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IRMAA: What is IRMAA in Medicare?


If you are a Medicare beneficiary with a high annual income, it may be a shock to realize your Medicare Part B and Medicare Part D premiums are higher than you initially thought they would be. This difference in premium reflects your Income Related Monthly Adjustment Amount (IRMAA).

The Social Security Administration determines if you owe an IRMAA based on the income you reported on your IRS tax return two years prior. If you feel your higher Medicare Part B premium is incorrect, there are steps you can take to appeal the IRMAA determination.

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What is IRMAA?

IRMAA is the Income Related Monthly Adjustment Amount added to your Medicare Part B and Medicare Part D premiums. You will only need to pay an IRMAA if your annual modified adjusted gross income (MAGI) exceeds a predetermined amount.

In 2003, IRMAA was added as a provision to the Medicare Modernization Act. The provision was set to help increase the financial stability of Medicare for future beneficiaries. Rather than paying the standard premium, those who qualify for IRMAA must pay a higher monthly premium based on their income bracket.

Most Medicare enrollees have Social Security automatically deduct their Medicare Part D and Medicare Part B premium from their Social Security check before it is deposited into their bank account each month. If you are not receiving income benefits with Social Security, you will typically receive a quarterly bill from Medicare. Regardless of how you pay your Medicare premiums, you will pay your IRMAA in addition to your premium each month.

Can IRMAA Impact My Medicare Part B Premium?

Your income and tax-filing status from two years ago determine your IRMAA eligibility. If your income exceeds a pre-determined amount, IRMAA can impact your Medicare Part B premium. Keep in mind, each year the IRMAA amounts change. Thus, qualifying for IRMAA any year does not qualify you for life.

Depending on income, you may not have to pay the additional fee each year. Also, if you have a special situation and believe IRMAA should not apply to you, you can request a redetermination or IRMAA appeal.

How to Calculate IRMAA

To calculate your IRMAA, you will need to review your tax returns submitted to the IRS two years prior to the current year. Your IRMAA is based on the modified adjusted gross income stated on your tax form.

Refer to the 2022 Medicare IRMAA Chart below for an idea of what Medicare costs you should expect in 2022.

2020 annual income: Individual 2020 annual income: Filing Jointly 2020 annual income: Filing separately Medicare Part B Premium 2022 Medicare Part D Premium 2022
$0 – $91,000 $0 – $182,000 $0 – $91,000 $170.10 Plan Premium
$91,001 – $114,000 $182,001 – $228,000 $238.10 Plan Premium + $12.40
$114,001 – $170,000 $228,001 – $284,000 $340.20 Plan Premium + $34.10
$142,001 – $170,000 $284,001 – $340,000 $442.30 Plan Premium + $51.70
$170,001 – $500,000 $340,001 – $750,000 $91,001- $409,000 $544.30 Plan Premium + $71.30
> $500,001 + $750,001 + $409,001 + $587.30 Plan Premium + $77.90

You can also view the image below for more details on Medicare Part B income-related premiums after 2022.

Medicare Income-Related Monthly Adjustment Amount

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What Line is MAGI on 1040?

Your modified adjusted gross income amount (MAGI) is made up of your total adjusted gross income plus any tax-deducted income. If you are unsure of your MAGI, you can quickly figure it out by looking at your tax return records. On your IRS Form 1040, these are line items 37 and 8b.

If the SSA determines that you owe a higher Medicare Part B premium based on your MAGI, they will notify you of your new amount by mail. However, if you think the income information Social Security used to determine your Income Related Monthly Adjustment Amount was incorrect or outdated, you can request an appeal for Medicare to revisit the decision.

In this case, you may need to contact the IRS and correct any wrong information before you file the appeal. Fixing the issue may be as simple as filing an amended tax return.

A new initial determination is a revised decision that the SSA makes regarding your Income Related Monthly Adjustment Amount. If you have experienced a life-changing event that caused a decrease in income, you can request that the SSA revisit its decision.

