What is the income-related monthly adjusted amount (IRMAA)?

Does income affect Medicare premiums?

Yes, your income can affect your premiums for Medicare Part B and Medicare Part D. People with high incomes pay higher premiums for both of these parts of Medicare. The income threshold for premium surcharges is indexed for inflation each year. In 2023, the threshold is $97,000 for a single individual; in 2024, it’s $103,000 for a single person. Most people do not pay any premium for Medicare Part A, but even for those who do, there is no income-related surcharge, so Part A premiums are not affected by income.

What is IRMAA?

Medicare beneficiaries who earn over $97,000 a year (the threshold increases to $103,000 in 2024) – and who are enrolled in Medicare Part B and/or Medicare Part D – pay the income-related monthly adjusted amount (IRMAA), which is a  surcharge added to the Part B and Part D premiums.

Since 2007, high-income Medicare enrollees have been required to pay the IRMAA surcharge for Medicare Part B coverage. An IRMAA surcharge for Medicare Part D premiums took effect in 2011.

For Medicare beneficiaries who receive Social Security retirement benefits, the premium for Part B is deducted from their Social Security check. This is true regardless of whether the person is subject to the IRMAA surcharge or not. But the “hold harmless” provision that prevents Social Security checks from decreasing from one year to the next does not apply to people who pay the IRMAA surcharge.

(The “hold harmless” provision has not been applicable in recent years, due to fairly large cost-of-living adjustments (COLA) for Social Security benefits. The 2023 COLA was historically large, and Part B premiums declined for 2023, including the Part B premiums that are paid by people subject to the IRMAA surcharge. For 2024, the average Social Security retiree benefit will increase by $59/month. Standard Part B premiums are increasing by just under $10/month for 2024, so the hold harmless provision will once again be non-applicable in nearly all cases.)

Does 'Medicare income limits' mean the same thing as IRMAA?

When people talk about “income limits”with regard to Medicare, they could be referring to the threshold where IRMAA surcharges start to apply for those on the higher end of the income spectrum. (Above a certain income limit, you’ll be subject to IRMAA, but below it, you won’t.)

But they could also be referring to the income thresholds that apply to Medicare Savings Programs and dual eligibility for Medicare and full Medicaid, for those on the lower end of the income spectrum. (Note that on the lower end, eligibility rules also include asset limits, in addition to income limits.)

So you’d need to know the context in order to determine which program is being discussed: Is it an upper income limit, below which a person has access to certain financial assistance with their coverage? Or are they referring to the highest income a person can have and not be subject to paying additional premiums for their Medicare coverage?

How is my income used in my IRMAA determination?

IRMAA is determined by income from your income tax returns two years prior. This means that for your 2023 Medicare premiums, your 2021 income tax return was used, and for your 2024 premiums, your 2022 income tax return will be used.

IRMAA applicability and amounts are recalculated annually. The IRMAA surcharge is added to your 2023 premiums if your 2021 income was over $97,000 (or $194,000 if you’re married). For 2024, the IRMAA surcharge will be added to your premiums if your 2022 income was over $103,000 (or $206,000 if you’re married). You will receive notice from the Social Security Administration to inform you if you are being assessed IRMAA. But as discussed below, there’s an appeals process if your financial situation has changed.

How is income calculated for Medicare's IRMAA determinations?

The income used to determine IRMAA is a form of Modified Adjusted Gross Income (MAGI), but it’s specific to Medicare. The Modified Adjusted Gross Income is different from your Adjusted Gross Income, because some people have additional income sources that have to be added to their AGI in order to determine their IRMAA-specific MAGI.

It’s important to understand that MAGI for calculating IRMAA isn’t the same as the normal MAGI that you might be accustomed to for non-healthcare purposes, nor is it exactly the same as MAGI for calculating premium tax credits and Medicaid/CHIP eligibility under the Affordable Care Act. Table 1 in this Congressional Research Service brief is useful in seeing how MAGI is determined for IRMAA calculations.

How have Medicare's income-related surcharges changed over time?

There have been a few recent changes that affect high-income Medicare beneficiaries:

• In 2019, a new income bracket was added at the high end of the scale, for people earning $500,000 or more ($750,000 for a married couple). Prior to 2019, the highest income bracket was $160,000+ ($320,000+ for a married couple). But in 2019, the new income bracket meant that a beneficiary earning $500,000+ would be paying a larger premium than someone earning $160,000.
• 2020 was the first year that the income thresholds for IRMAA surcharges were adjusted for inflation. Prior to that, it started at $85,000 and that number had been unchanged since the program began. But starting in 2020, the thresholds were adjusted for inflation, with the low-end threshold increasing to $87,000 for a single person.
• For 2021, the IRMAA thresholds were indexed again, with the low-end threshold increasing to $88,000 for a single person.
• For 2022, the IRMAA thresholds started at $91,000 for a single person and $182,000 for a married couple.
• For 2023, the IRMAA thresholds increased significantly, to $97,000 for a single person and $194,000 for a married couple.
• For 2024, the IRMAA thresholds again increased significantly, to $103,000 for a single person and $206,000 for a married couple.
• Going forward, the Modified Adjusted Income requirements will continue to be adjusted by inflation (CPI).
  

Can I appeal the IRMAA determination?

You can appeal the IRMAA determination – filing for a redetermination – if you believe that your calculation is erroneous. In addition, if you have had a life-changing event such as a loss of income or divorce, then you can refile or you can file for a redetermination using Form SSA-44.

If you do not agree with a redetermination, there is a formalized appeal process – the third level of appeal – technically called the Decision by Office of Medicare Hearings and Appeals (OMHA). (Note that this is a different procedure from the appeal or grievance procedure when you receive denials of service from Medicare Parts A, B, or D.)

Why does Medicare have premium surcharges for people with higher incomes?

The higher premiums for Medicare Part B took effect in 2007, under the Medicare Modernization Act. And for Medicare Part D, they took effect in 2011, under the Affordable Care Act. Medicare premiums cover only a small fraction of the cost of providing coverage, and the IRMAA rules were created to ensure that beneficiaries with the means to do so are required to pay a larger share of the cost of their coverage.

Beneficiaries’ premiums only cover about 26% of the cost of Part B, and about 17% of the cost of Part D (and that’s with IRMAA surcharges in effect for beneficiaries with high incomes). Most of the cost of Medicare Part B and Part D is covered by general revenues, and the IRMAA surcharges help to spread that cost to beneficiaries who can afford to pay a larger share of the cost of their coverage.