What is IRMAA?
IRMAA stands for Income-Related Monthly Adjusted Amount. IRMAA only applies to people enrolled in Medicare Part B and/or Medicare Part D. IRMAA only applies to people with high incomes. Essentially, people who can afford to pay more for Medicare, pay more.
How is IRMAA Calculated?
IRMAA is always income based and is scaled up. IRMAA is calculated by using your tax return from two years previous. In other words, the IRMAA for 2023 is calculated using income tax returns from 2021. Typically, it is the Adjusted Gross Amount used with certain deductions added back. Some of these deductions include: IRA contributions, tuition deductions, and a few others.
How Long Do I Pay IRMAA?
You will pay IRMAA for as long as your income falls into the qualifying amount according to the chart below.
Do I Still Have to Pay IRMAA If My Income Changes?
Not if your income drops into the standard range – but you may have to appeal the IRMAA to end it. For an example, someone turning 67 who was a high-income earner retires. Once they retire, they are no longer making the same money as they were two years ago (remember, IRMAA is calculated on tax returns from two years ago). Once this person’s income changes, they can appeal the IRMAA based on the fact that their income has changed.
Alternatively, if someone who is not paying IRMAA, takes a large IRA distribution, sells a taxable investment or other asset, inherits a large sum of money, etc. will be subject to paying IRMAA if this reported amount increased their income into the appropriate range.
My Income Went Down After Retirement and I’m Being Asked to Pay IRMAA
Once your income goes down and you are no longer subject to the IRMAA, you may still receive a letter telling you to pay more. In this case, you will need to appeal the decision. The letter you receive will include instructions on how to do this. Be sure to respond within any specified timeframe.
I Don’t Think They Calculated My IRMAA Correctly
If you believe an incorrect determination has been made, you can always appeal the decision. Be sure to respond within any specified timeframe.
Other Reasons to Appeal
Any number of life circumstances may arise that affect income including retirement, marriage, divorce, death of a spouse, loss of income producing property, etc. These are all reasons to request a redetermination.
How to Appeal IRMAA
You may request an appeal by completing a “Request for Reconsideration” form (Form SSA-561-U2). If denied, you have 60 days to appeal further by following instructions in the denial notice.
