What you need to know about IRMAA and Medicare

Medicare is not always easy to navigate, especially with a large number of rules, penalties, and other extra charges. Knowing what Medicare costs to expect is an important part of retirement planning. 

While most people pay the standard Part B premium and the base Part D premium for the prescription drug plan they choose, some high-earning Medicare beneficiaries pay higher Medicare premiums due to IRMAA. In this post, we’ll explain how IRMAA (income-related monthly adjustment amount) works. You’ll learn if you’ll be responsible for IRMAA, how much extra you may be charged for your Medicare premiums, and how to handle Medicare IRMAA appeals.

Key Takeaways:

• IRMAA (Income-Related Monthly Adjustment Amount) is an additional charge you have to pay for Medicare Part B and Part D if you make more than $103,000 filing solo or $206,000 filing jointly. 

• You can appeal your IRMAA cost if you experience a life-changing event. 

• Beneficiaries on Medicare Advantage will also have to pay IRMAA costs.

What is IRMAA?

IRMAA stands for Income-Related Monthly Adjustment Amount. IRMAA is an additional cost for Medicare beneficiaries who have higher incomes. Most Medicare beneficiaries are not subject to IRMAA—only 5% are. If you are subject to IRMAA, your Medicare Part B and Part D premiums will be higher. 

How much does IRMAA cost?

In 2024, the standard monthly Medicare Part B premium is $174.70 per month, but those who have a higher salary will have an IRMAA charge and will have to pay more. Medicare Part B IRMAA charges range from $69.90 to $419.30. Premiums vary for Part D coverage, but there will also be an IRMAA charge. Medicare Part D IRMAA charges range from $12.90 to $81.00.

When determining if you’re subject to IRMAA, the government will consider your modified adjusted gross income (MAGI) from two years prior. We outline the specific IRMAA income brackets and Medicare premium surcharges in a chart later on in this piece.

What income counts as IRMAA?

Not all of your income is considered when determining your MAGI for IRMAA charges on Medicare. The following income sources do not count when calculating how much you make for IRMAA purposes:

• Distributions from Roth IRAs and Roth 401(k)s

• Health savings accounts

• Life insurance

Income sources that do count toward your MAGI and IRMAA charges include:

• Earned income

• Interest

• Required minimum distributions

• Capital gains 

IRMAA charges are recalculated every year. If you recently sold a house and have capital gains, you’d have to pay a higher IRMAA cost, but you can expect it to decrease the year after. 

Who qualifies for IRMAA?

Your IRMAA charges are determined by your tax returns from two years prior (e.g., in 2024, your MAGI will be based on your 2022 tax return). 

If your modified adjusted gross income is less than $103,000 (for individuals) or $206,000 (for those who file jointly), then you do not owe an IRMAA surcharge for Medicare Part B and Medicare Part D. 

If you earned more than $103,000, or if you and your spouse earned more than $194,000 jointly in 2022, you do owe IRMAA surcharges in addition to the standard Part B and Part D premiums for 2024. 

Your income two years ago doesn’t necessarily reflect how much you make currently if you’re still working. There may also be other life changes that affect how much money you have currently. For these reasons, you can appeal your IRMAA and reduce or eliminate the fees. We’ll explain how to appeal your IRMAA charges later in this article.

How IRMAA affects your coverage: 2024 IRMAA thresholds

In 2024, you’ll need to pay the Part B and Part D IRMAA charges if you make more than $103,000 filing solo or $206,000 filing jointly. There are different IRMAA costs based on how much money you or you and your spouse make. Here’s a breakdown of your Part B and Part D monthly Medicare premiums adjusted for IRMAA: 

How do I pay IRMAA charges?

How you pay IRMAA surcharges depends on whether or not you’re taking Social Security. 

If you’re a high earner who is not taking Social Security: 

• When you first start Medicare, your IRMAA charge will be billed separately from your first Medicare Part B bill. While it can be confusing, it’s important that you pay both invoices. If you don’t, your Part B and/or Part D insurance will get canceled. 

• After this initial billing, you can expect one invoice for your Medicare Part B and Medicare Part D premiums, which you’ll receive on a quarterly basis. 

If you’re a high earner collecting Social Security benefits, the additional charges from IRMAA will be taken from your Social Security payments automatically. 

How to lower your IRMAA charges

You can reduce or eliminate your IRMAA charges with an appeal if your 2024 income is much lower than your 2022 income. To qualify for appeal to lower your IRMAA, you must experience at least one of the following life-changing events:

• You get married

• You get a divorce/annulment

• Your spouse passes away

• You stop working

• You work less or part-time

• You lose income-producing property

• You lose pension 

• You get an employer settlement 

How to appeal IRMAA 

If you experience one of these life events, you can appeal IRMAA charges by filling out Form SSA-44 found on the Social Security government website or at your local Social Security office. If the appeal is accepted, Social Security will determine your IRMAA charge based on your current year’s income instead of your 2022 income. 

After you complete the IRMAA appeal form, send it by fax or certified mail to your local Social Security office. You should hear back within four to six weeks. You can also set up an interview appointment with your local office. 

Medicare Advantage and IRMAA

Medicare Advantage replaces Part A and Part B, but that doesn’t mean you can get off the hook for IRMAA charges. Those on Medicare Advantage still need to pay Part B premiums, and most Medicare Advantage plans also include Part D coverage. If you’re on a Medicare Advantage plan with Part D coverage, you’ll still have to pay IRMAA charges for both Part B and Part D. 

Being surprised at what you have to pay for Medicare is frustrating, and an IRMAA charge can feel like one more thing to keep track of when it comes to taking care of your health. Get peace of mind and understand the exact costs of your Medicare plan with a licensed Chapter Advisor. Call us at (855) 900-2427 or schedule a time to talk.