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Medicare IRMAA: How To Avoid The Surcharge If Possible

Medicare Part B and Medicare Part D premiums can be increased if you are assessed by Medicare IRMAA. The Medicare IRMAA is based on how much you earn in one year—you must make less than $88,000 per year or less as an individual or $176,000 per year or less as a couple if you want to avoid paying an extra cost. IRMAA stands for Income Related Monthly Adjustment Amount.

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Medicare IRMAA Guidelines You Need to Know

How are the Medicare Part B premiums figured? Most people have a $0 premium for their Medicare Part A hospital insurance. But as you probably know there is a monthly premium assigned for your Medicare Part B. The standard Medicare Part B premium in 2021 is $148.50 per month. That is for individuals making less than $88,000 a year and joint earners making less than $176,000 a year. If you are making more than that then your Medicare Part B premiums will likely be higher. 

It is important to know that Medicare will look back two years when determining your income for your Medicare Part B premium. When determining your IRMAA, social security will look at your Modified Adjusted Gross Income also called (MAGI). It is necessary to know that Social Security will access your tax return every year in order to determine your IRMAA for Medicare Part B and Medicare Part D premiums. Maybe you only had income high enough for the IRMAA for one year. If your income goes down you may not get an IRMAA for the next year.  

What Is Medicare IRMAA?

Here is a web page from Medicare’s website on IRMAA. You can see here under the “What Is It Heading.” It states, You’ll get this notice if you have Medicare Part B and/or Medicare Part D and social security determines that any Income Related Monthly Adjustment Amounts (IRMAA) apply to you. This notice includes information about social security’s determination and appeal right.

Medicare IRMAA
Medicare IRMAA

What Aspects of Medicare are Affected by IRMAA?

Medicare is an essential public service for the elderly here in America, which helps cover medical expenses in various terms. Some people will be more affected by these changes than others due to their specific needs when it comes down to coverage.

Medicare Part A

What is hospital insurance? Medicare Part A covers inpatient stays at hospitals, skilled nursing facilities, and mental health facilities. IRMAA doesn’t affect this coverage either; most Medicare Part A people don’t even pay for it monthly.

What does Medicare Part B Cover?

Medicare Part B covers medical expenses. It covers the following:

  • A variety of outpatient health treatments
  • Some forms of preventative treatment require long-lasting medical equipment.

Medicare Part C — Medicare Advantage

You’ve heard that Original Medicare (Medicare Part A and Medicare Part B) doesn’t cover dental, vision, or hearing. Luckily there are plans like Medicare Part C, which do! IRMAA can affect your Medicare Part C. But even if you have a $0 monthly premium Medicare Part C plan if it includes drug coverage you can be subject to the IRMAA surcharge for the Medicare Part D portion of your Medicare Advantage plan.

How much will IRMAA Medicare Increase to My Medicare Part B Charges?

The cost for Medicare Part B premium in 2021 is $148.50 per month, and an additional IRMAA surcharge may apply depending on your income. This surcharge amount varies based on how you filed taxes two years ago (IRS tax return information).

Below is a chart from Medicare’s website. Here is a link to the website if you would like to view it. You will notice in the top box that it states, “if your yearly income in 2019 (for what you pay in 2021) was”. This is referring to your Modified Adjusted Gross Income (MAGI). Then you look for which box your income falls in and that is the premium you will be paying for your Medicare Part B premium. For example, if you are an individual and you made $125,000 in 2019 then your 2021 Medicare Part B premium would be here and the premium would be $297 a month. 

Medicare IRMAA
Medicare IRMAA

How much will IRMAA Charge Me for Medicare Part D?

It can be a little challenging to figure out the monthly premium for Medicare Part D plans. The company offering the policy will determine its price, and since there’s no standard, it could range from one program to another. But that’s not all! You also have to add surcharges into your calculations depending on how you filed taxes two years ago. The extra Medicare Part D premium is paid directly to Medicare rather than to your plan’s provider.

There is also Income Related Monthly Adjusted Amount for Medicare Part D as well. In addition, it also goes back two years and uses your Modified Adjusted Gross Income (MAGI). Here is the chart from Medicare’s website on the Medicare Part D increased premiums. You will see the income spreads are the same. What you will want to do is again look up where your MAGI falls in the chart. We will use $125,000 again as an individual. Then we look to the right and it tells us that you will need to add $31.80 per month to your Medicare Part D premium.

Medicare IRMAA

If you get a stand-alone Medicare Part D plan with a monthly premium of $20 per month, then you would add $31.80 to the $20 monthly premium for your Medicare Part D plan. This would be a total of $51.80 per month. I know some of you are thinking, well I’ll just get a $0 monthly premium Medicare Advantage with Medicare Part D for my Medicare coverage and I’ll outfox Medicare and avoid this extra payment. 

