Page 6 - Cover Letter and Medicare Evaluation for Jamie Marshall

Medicare’s Part B and Part D premiums for people with higher incomes

What is IRMAA?

Most Medicare beneficiaries pay the standard Part B and Part D premiums. But for people whose

incomes are higher, an extra charge, or surcharge, is added to the standard premium. Medicare
refers to this extra charge as an “Income-Related Monthly Adjustment Amount,” or IRMAA.

There are six income levels, or tiers, that determine how much people will pay in Part B and Part D
premiums, including any IRMAA charges (these are shown on the next page). The first tier, some-
times called the baseline tier, is the standard premium amount that most people pay. In 2022,
people whose incomes are in this tier will pay the standard Part B premium — $170.10 a month —
as well as the standard Part D premium for the drug plan they’re enrolled in. According to Social

Security, 93% of Medicare beneficiaries are in this first tier, and only 7% are subject to the higher
IRMAA amounts.

By way of background, IRMAA charges were seen by Congress as a way to
help reduce Medicare’s cost deficits. The surcharges for Part B premiums were
first assessed in 2007, while those for Part D premiums did not go into effect until 2011.
How is IRMAA calculated?

People’s “modified adjusted gross incomes” (MAGI) determine whether they will pay the IRMAA
charges. MAGI equals the sum of their adjusted gross incomes and any tax-exempt interest in-
come they earn. Since few people have tax-exempt interest income, their MAGI

and adjusted gross incomes are usually the same number.
In most cases, there’s a two-year lag between the tax return year and the year

that people pay the IRMAA charges. In 2022, for instance, the Part B and Part D
IRMAA amounts are based on tax returns for 2020. The Social Security website
has a more detailed explanation of how IRMAA is calculated.
Can you appeal the higher amounts?

Yes. People who are to be assessed the IRMAA charges receive an ini-
tial determination letter from Social Security indicating the adjust-
ment amounts. This letter will also have information about how to
request a new determination.

In many cases, people ask for a new determination if their incomes
have dropped since the tax return year because of a life-changing event, including retirement or a
reduction in work hours. Other reasons listed by Social Security are divorce, death of a spouse,

and the loss of income-producing property.

To request a new determination because of a life changing event, people should complete
Form SSA-44. For married couples who file joint tax returns, each spouse will need to request a
new determination.