Medicare IRMAA (Everything You Need To Know)

What is IRMAA? How Can I Avoid IRMAA? How do I appeal?
These questions and more are answered in this video.
In Medicare 2023, IRMAA is an acronym for Income Related Monthly Adjustment Amount. The IRMAA monthly charge is an extra premium charged to higher income earners for their Medicare Part B (outpatient) and Medicare Part D (prescription drug) coverage.

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Medicare-IRMAA 0:00
What is IRMAA 1:30
How is IRMAA Calculated 5:22
Medicare Advantage Plans & IRMAA 7:30
How to Appeal 7:55
How to Avoid 10:05
Conclusion 12:28

How Is IRMAA Calculated?
The Centers for Medicare & Medicaid Services (CMS) and Social Security determine your eligibility for IRMAA payments by calculating your annual Modified Adjusted Gross Income (MAGI). This is simply your Adjusted Gross Income from your tax return with some deductions added back to your income. The MAGI used is as of two years ago. In other words, CMS recalculates your MAGI on a rolling two-year lookback. CMS then informs Social Security of their determination.
Some of the deductions added back to your income to determine your MAGI include:
• Untaxed Social Security payments
• IRA Contributions
• Any passive income loss
• Deductions for tuitions and fees
Your MAGI is then matched with tax filing status and income levels in the table below to determine the amount due. For 2022 the Part B premium ranges from $170.10 per month (standard) to a high of $578.30 per month for those in the highest income bracket.

Can I Avoid an IRMAA Surcharge with Medicare Advantage Plans?
The short answer is no. IRMAA charges are based on your income and will be assessed regardless of how you get your Medicare.

How To Appeal an IRMAA Surcharge
If it is determined that you should pay an IRMAA surcharge, you will receive an Initial Determination notice from Social Security. The notice will include information on how to request a new initial determination.
You will want to appeal the IRMAA decision if you believe the was incorrect. For example, if you had corrected or amended a previous tax return resulting in a lower reported income. Also, there are certain life-changing events that will be considered in reevaluating your IRMAA status.
Social Security will consider these life changing events when re-examining your IRMAA status:
• The death of spouse
• Marriage
• Divorce or annulment
• You or your spouse stopped working or reduced the hours worked.
• Loss of pension
• Involuntary loss of income-producing property
• Receipt of settlement payment from a former or current employer due to closure or bankruptcy

How to Avoid an IRMAA Surcharge
Below are a list of ways a person can avoid the IRMAA surcharge.

1. Plan ahead. Now that you know the IRMAA calculation uses your income as of two years ago, avoid actions that will influence your income up to two years prior to starting Medicare.
2. Be careful with Roth Conversions. You can accidentally push your Part B premium from $170 a month to nearly $600 a month.
3. Required Minimum Distributions (RMDs) If an RMD will push you into a higher bracket you can use charitable contributions to lower your income. If you don’t need the income from your RMD, your philanthropy can benefit you as well as your favorite charity.
4. Consider the tax advantaged income of annuities and life insurance. The result will be a more secure income, lower taxes and possible IRMAA avoidance.

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