Page 24 - Cover Letter and Evaluation for Michael Boucher

Medicare’s Part B and Part D premiums for higher income individuals

What is IRMAA?

Since 2007, relatively affluent individuals enrolled in Medicare Part B have been required to
pay higher premiums. And since 2011, they have also had to pay
higher Part D premiums. These extra payments are referred to as

“Income-Related Monthly Adjustment Amounts,” or IRMAA.
There are six income levels or tiers, shown on the next page, used

to determine how much people will pay for their Part B and Part D
premiums in 2021. Tier 1 is the baseline tier, and people in this
tier pay the standard Part B premium — $148.50 a month in 2021.

According to Social Security, 93% of Medicare beneficiaries pay the standard Part B
premiums, with only 7% having to pay the higher IRMAA premiums.
How is IRMAA calculated?

People’s modified adjusted gross incomes (MAGI) determine
whether they will pay the higher premiums. MAGI is calculated by
adding the adjusted gross incomes (AGI) on their tax returns to any

tax-exempt interest income they received. In most cases, MAGI
and AGI will be the same. There’s a two-year lag between the year
of the tax return and the year that the premiums are paid. In 2021,
for instance, the Part B and Part D premium amounts are based on
2019 tax returns. The Social Security website has a more detailed explanation of how
IRMAA is calculated, which can be accessed at this link:

Can you appeal the higher amounts?

Yes. Those who are subject to the higher premiums will receive an initial determination
letter from Social Security indicating the amounts of the Part B
and Part D premiums they will pay. The letter also has infor-

mation about how to request a new determination. Often peo-
ple request a new determination when their incomes have de-
clined since the tax return year because of a life-changing event
such as retirement or a reduction in work hours. Other reasons
include divorce, death of a spouse, and the loss of income-producing property.

To request a new determination because a life-changing event, complete Form SSA-44,
which can be found at this link. It has detailed instructions about how to complete this

form. For married couples who file joint tax returns, each spouse must request a new
determination.