The Income Related Monthly Adjustment Amount (IRMAA) is a surcharge upon your current year’s Medicare Part B and D premium and you pay for IRMAA directly from your Social Security benefit.
For those of you who are not receiving Social Security, but who are enrolled into Medicare and are in an IRMAA bracket you will be sent a bill every 3 months (quarterly).
How IRMAA works:
Every 1 to 3 years the Centers for Medicaid Services (CMS) receives information from the IRS on the amount of income enrollees into Medicare are generating. If the income is too high a surcharge is added to that current year’s Medicare Part B and Part D premium.
The IRMAA surcharge lasts until either:
- CMS and the IRS re-calculate your income which may be the next year or within 2 to 3 years.
- You file an appeal to have CMS recalculate your income.
CMS, the IRS and Social Security.gov define income as:
“Adjusted gross income plus any tax-exempt interest.”
Some examples of income for IRMAA:
| Wages | Withdrawals from Traditional 401(k)’s or IRA’s |
| Social Security benefits | Pension Income |
| Dividends | Rental Income |
| Capital Gains | Interest |
The 2021 IRMAA brackets are as follows:
| Individual | Married Couple | Part B | Part D |
| < $88k | < $176k | $148.50 | Premium (varies) |
| $88k – $111k | $176k – $222k | $207.90 | Premium + $12.30 |
| $111k – $138k | $222k – $276k | $297.00 | Premium + $31.80 |
| $138k – $165k | $276k – $330k | $386.10 | Premium + $51.20 |
| $165k – $500k | $330k – $750k | $475.20 | Premium + $70.70 |
| >$500k | >$750k | $504.90 | Premium + $77.10 |
Impact of IRMAA on Social Security
According to the Medicare Board of Trustees and the Social Security Board of Trustees:
- Medicare premiums along with IRMAA surcharges will continue to inflate by at least 6.21% for the next 8 years,
- Social Security’s costs of living adjustment (COLA) is projected to be no higher than 2.40%.
Ultimately, for many people receiving Social Security their benefits will never actually increase due to Medicare premiums and IRMAA surcharge, if imposed, consuming the COLA given by Social Security.
Again, you pay for IRMAA through your Social Security benefit and this will cost even more later on.
