IRMAA 2023: 6 Tips to Understand Your Medicare Premiums

How will income-related monthly adjustments (IRMAA) impact Medicare in 2023?

An estimated 58.6 million people are enrolled in Medicare in the United States. Some beneficiaries will be affected by IRMAA rules.¹

IRMAA may impact Medicare beneficiaries enrolled in:

• Medicare Part B (outpatient or doctor visit coverage)
• Medicare Part D (prescription drug coverage)

Does your monthly Medicare payment seem higher than expected? IRMAA may be the reason.

1. What Is IRMAA?

The Income-Related Monthly Adjustment Amount sliding scale is a set of statutory percentage-based tables. These tables are used to adjust Medicare premiums based on adjusted gross income.²

• IRMAA is an additional amount that some people might have to pay along with their Medicare premium. If their modified adjusted gross income (MAGI) is higher than a certain threshold, they might pay more.
• IRMAA only applies to people enrolled in Medicare Part B and/or Medicare Part D.

IRMAA background information⁶

IRMAA was first enacted in 2003 as part of the Medicare Modernization Act.

• This new rule applied only to high-income enrollees of Medicare Part B.
• In 2011, IRMAA was expanded under the Affordable Care Act. The new rules include high-income enrollees in Medicare Part D.
• Why was IRMAA expanded? This change was made to try and strengthen the financial stability of the Medicare program.

Will IRMAA impact your Medicare costs?

In most circumstances, the government pays a major share (about 75%) of your Part B and/or Part D coverage.³

If you have a larger income, you’ll have to pay a larger percentage share of your coverage.

• This larger share is your IRMAA. The government saves money by paying a smaller percentage of the share. You will have to pay IRMAA, plus the typical premium price.

IRMAA isn’t part of your plan premium.

• The premium payment you make is your share of your insurance costs. But when you pay for it, the government has already paid its share. Both payments add up to the entire cost of the premium.
• Do you have more money than expected? IRMAA is the payment the government asks for when this happens.

If you think you will have to make IRMAA payments, keep reading for more information on what you might have to pay.

2. How Is IRMAA Calculated?

The government determines whether you qualify for IRMAA. How? By calculating your modified adjusted gross income (MAGI).³

• Your monthly IRMAA payment for each year is calculated by your MAGI from the two years prior.
• Your MAGI is your adjusted gross income (AGI) with certain costs added back to it.
• Your AGI is often used to determine your income bracket for tax purposes. AGI includes your total income for a year with certain deductions subtracted.

Note: Your MAGI adjusts by adding some deductions back, and so it might, in some cases, be higher than your AGI. Most people’s MAGI is equal to or slightly higher than their AGI.

Deductions added back to your MAGI can include:

• Student loan interest
• IRA contributions
• Any passive income loss
• Deductions for tuition and fees
• Taxable social security payments

IRMAA: 6 income threshold tiers for 2023

Wondering how your income will impact Medicare premiums?

Below are the six income threshold tiers for 2023. The numbers depicted here are based on the Social Security Administration’s (SSA) most current records.3

• Tier 1 consists of individuals with MAGIs of up to $97,000 and married couples filing jointly with MAGIs of less than or equal to $194,000.
• Tier 2 consists of individuals with MAGIs between $97,000.01 and $123,000 and married couples filing jointly with MAGIs between $194,000.01 and $228,000.
• Tier 3 consists of individuals with MAGIs between $123,000.01 and $153,000 and married couples filing jointly with MAGIs between $246,000 and $306,000.
• Tier 4 consists of individuals with MAGIs between $153,000.01 and $183,000 and married couples filing jointly with MAGIs between $306,000.01 and $366,000.
• Tier 5 consists of individuals with MAGIs between $183,000.01 and $500,000 and married couples filing jointly with MAGIs between $366,000.01 and $750,000.
• Tier 6 consists of individuals with a MAGI greater than or equal to $500,000.01 and married couples filing jointly with a MAGI greater than or equal to $750,000.01.

Keep in mind your IRMAA payments aren’t calculated by how much money you made the previous year. They’re based on your MAGI from two years ago.

Find your monthly Part B premium

Wonder if you’ll pay extra for Medicare Part B?

Look at the chart below for more information on what your monthly Part B adjusted amount might be in 2023. The chart is based on your filing status and yearly income for 2020.³

Find your monthly Part D cost

How much will you pay for prescription drug coverage (Medicare Part D)?

Look at the chart below for more information on what your monthly Part D adjusted amount will be in 2023. The chart is based on your filing status and yearly income for 2020.³

3. Who Pays IRMAA?

Only individuals who earn more than $97,000 and married couples filing jointly who earn more than $194,000 must pay IRMAA.

