Everything You Need to Know About IRMAA

Some Medicare recipients, specifically those enlisted in Medicare Component B (outpatient or medical professional browse through insurance coverage) and/or Medicare Part D (prescription medicine insurance coverage), may be puzzled if their monthly settlements seem a little bit greater than they had originally anticipated because of IRMAA.

What Is IRMAA?

IRMAA is an added amount that some individuals may have to pay along with their Medicare costs if their customized adjusted gross earnings (MAGI) is higher than a certain threshold. IRMAA just applies to individuals who are signed up in Medicare Component B and/or Medicare Component D.

If you think you will have to make IRMAA payments, keep reviewing for more details on what you might need to pay.

The federal government broadened the eligibility of IRMAA payers to try to enhance the financial stability of the Medicare program.

IRMAA was first enacted in 2003 as a provision of the Medicare Modernization Act.

IRMAA isn’t actually part of your plan costs. The first costs payment you make is your share of your insurance costs, yet when you pay it, the government has currently paid its share, which adds up to the whole cost of the costs. When it realizes that you in fact have even more money than it at first thought, IRMAA is primarily the payment the government asks for.

How Is IRMAA Calculated?

The government figures out whether you get approved for IRMAA by locating your modified adjusted gross income (MAGI). Your month-to-month IRMAA settlement for every year is figured out by your MAGI from 2 years prior. Your MAGI is your modified gross income (AGI) with certain costs added back to it. Your AGI is a generally utilized earnings number to identify your earnings brace for tax obligation functions. AGI includes your overall income for a year with certain reductions subtracted. Your MAGI readjusts by adding some reductions back, therefore it might, in some instances, be higher than your AGI. Most individuals MAGI is identical to or somewhat more than their AGI. Reductions included back to your MAGI can include:

  • Student loan interest
  • IRA contributions
  • Any passive income loss
  • Deductions for tuition and fees
  • Taxable social security payments

Below are the six earnings threshold tiers for 2021. The numbers depicted here are based upon the Social Protection Management’s (SSA) most existing documents.

  • Tier 1 consists of individuals with MAGIs of up to $88,000 and married couples filing jointly with MAGIs of less than or equal to $176,000.
  • Tier 2 consists of individuals with MAGIs between $88,001 and $111,000 and married couples filing jointly with MAGIs between $176,001 and $222,000.
  • Tier 3 consists of individuals with MAGIs between $111,001 and $138,000 and married couples filing jointly with MAGIs between $222,001 and $276,000.
  • Tier 4 consists of individuals with MAGIs between $138,001 and $165,000 and married couples filing jointly with MAGIs between $276,001 and $330,000.
  • Tier 5 consists of individuals with MAGIs between $165,001 and $499,999 and married couples filing jointly with MAGIs between $330,001 and $749,999.
  • Tier 6 consists of individuals with a MAGI greater than or equal to $500,000 and married couples filing jointly with a MAGI greater than or equal to $750,000.
Source https://youstaywealthy.com/medicare-irmaa-brackets/

Consult the graph below for more details on what your month-to-month Part B adjusted quantity may be in 2021. The graph is based on your filing condition and annual earnings for 2019

Keep in mind: Your IRMAA repayments aren’t determined by just how much cash you made the previous year yet rather your MAGI from two years back.

File Individual Tax Return File Joint Tax Return File Married & Separate Tax Return You Pay (in 2021)
$88,000 or less $176,000 or less $88,000 or less Your plan premium
Above $88,000 up to $111,000 Above $176,000 up to $222,000 Not applicable. $12.30 + your plan premium
Above $111,000 up to $138,000 Above $222,000 up to $276,000 Not applicable. $31.80 + your plan premium
Above $138,000 up to $165,000 Above $276,000 up to $330,000 Not applicable. $51.20 + your plan premium
Above $165,000 up to $499,999 Above $330,000 up to $749,999 Above $88,000 up to $411,999 $70.70 + your plan premium
Above or equal to $500,000 Above or equal to $750,000 Above or equal to $412,000 $77.10 + your plan premium
Source: Social Security Administration

The chart below shows Part D premium payments for 2021. These numbers are based on your 2019 tax return

File Individual Tax Return File Joint Tax Return File Married & Separate Tax Return You Pay (in 2021)
$88,000 or less $176,000 or less $88,000 or less Your plan premium
Above $88,000 up to $111,000 Above $176,000 up to $222,000 Not applicable. $12.30 + your plan premium
Above $111,000 up to $138,000 Above $222,000 up to $276,000 Not applicable. $31.80 + your plan premium
Above $138,000 up to $165,000 Above $276,000 up to $330,000 Not applicable. $51.20 + your plan premium
Above $165,000 up to $499,999 Above $330,000 up to $749,999 Above $88,000 up to $411,999 $70.70 + your plan premium
Above or equal to $500,000 Above or equal to $750,000 Above or equal to $412,000 $77.10 + your plan premium
Source: Medicare.gov

If you are on Medicare Part B or Medicare Part D, you will receive an “Initial IRMAA Determination Notice” from Social Security. It can arrive any time after you are enrolled in either Part B or Part D. This notice will tell you how much you’ll have to pay for your IRMAA. It’s very important that you keep this notice, especially if you need to refer back to it for appeals. (See the “How to Appeal IRMAA” section below for more information.)