Uncle Sam Ain’t Gonna Miss Gettin’ His Money

We all know ol’ Uncle Sam he ain’t gonna miss out on his money, sorry for the bad grammar. But, even if you get a $0 premium Medicare Advantage plan with Medicare Part D prescription coverage, you will need to pay the IRMAA related extra premium. To keep going with this example of the individual that is making $125,000 a year and got a $0 premium Medicare Advantage Plan with Medicare Part D prescription coverage. They would be paying $31.80 per month on top of the $0 premium. A total of $31.80 per month. I word it that way because if you were to get a Medicare Advantage plan with a premium of $20 a month. You would pay the $31.80 per month on top of the $20, for a total of $51.80 per month.

What Should I do if I don’t Believe I Should Pay IRMAA Medicare?

If you do not feel you should be required to pay an IRMAA, you may appeal the judgment. Let’s look at how this procedure works in more detail.

When may I File an Appeal?

The Appeal process for IRMAA is a lengthy and difficult one. With an approximate 60 day window to appeal, the SSA will evaluate whether you have a good cause to grant your request after this time has passed.

What Documents will I be Required to Provide?

Your circumstances determine the papers you must provide as part of your appeal. They may also include:

  • Returns on federal income tax
  • Certificate of marriage
  • Divorce decree or marriage annulment
  • Certificate of death
  • Pay stubs copies
  • A written letter from your employer stating work reduction or cessation
  • A letter or statement is informing you of the loss or decrease of your pension.
  • Insurance adjuster’s declaration showing the loss of an income-generating property

What is the Procedure for Filing an Appeal?

Here are some situations which may qualify you for a new determination. The situation is Tax return inaccurate or out of date. Here are the descriptions. A beneficiary filed an amended tax return for the year SSA is using to make an IRMAA decision. There was an error in the IRS data. The IRS provided SSA with older data and the beneficiary wants to use newer information. You had a major life-changing event that significantly reduced your income.

Another section of potential qualifying events is a Life-changing event that affects the beneficiary’s Modified Adjusted Gross Income (MAGI). There are 7 qualifying life-changing events: Death of spouse, Marriage, Divorce or annulment, Work reduction, Work stoppage, Loss of income from income-producing property, Loss or reduction of certain kinds of pension income. If any of these apply to you or you think you have a circumstance that would warrant an IRMAA appeal, give social security a call or fill out the appeal form.

Conclusion How To Avoid Paying The Medicare IRMAA Surcharge

Medicare is a great program that helps millions of Americans stay healthy and live longer lives. But if you make more than $85k per year, then IRMAA can add an extra cost to your monthly premiums–and that’s not good for anyone! How much do you know about IRMAA? Do you want some help understanding how it works or making sure it doesn’t affect your finances too negatively in the future? Let me know by leaving a comment below. I’m here to help!

About The Author — Christopher Duncan

I’m Chris Duncan, owner of Trusted Benefits Direct. As your Medicare advisor, I want you to know that my business offers superior solutions for everyone. I do not work for insurance companies, which allows me to serve you at a high level without any hidden agendas or conflicts of interest. All resources are provided at no cost because people must find peace of mind when looking ahead years down the line.

As an insurance agent, it’s my goal to make your life easier. That includes the process of securing all types of coverage for you and your loved ones, including Medicare Supplements, Medicare Advantage, Medicare Part D, Final Expense life insurance services, and retirement security plans. You can reach me toll-free at 800-910-3382 or get a free quote on MedicareRateQuote.com with just a few clicks! Don’t forget that I also offer contact forms if you would like more information from trustedbenefitsdirect.com – click here now!

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2 thoughts on “Medicare IRMAA: How To Avoid The Surcharge If Possible”

  1. Hi Chris!
    I’m going to subscribe to your YouTube channel!
    I need some advice. My wife and I are retired and have been on Medicare for 2 and 4 years respectively. Our MAGI’s have never initiated a IRMAA surcharge-Not even close!
    Since we took a very large withdrawal from our untaxed TSP account in 2020 to buy property and build a retirement home, I anticipate a IRMAA induced premium for 2022.
    Our MAGI for 2021 will be, ONCE AGAIN, far below the threshold for any IRMAA charges in 2023.
    Since our MAGI for 2020 was a 1 year extreme variance of our income, could we APPEAL to Medicare to use are 2021 MAGI to eliminate the IRMAA for 2022?
    Would I have to wait to appeal until AFTER I file my 2021 taxes in 2022? Or just bring documentation of our incomes to a SSI office?
    We really appreciate your guidance.
    Jerry & Linnea Mazock

    1. Hi Jerry, thanks for this comment and for giving me a call about your Medicare IRMAA question. I hope I was able to point you in a good direction for your Medicare IRMAA appeal.

      If I can be of help in the future please let me know.
      Thanks
      Chris Duncan
      800-910-3382

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