The Income Related Monthly Adjustment Amount (IRMAA) determines your Medicare payments if you or your earn above a certain income level. You can also potentially avoid these fees.
Your Medicare costs are based on premiums, deductibles, copayments, coinsurance, and various other out-of-pocket costs. Copayments and coinsurance are paid when you receive a covered benefit under a plan, typically either a small flat fee or around 20% of the total cost.
The most common (and most important when looking at the IRMAA) of these to consider, however, are your premiums and deductibles for Original Medicare. Most people receive premium-free Part A, so IRMAA changes won’t affect it. The average deductible for 2023 is $1,600 per benefit period. For Part B, it is an annual $226.
The premium for Part B, unlike Part A, must be paid no matter what, and can thus change based on your IRMAA. For 2023, the standard Part B premium is $164.90.
Part D premiums are affected by the IRMAA as well. Because Part D plans are offered privately rather than federally, it is hard to determine a standard premium. Part D is still regulated by the government, however, and is still a part of the larger government program. As a result, a set additional fee will be added to whatever your premium is with your provider.
The IRMAA is based on your joint or single tax filings. This, particularly, is based on your income from 2 years ago. There are 3 tax filing levels—each of these levels determines how your income is considered for your Part B or D premium. There are also income levels within the 3 larger tax filing levels—these are the limits placed on income to give you your actual premium or addition to it.
The first tax filing level includes the head of household, single, or widow/er with dependent child. Or, people who are married, filing separately, and were living apart for the whole year. Level two includes married people filing jointly. Level three is a bit specific—it includes those married and filing separately who have lived together for some part of the year.
In some cases, your income may have changed drastically in the past two years. You can make an appeal to the Social Security office of this change, and possibly have your IRMAA increased premium decreased or removed completely.
You can fill out a Social Security Administration IRMAA exception form, which asks if you have experienced a life-changing event that has lowered your income. You will have to provide documentation proving your decreased income.
There are 2 general categories that count for a SSA IRMAA exception—you have an inaccurate tax return, or one of 7 events. The inaccurate tax return can include flops on the part of the government, or something that has made your previous tax return no longer accurate to your income.
The 7 events that can also disqualify you from the IRMAA are:
Clauses such as the IRMAA can be scary. You need to prepare ahead of time and account for it when planning your retirement. Schwenker Senior Insurance can help you figure it out—to get started, give us a call 563-579-6116, or email us at jon@schwenkerins.com.
