October 20, 2021
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Medicare.Gov Technology Updates
Government Affairs Report
Dealing with Tricky Election Periods, Part I
What You Should Know About IRMAA
KFF Reports that Higher and Faster Growing Spending per Medicare Advantage Enrollee Adds to Medicare's Solvency and Affordability Challenges
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What You Should Know About IRMAA
by Paul Davis
If you are on Medicare, you may be familiar with Income Related Monthly Adjustment Amount, or IRMAA. If you are considering enrolling in Medicare, you should be aware of this as it can increase what you pay for Part B and D premiums. If your income is higher than the allowed amount, your Part B premium will be higher. What you need to be sure of is that the amount that is counted as income is correct so that a higher premium won’t be charged if your income was actually lower than it appears.

Most people on Medicare now pay $148.50/month for Part B but IRMAA adds an income component that can boost that monthly cost to as high as $582/month per person.

This is currently based on your Modified Adjusted Gross Income (MAGI) for the tax year 2019. There is always a two-year look-back. Every January 1, this is recalculated. MAGI is NOT a line item on your tax return. For many, it is identical to Adjusted Gross Income, but for some it is different so consult your tax preparer.

If you file single and your MAGI was under $88,000 in 2019, you will be at the $148.50 mark. If you file jointly and your MAGI was under $176,000 in 2019, you will be at the $148.50 mark. Income above that will result in a benefit-determination letter sent to you from Social Security to notify you of the new higher amount that you will pay for Parts B and D based on that income.

Some items that can affect your AGI: 
  • student loan interest
  • one-half of self-employment tax
  • qualified tuition expenses
  • tuition and fees deduction
  • passive loss or passive income
  • IRA contributions
  • non-taxable Social Security payments
  • the exclusion for income from U.S. savings bonds
  • foreign-earned income exclusion
  • foreign-housing exclusion or deduction
  • the exclusion under 137 for adoption expenses
  • rental Losses
  • any overall loss from a publicly traded partnership
What can you do about IRMAA? If you’ve had a change in circumstances, you can appeal using form SSA 44. You must be able to attest that you’ve had a life-changing event such as:
  • marriage, divorce or annulment
  • death of your spouse
  • work stoppage
  • work reduction
  • loss of income-producing property
  • loss of pension income
  • employer settlement payment
We most often use this form when someone quits working and enrolls in Medicare, but it can apply to anyone who has had one of these changes. This will affect your IRMAA immediately as opposed to when the change is reflected in your tax return. If you have had no change in circumstances or income, you are going to be saddled with IRMAA. It is the intent of Congress that the top five percent to 10% of income earners should pay more.

If you are over 65 and still working, you may be considering transitioning onto Medicare instead of your group health plan. IRMAA plays a big part in our analysis as to whether that makes sense. So part of this is a math problem. However, we also must factor in the quality of coverage and maximum out-of-pocket exposure.

You may be able to affect your IRMAA by altering your investment portfolio, which is something to discuss with your financial and tax advisors if you have some time before turning 65.
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