $74.20 |
| > $750,000 | $594.00 | Premium + $81.00 |
Married Filing Separately Income Ranges and Surcharges
The sliding scale for married couples filing separately is much narrower: – $97,000 to $403,000: $362.60 for Part B, $70.00 for Part D – Above $403,000: $395.60 for Part B, $76.40 for Part D These monthly surcharges are in addition to your regular Part B and Part D premiums. They’re based on your annual income from 2022. If your income has dropped since then, you may be able to appeal the IRMAA determination and pay a lower premium.
How to Determine if You’ll Pay IRMAA
Wondering if you’ll be on the hook for those hefty IRMAA surcharges? Here’s how to find out. The Social Security Administration (SSA) is responsible for determining IRMAA each year. They use your tax returns to calculate whether you owe the extra premium and how much. If you’re flagged for IRMAA, SSA will send you an initial determination notice. This letter explains why you’re subject to IRMAA, how much more you’ll pay, and what to do if you disagree with the determination.
Using Tax Returns to Calculate IRMAA
To calculate IRMAA, SSA looks at your IRS tax return from two years prior. For example, your 2024 IRMAA is based on your 2022 return. They use your modified adjusted gross income, or MAGI. This figure includes your adjusted gross income plus any tax-exempt interest and untaxed Social Security benefits. If your MAGI is above $103,000 (for singles) or $206,000 (for couples), you’ll likely owe IRMAA.
Receiving IRMAA Determination Notice
If you’re subject to IRMAA, expect to receive a notice from SSA in the fall before the premium year. For example, 2024 notices will go out in late 2023. The notice will state the income reported to SSA by IRS, the income bracket you fall into, and the premium surcharges that apply to you. It also explains how to appeal the determination if you’ve had a life-changing event that reduced your income. If you don’t receive a notice, you’re not subject to IRMAA for that year. But keep in mind, SSA recalculates every year, so your status can change as your income fluctuates.
Options for Paying IRMAA Premiums
If you’ve been hit with IRMAA surcharges, you have a few options for paying the extra premiums: If you’re already receiving Social Security retirement benefits, the easiest way to pay IRMAA is through automatic deduction. SSA will withhold your IRMAA premiums from your monthly benefit check. You don’t have to do anything – it happens automatically.
Direct Payment to Medicare
If you’re not yet receiving Social Security, you’ll get a bill from Medicare for your IRMAA premiums. You can pay by check, money order, credit card, or debit card. Make sure to send your payments to the address on the bill and include your Medicare number. If you don’t pay on time, you could lose your Medicare coverage.
Medicare Easy Pay Program
Another option is Medicare Easy Pay, which allows you to have your premium payments automatically deducted from a checking or savings account each month. You can sign up for Easy Pay online, by phone, or by mailing in a paper form. Once you’re enrolled, your IRMAA premiums will be withdrawn from your bank account on the 20th of each month. Easy Pay can give you peace of mind, knowing your premiums are always paid on time.