Situations Social Security Considers Life-Changing Events:

  • Marriage
  • Divorce
  • Spousal death
  • You or your spouse stop working or reduce the number of working hours
  • Involuntary loss of income-producing property due to a natural disaster, disease, fraud, or other circumstances
  • Receipt of the settlement payment from a current or former employer due to the employer’s closure or bankruptcy

You can request a new initial determination by submitting a Medicare IRMAA Life-Changing Event form. You can also schedule an appointment with Social Security. Documentation will be required with proof of the life-changing event that caused your income to go down.

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How to Appeal the IRMAA Decision

If requesting a new initial determination is not an option, you have the right to file an appeal for your Medicare Part B premium increase.

Social Security does not have a strict timeframe in which they must respond to a reconsideration request. If you have questions about your appeal status, it is best to contact the agency currently reviewing your appeal.

An appeal will not cost you anything, and if you state your case well enough, you may save yourself some money.

If you want to appeal your IRMAA, you should visit the Social Security website and complete the Request for Reconsideration form. The form will give you three options on how to appeal, with the easiest and most common way being a case review.

Documentation is essential for an appeal. You should write a cover letter explaining why you believe you are being overcharged and provide backup documentation.

You can appeal your Medicare Part B premium increase for outdated or incorrect information when you:

  • Filed an amended tax return with the IRS
  • Have a more recent tax return that shows you are receiving a lower income than previously reported

For example, let’s say you were single with an income of $95,000 the year you retired. Then, two years later, your income is only $45,000 from Social Security and IRA distributions. If this is the case, then you should not have to pay a higher Medicare Part B premium based on your former income.

Documentation Needed to File an IRMAA Appeal

  • A letter from your former employer confirming your retirement
  • A copy of your last pay stub to show your decreased income
  • Any official documents that support your case

If you have a successful appeal, Social Security will automatically correct your Medicare Part B premium amount. If you’re denied, they will provide instructions on how to appeal the denial to an Administrative Law Judge. While you are in the process of the appeal, you will continue to pay the higher Medicare Part B premium.

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FAQs

What are the MAGI limits for Medicare premiums?
The MAGI limits for Medicare premiums change every year and are different for those who file jointly and separately.
How can I avoid IRMAA?
You can lower your MAGI in a few ways, including contributions to a pre-tax retirement plan or HSA account, and through health insurance premiums you pay while self-employed. Also, consider deductions on your tax return.
How do I dispute IRMAA?
If your income has seen a significant decrease in the past two years, you can file an appeal. To dispute your IRMAA payments, complete Form SSA-44 with information about your life-changing event and income reduction.
Is there a refund after a successful IRMAA appeal?
Yes, the IRS will refund any excess amounts.
How much money can you have in the bank on Medicare?
There is no asset or income limit that disqualifies otherwise eligible people from Medicare. Yet, there is a cap on IRMAA that is subject to increase annually.

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Sources:

MedicareFAQ is dedicated to providing you with authentic and trustworthy Medicare information. We have strict sourcing guidelines and work diligently to serve our readers with accurate and up-to-date content.

  1. Initial IRMAA Determination, Medicare. Accessed March 2022.
    https://www.medicare.gov/forms-help-other-resources/mail-you-get-about-medicare/initial-irmaa-determination

Jagger Esch

Jagger Esch is the Medicare expert for MedicareFAQ and the founder, president, and CEO of Elite Insurance Partners and MedicareFAQ.com. Since the inception of his first company in 2012, he has been dedicated to helping those eligible for Medicare by providing them with resources to educate themselves on all their Medicare options. He is featured in many publications as well as writes regularly for other expert columns regarding Medicare.

54 thoughts on “IRMAA: What is IRMAA in Medicare?

  1. I received a $6600 federal energy tax credit. That credit threw me $1200 over into an IRMA. Is there consideration to remove that tax credit in calculating my IRMA? I would like to appeal the IRMA. Hopefully we are not penalized for going green. Thank you, Cindy

    1. Hi Cynthia! I would imagine this qualifies for an appeal due to a change in circumstance. Assuming the credit is only applied to one year of your tax returns. It doesn’t hurt to try!

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