Introduction

Income-related Monthly Adjustment Amount (IRMAA) is an additional charge that applies to certain Medicare beneficiaries with higher incomes. It affects both Medicare Part B, which covers doctors’ services and outpatient care, and Medicare Part D, which covers prescription drugs. In this article, we will dive into the intricacies of how IRMAA is calculated and its implications on your healthcare costs.

IRMAA Thresholds and Brackets

The calculation of IRMAA depends on the individual’s or the couple’s modified adjusted gross income (MAGI), which includes various sources of income such as wages, Social Security benefits, and interest earnings. Based on their MAGI, beneficiaries fall into different income brackets, each with its own corresponding IRMAA.
As of 2021, the income brackets for IRMAA are as follows:

1. Individuals:

– Up to $88,000

– Between $88,000 and $111,000

– Between $111,000 and $138,000

– Between $138,000 and $165,000

– Between $165,000 and $500,000

– Over $500,000

2. Couples filing jointly:

– Up to $176,000

– Between $176,000 and $222,000

– Between $222,000 and $276,000

– Between $276,000 and $330,000

– Between $330,000 and $750,000

– Over $750,000

Calculation Process

To determine your IRMAA for Medicare Part B or Part D:

1. Obtain your MAGI reported on your IRS tax return from two years prior. For example: if you’re calculating your IRMAA for 2021, you’ll use your 2019 tax return data.

2. Based on your MAGI, identify the income bracket you fall into according to the above mentioned categories for individuals and couples.

3. Determine the standard premium for Medicare Part B and Part D for the year in question. In 2021, the standard premium for Medicare Part B is $148.50 per month, while the premium for Part D varies based on plan selection.

4. Identify the specific IRMAA surcharge associated with your income bracket. This surcharge will be added to your monthly premium for both Medicare Part B and Part D coverage.

5. Calculate your total monthly healthcare premium cost by adding your respective IRMAA surcharge to the standard Medicare Part B and Part D premiums.

Appealing Your IRMAA

If you believe that you are being unfairly charged due to a change in circumstances such as marriage, divorce, or reduction in work hours, you can appeal your IRMAA determination. To do so, you must submit a form SSA-44 (Medicare Income-Related Monthly Adjustment Amount – Life-Changing Event) to the Social Security Administration (SSA), explaining your situation and providing supporting documentation as evidence of your reduced income.

Conclusion

Understanding how IRMAA is calculated is essential to managing your healthcare expenses effectively. By staying informed about these calculations and keeping track of any changes in income or life events, you can ensure that you’re paying a fair and accurate rate for your Medicare coverage.