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How does the Income-Related Monthly Adjustment Amount (or IRMAA) affect me and my Medicare plan premiums?

Category: IRMAA: Higher Incomes and Costs
Updated: Aug, 02 2023

If you are paying IRMAA (the Income-Related Monthly Adjustment Amount), this means that, based on your income, you will pay higher premiums for your Medicare Part B and Medicare Part D coverage.

As noted by the Social Security Administration:
If you have higher annual income [modified adjusted gross income (MAGI)], you will pay an additional premium amount for your Medicare Part B (out-patient care) and your Medicare Part D prescription drug plan coverage. The Social Security Administration calls the additional monthly premium amounts the "income-related monthly adjustment amount" or IRMAA.

Here is how IRMAA works:

Medicare Part B IRMAA
  • Medicare Part B helps pay for your doctors’ services and outpatient care. It also covers other medical services, such as physical and occupational therapy, and some home health care. For most beneficiaries, the government pays a substantial portion—about 75 percent—of the Part B premium and the beneficiary pays the remaining 25 percent.
If you are a higher-income beneficiary, you will pay a larger percentage of the total cost of Part B based on the income you report to the Internal Revenue Service (IRS). You will pay monthly Part B premiums equal to 35, 50, 65, or 80 percent of the total cost, depending on what you report to the IRS.

Medicare Part D IRMAA
  • Medicare Part D prescription drug coverage helps pay for your prescription drugs. For most beneficiaries, the government pays a major portion of the total costs for this coverage and the beneficiary pays the rest. Prescription drug plan costs vary depending on the chosen Medicare Part D plan, and on whether you qualify for the financial Extra Help program that pays a portion of the Medicare Part D prescription drug coverage costs (monthly premiums and drug costs) for lower income Medicare beneficiaries.  (Click here to read more about the Extra Help program.)

If you are a higher-income beneficiary with Medicare Part D prescription drug coverage (a stand-alone PDP or an MAPD), you will pay monthly premiums plus an additional amount, which is based on the annual income you report to the IRS.  Because individual Medicare Part D plan premiums vary, the law specifies that the amount is determined using one base premium (click here to see more about the base premium).  The Social Security Administration calculates the additional amount you pay for your Medicare Part D premium to the base Medicare Part D beneficiary premium, not the premium of your chosen Medicare Part D plan.

If you are a higher-income beneficiary, Social Security deducts the IRMAA from your monthly Social Security payments regardless of how you ordinarily pay your monthly Medicare Part D prescription drug plan premiums. If the amount of your IRMAA is greater than your monthly payment from Social Security, or you do not get monthly payments, you will get a separate bill from another Federal agency, such as the Centers for Medicare & Medicaid Services (CMS) or the Railroad Retirement Board.

Question:  Which tax return is used to determine your IRMAA liability?

Your most recent tax returns are usually used to calculate IRMAA.  For example, your 2023 IRMAA is determined using your 2021 income (MAGI) as reported on your 2022 taxes.  For more information, please see: "Which Federal income tax return is used by the Social Security Administration to determine whether I have an income-related monthly adjustment amount for my Medicare Part B and Medicare Part D?"

Question:  Can I appeal my IRMAA assessment?

Yes.  Please see: "What can I do if I do not agree with the Social Security Administration's income-related monthly adjustment amount or IRMAA assessment?"

Question:  Where can I learn more about IRMAA?

As further reference, here is a link our Q1Medicare.com Article Section on the Income-Related Monthly Adjustment Amounts for Medicare Part D plans:  IRMAA - for Higher Incomes.

For example, in our IRMAA section you can read the article:
For a historical perspective . . .  If you are interested in how IRMAA has changed over the years, here an example of an older article with the 2013 Medicare Part D IRMAA information.

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  • Medicare beneficiaries with higher incomes may be required to pay both a Medicare Part B and Medicare Part D Income Related Monthly Adjustment Amount (IRMAA). Read more on IRMAA.
  • Medicare Advantage plans that include prescription drug coverage (MAPDs) are considered Medicare Part D plans and members with higher incomes may be subject to the Medicare Part D Income Related Monthly Adjustment Amount (IRMAA), just as members in stand-alone Part D plans. In certain situations, you can appeal IRMAA.
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