WTF (What the Finance) is IRMAA?

For those of you reading this to learn more about the Queen of Soul, Irma Thomas, get used to disappointment. If, however, you are hoping for a riveting read about Medicare premiums, you are in luck!

IRMAA stands for Income-Related Monthly Adjustment Amount.  It is the calculation that has people with higher means paying more per month for Medicare Part B (doctor visit) and Part D (prescription drug) coverage.

IRMAA’s purpose is to shore up the stability of Medicare by making higher earners pay more of the cost.  Who is considered a higher earner?  Or is the more relevant question, WHEN is a person a higher earner?

The look back period to determine what you will pay for Parts B and D is two years.  So, if you are reading this in January 2023, Medicare is looking at your Modified Adjusted Gross Income (MAGI) in 2021.

If your MAGI was under $97,000 (single) or $194,000 (joint), your Medicare Part B premium will be $164.90 in 2023.  That’s the minimum premium.  For Part D, the charge is the premium for the plan you choose, without any additional tacked on.

The most a person will pay for Part B is $560.50/month for incomes over $500,000 (single) or $750,000 (joint).  For Part D, you must add $76.40/month to the plan premium.  There is a whole range in between, which you can see with this handy chart.

What if your income or general financial circumstances has changed for the worse since 2021?  You can appeal an IRMAA upcharge for the following reasons.

  1. Tax status changed due to marriage, divorce, annulment, or death of a spouse.
  2. You or your spouse stopped working or reduced hours.
  3. A disaster created the loss of an income producing property.
  4. Your or your spouse’s pension plan was terminated.
  5. The increased income in 2021 came from a settlement from an employer due to a reorganization, closure, or bankruptcy.

Hopefully you are a little clearer on what to expect when expecting…Medicare costs.



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