Medicare Surcharge for High Income Earners (IRMAA)

If you’re in a higher income bracket and also a Medicare beneficiary, there are some things you need to know about the cost of Medicare in 2020. Both Part B and Part D costs are subject to a surcharge called IRMAA (Income Related Monthly Adjustment Amount) if your income is above the limit. 

Many people ask us what the IRMAA surcharges for 2020 are during their cost-free consultations. Besides wanting to know the income-related Medicare surcharges, many people have other questions about IRMAA and what income is used to determine your Medicare premiums for Part B and Part D.

We’ve created this article to answer our most frequently asked questions, as well as let you know what your Medicare Part B and Part D costs should be for 2020, depending on your income.

Understanding Medicare Part A, Part B, and Part D for High Income Earners

To understand where IRMAA applies, you have to understand how Medicare is set up. 

Part A has no premium if you (or a spouse) have paid into the system for 40 quarters over your lifetime. It covers hospital, nursing home, and skilled nursing facility stays. There is no IRMAA surcharge for Part A since there’s no premium to begin with.

Part B has a premium that can change each year. The premium for most people in 2020 is $144.60. This premium goes up for those who fall into the “high income earner” category. The surcharge is called the Income Related Monthly Adjustment Amount, or IRMAA. We’ll go into much more detail below.

Part D covers prescription drugs and the premium depends on the plan you choose. This premium is also subject to IRMAA if you are a high income earner.

What income is used to determine my IRMAA surcharge?

Your income is determined with your tax return from two years ago. Your modified adjusted gross income is the number that is used to see if you need to pay the IRMAA surcharge on top of the basic Medicare premium. 

Which Medicare parts require an IMRAA surcharge for high income earners?

Only Part B and Part D require a surcharge. Since Part A doesn’t have a premium for most people, if you qualify with your work history, there’s no charge and no surcharge.

What will my IRMAA surcharge for Part B be in 2020?

The Part B costs for high income earners in 2020 can be seen in the chart below. Notice that you pay $144.60 if your income is below $87,000 (filing single) or $174,000 (filing jointly). The premium goes up if your income is above that threshold.

This chart lays out income brackets for IRMAA
Data from the medicare.gov website

What will my IRMAA surcharge for Part D be in 2020?

Part D premiums can vary depending on the plan you choose. For this reason, there’s a set national base beneficiary premium that’s used to figure your IRMAA amount. The national base beneficiary premium for Part D in 2020 is $32.74. Your IRMAA won’t change if you get a more or less costly Part D plan since IRMAA is calculated on this base premium amount.

Again, IRMAA is the additional amount you owe if your income is above $87,000 (filing single) or $174,000 (filing jointly). For those high income earners making more than this threshold, you can figure out your surcharge with the following chart.

This chart lays out income brackets for determining IRMAA for Part D
Data from medicare.gov web site

What income is used to determine IRMAA?

Your modified adjusted gross income (MAGI) is used to calculate your IRMAA surcharge. MAGI equals your adjusted gross income, plus tax-exempt interest income. If you have specific questions about your taxes, it’s a good idea to contact our in-house financial planner, Jeremy Tyler. Since he specializes in financial planning for retirees, he has strategies and tips for dealing with IRMAA and other Social Security related matters.

How will I know if I owe an IRMAA surcharge?

The Social Security Administration will send you a notification called an initial determination that your premium is higher than the standard. If you don’t think they made a correct determination, you can file an appeal, or submit a form if you’ve had a life changing event (see below) that alters your income.

Where do I send my IRMAA surcharge payment?

How to Pay Part B IRMAA
Your Part B IRMAA surcharge is simply added to your Part B premium. This will be automatically deducted from your Social Security monthly benefit check. If you don’t receive a check, you’ll get a bill for the full amount.

How to Pay Part D IRMAA
There are many Part D plans available, so your IRMAA surcharge is not added to the Part D bill amount. Your Income Related Monthly Adjustment Amount gets paid directly to the Social Security Administration, not your Part D plan. You can have your surcharge deducted from your monthly Social Security check or receive a bill every month.

Can IRMAA change if I have a reduction in income?

Yes. If you experienced what the Social Security Administration considers a “Life Changing Event” you can fill out a form to reduce or eliminate your IRMAA surcharge. A few of the life changing events considered are a marriage, divorce, death of a spouse, work stoppage or reduction, loss of a rental property, or loss of your pension. These must go along with a reduction of income as a result of the event. 

As your agents, we can help you find the form and let you know what kind of documentation you must provide when you submit it.

Do I pay IRMAA for Part D if I have an employer or union plan?

Yes, you must still pay the Income Related Monthly Adjustment Amount directly to the Social Security Administration (or have it taken out of your monthly Social Security check).

What happens if I forget to pay the IRMAA surcharge?

It’s very important that you pay your monthly IRMAA surcharge. If you forget or paperwork gets lost, you will lose your coverage and may not be able to enroll again. For this reason, we recommend that you have the surcharge taken out of your Social Security check. That way it’s automatic and you won’t forget to pay. 

If you don’t receive Social Security, be sure to keep your address updated with their office. They need to be able to contact you regarding IRMAA payments. You want to stay aware of any surcharge due so you don’t lose your coverage.

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We encourage you to contact our office if you have any questions about enrolling in Medicare, if you want to compare plans, or if you’re interested in finding a Medicare Advantage plan. We’ve taken care of area Medicare beneficiaries for over 15 years so we know our way around IRMAA and other Medicare policies.

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