What is IRMAA & How Can You Avoid Additional Medicare Costs?

If you’re at the age when Medicare is becoming a part of your daily life, you’re probably considering the different options available and their accompanying costs. One of the costs you might encounter is IRMAA – the income related monthly adjustment amount.

IRMAA is a surcharge you might incur on your Medicare Part B and Part D plan premiums if your adjusted gross income (AGI) is above a certain level.

If you’re trying to save on your Medicare costs, you might have some options that can help you to keep your out-of-pocket low.

How IRMAA Works

To navigate reducing your Medicare IRMAA-associated costs, it’s helpful to understand how it works. 

Typically, Medicare beneficiaries pay a standard premium that covers 25% of the costs for Part B and Part D. The other 75% is covered by the government. Beneficiaries with higher incomes end up paying more than 25%.

Essentially, IRMAA brackets put candidates in premium categories that determine the adjusted amount they pay for prescription drug coverage or Medicare Part B medical coverage. There are 5 brackets, which determine whether a beneficiary pays 35%, 50%, 65%, 80%, or 85% of the program costs.

The real shocker for most beneficiaries is that the program is based on your yearly income – whether individually or jointly filed – from 2 years prior. 

For example:

The income on your 2021 tax filing will determine what you pay in 2023. 

We all know that a lot can change in 2 years, especially as we retire, lose property, or even face the death of a loved one.

IRMAA determination is evaluated every year, but because it reflects your income from 2 years prior there are instances that make you eligible for appeal. 

How to Appeal IRMAA

Sometimes there is nothing that you can do to avoid the IRMAA surcharge. But there are many cases in which you may qualify for an IRRMA adjustment that makes you eligible to reduce or completely eliminate your extra cost.

There are many everyday life events that the Social Security Administration will consider for an IRMAA appeal. Those events include but aren't limited to:

If you've experienced any of these life changes, you will need to request an appeal in writing by completing a request for reconsideration form (SSA-561-U2). There are three ways to get the form:

If you have not experienced a qualifying life event, you might not be able to reduce your Medicare Part B premium. 

Of course, this is a simplified overview of IRMAA and the IRMAA appeals process. But simply understanding the appeal process allows you to take control of your Medicare coverage and determine how to get the lowest-cost care possible.The most important part of navigating the world of Medicare is understanding your needs and making sure that your plan accommodates each of them. Concerned you don't have the right Medicare plan for your needs? Schedule a time to talk with one of our local Medicare advisors.

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