Nothing Pops to mind when you hear the term IRMAA, does it?
IRMAA was enacted in 2003 as a provision of the Medicare Modernization Act. The provision applied only to high-income enrollees of Medicare Part B.
In 2011, IRMAA was expanded under the Affordable Care Act to include high-income enrollees of Medicare Part D as well.
Since 2007, a beneficiary’s Part B monthly premium is based on his or her income. These income-related monthly adjustment amounts affect roughly 7 percent of people with Medicare Part B. Most of them are the younger retirees who still are generating income.
You’re turning age 65, you’ll have a 7-month window of time when you can sign up for Medicare. It’s called your Initial Enrollment Period – or IEP for short. Your IEP includes your 65th birthday month, the 3 months before and the 3 months after.
You’ve been paying for Medicare with every dollar you’ve earned through Federal Insurance Contributions Act (FICA) wage taxes. This year the government nabs 1.45% of your efforts to support Medicare.
You would think that would suffice, but no. You’ll pay the higher premium if your income from 2 years ago, is more than:
- $91,000 in 2022, if you file an individual tax return or are married and file separately
- $182,000 in 2022, if you are married and file a joint tax return
The Part B base premium is $170.10 each month but can go as high as $578.30 for the top earners. These top earning folks will also pay an additional $12.40 – $77.90 for their Medicare Part D premium. Yowzers!
You won’t have to take any additional action to pay the surcharges associated with the IRMAA. They will be automatically added to your premium bills! How cool is that!
However, you can appeal IRMAA surcharges. The appeal is for certain life changing events—marriage, divorce, death, work reduction or stoppage, pension default, etc. If you have one of these events and an appeal is filed, you have a decent chance that your IRMAA will be readjusted and you won’t have the government vacuuming your wallet. This is super important to know for the first year of retirement because your income may have considerably dropped.
Now you know your way around the Income Related Monthly Adjusted Amount and it’s horrible effects on Medicare Part B and D premiums. If you’re walloped with an IRMAA and are good at telling tales of woe, maybe you can get out of it and get the extra charges dropped. Good luck.