Who Pays IRMAA?

As noted above, only individuals who earn more than $88,000 and married couples filing jointly who earn more than $176,000 are required to pay IRMAA.

How to Pay IRMAA

As IRMAA isn’t technically part of your plan premium, you don’t pay IRMAA to your plan’s provider. Instead, IRMAA is paid to Medicare (the Centers for Medicare and Medicaid Services) itself.

If IRMAA isn’t taken out of your Social Security check, you’ll get a bill from Medicare or the Railroad Retirement Board (RRB), if you get benefits from them rather than Social Security.  Look for something called a “Medicare Premium Bill” (CMS-500) every month.

There are many ways to pay your Medicare bill:

  1. Pay via your bank account or using your bank’s online bill payment service. Unfortunately, not all banks offer this service.
  2. Register to use Medicare Easy Pay, which deducts your payment from your bank account at no charge each month, usually on the 20th.
  3. Send a check or money order. Enclose your payment coupon, and mail the payment to:
    Medicare Premium Collection Center
    P.O. Box 790355
    Louis, MO 63179-0355
  4. Make a payment with a credit or debit card. There should be a payment coupon on the paper copy of your Medicare bill where you can fill out your payment account information.

If you get your bill from the RRB, you won’t be able to pay your IRMAA with any of the methods listed above. Instead, you or your bank will have to mail your payments and payment coupons to:

RRB, Medicare Premium Payments
P.O. Box 979024
St. Louis, MO 63197-9000

If you don’t pay your IRMAA (or your base premium amount), you’ll get two notices before receiving a delinquent notice. Each notice is due on the 25th of the month in which it was sent. If the billing notice date is after the 25th, then the due date will be on the 25th of the next month. (For example: If you receive a bill on May 30, you’ll have to pay it by June 25.) If you are late after the delinquent notice, your coverage will be cancelled.

How to Appeal IRMAA

If you think that your IRMAA is too high, then you have options to reduce it.

  1. If you believe that the federal government might have made an error on your Initial IRMAA Determination Notice, you may formally request an appeal by completing a “Request for Reconsideration” form (Form SSA-561-U2). You can find the appeal form online or call the Social Security Administration directly at 1-800-772-1213 for a paper copy.Do not use this option if you know that the MAGI that the SSA has on file for you is incorrect. If this pertains to you, see Step 3.
    #
    This reconsideration will allow you to undergo another IRMAA determination. If the reconsideration is in your favor, your IRMAA will be corrected. If it’s denied, you can follow the directions on your denial papers to appeal to an administrative law judge (ALJ) within 60 days of the date printed on the reconsideration denial papers. A lawyer can also assist you with the appeal process.
    #
    If the ALJ appeal is unsuccessful, you have 60 days to make your case to the Medicare Appeals Council (MAC). If the MAC appeal is unsuccessful, your final recourse will be to appeal to the Federal District Court within 60 days of the council’s denial.
  2. You can also get a new Initial IRMAA Determination if something major happens in your life that would cause your income to decrease. These life-changing events can include:
    • Marriage
    • Divorce/annulment
    • Death of a spouse
    • Loss of income or certain reductions (from work, income-producing properties, or pensions)

    #
    This option is quite common for many people who feel that their reported income from two years ago was accurate but are currently having trouble paying for their expenses. People in this situation are not IRMAA’s intended payers. IRMAA’s intended payer system was designed to only include the most affluent enrollees of Medicare Part B and Medicare Part D. If you find that you are having a lot of trouble paying for IRMAA, you should obtain and submit Form SSA-44 from the Social Security Administration’s website.

  3. If you think, specifically, that the MAGI amount on which your IRMAA is based is incorrect, you will have to contact the Internal Revenue Service (IRS) directly. The government determines your MAGI based on the information you have filed with the IRS.
    #
    If you are successful in amending your MAGI, you’ll need a letter and transcript from the IRS stating that they have received the outdated, incorrect information and the new information. You should then contact the SSA directly and present them with the updated documentation.

Medicare Supplement (Medigap)

The only way to avoid IRMAA, if you’re eligible, is to not use Medicare Part B or Part D. But there might be more cost-effective options for you out there through Medicare Advantage and Medicare Supplement (or Medigap) plans. Once you turn 65, you’ll have a six-month open enrollment period to sign up for Medigap plans. After this point, you could be denied coverage. Also, many Medigap policies will often charge you higher premiums if you sign up later.

Medigap plans can vary greatly in cost and services offered. Barring a major life change or a bureaucratic error, you’re most likely not going to get your IRMAA lowered, which might, partially, be why you’re reading this. However, what you can do is find a Medicare Supplement or Medicare Advantage plan that might be more cost-efficient and a better fit for your needs.

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