4. How to pay IRMAA

IRMAA isn’t technically part of your plan’s premium. You don’t pay IRMAA to your plan’s provider. Instead, IRMAA is paid to Medicare (the Centers for Medicare and Medicaid Services) itself.⁴

If IRMAA isn’t taken out of your Social Security check:

• You’ll get a bill from Medicare or the Railroad Retirement Board (RRB), if you get benefits from them rather than Social Security.
• Look for something called a “Medicare Premium Bill” (CMS-500) every month.

There are many ways to pay your Medicare bill:

• Bank account. Pay with your bank account or using your bank’s online bill payment service. Unfortunately, not all banks offer this service.
• Medicare Easy Pay. Sign up to use Medicare Easy Pay, which deducts your payment from your bank account at no charge each month, usually on the 20th.
• Check or money order. Send a check or money order. Enclose your payment coupon, and mail the payment to:
  • Medicare Premium Collection Center: P.O. Box 790355; St. Louis, MO 63179-0355
• Make a payment with a credit or debit card. There should be a payment coupon on the paper copy of your Medicare bill where you can fill out your payment account information.
• If you get your bill from the RRB, you won’t be able to pay your IRMAA with any of the methods listed above. Instead, you or your bank will have to mail your payments and payment coupons to:
  • RRB, Medicare Premium Payments: P.O. Box 979024; St. Louis, MO 63197-9000

5. How to Appeal Your IRMAA to Lower Medicare Premiums

If you think that your IRMAA is too high, then you have options to lower it.⁵

If you believe that the federal government might have made an error on your Initial IRMAA Determination Notice:⁸

• File an appeal You may formally request an appeal by completing a “Request for Reconsideration” form (Form SSA-561-U2).
• Contact the Social Security Administration. You can find the appeal form HERE or call the Social Security Administration directly at 1-833-674-0691 for a paper copy. Do not use this option if you know that the MAGI that the SSA has on file for you is wrong.
• Reconsideration of IRMAA. This reconsideration will allow you to undergo another IRMAA determination. If the reconsideration is in your favor, your IRMAA will be corrected.
• Appeal to an Administrative law judge. If it’s denied, you can follow the directions on your denial papers to appeal to an Administrative law judge (ALJ) within 60 days of the date printed on the reconsideration denial papers. A lawyer can also assist you with submitting an appeal.
• Contact the Medicare Appeals Council. If the ALJ appeal is unsuccessful, you have 60 days to make your case to the Medicare Appeals Council (MAC). If the MAC appeal is unsuccessful, your final recourse will be to appeal to the Federal District Court within 60 days of the council’s denial.

You can also get a new Initial IRMAA Determination if something major happens in your life that would cause your income to go down.

These life-changing events can include:

• Marriage
• Divorce/annulment
• Death of a spouse
• Loss of income or certain reductions (from work, income-producing properties or pensions)

When a new IRMAA Determination makes sense⁵

This option is quite common for many people who feel that their reported income from two years ago was correct but are now having trouble paying for their expenses.

• People in this situation are not IRMAA’s intended payers.
• IRMAA’s intended payer system was designed to only include the most affluent enrollees of Medicare Part B and Medicare Part D.
• If you find that you are having a lot of trouble paying for IRMAA, you should get and submit Form SSA-44 from the Social Security Administration’s website.

If you think, specifically, that the MAGI amount on which your IRMAA is based is wrong:⁹

• You will have to get in touch with the Internal Revenue Service (IRS) directly.
• The government determines your MAGI based on the information you have filed with the IRS.
• If you are successful in amending your MAGI, you’ll need a letter and transcript from the IRS. This letter should state that they have received the outdated, incorrect information and the new information.
• You should then contact the SSA directly and share the updated documentation.

6. Medicare Supplement (Medigap)

The only way to avoid IRMAA, if you’re eligible, is to not use Medicare Part B or Part D.

But there might be more cost-effective options for you out there through:

• Medicare Advantage
• Medicare Supplement (or Medigap) plans.

Once you turn 65, you’ll have a six-month open enrollment period to sign up for Medigap plans.

• After this point, you could be denied coverage. Also, many Medigap policies will often charge you higher premiums if you sign up later.
• Medigap plans can vary greatly in cost and services offered. Barring a major life change or a bureaucratic error, you’re likely not going to get your IRMAA lowered.
• But, what you can do is find a Medicare Supplement or Medicare Advantage plan that might be more cost-efficient and a better fit for your needs.