[Update on August 12, 2020: projections for 2021]
Seniors age 65 or older can sign up for Medicare. Medicare calls people who receive it beneficiaries. Medicare beneficiaries must pay a premium for Medicare Part B that covers doctors’ services and Medicare Part D that covers prescription drugs. The premiums paid by Medicare beneficiaries cover about 25% of the program costs for Part B and Part D. The government pays the other 75%.
Medicare imposes surcharges on higher-income beneficiaries. The theory is that higher-income beneficiaries can afford to pay more for their healthcare. Instead of doing a 25:75 split with the government, they must pay a higher share of the program costs.
The surcharge is called IRMAA, which stands for Income-Related Monthly Adjustment Amount.
I haven’t seen any numbers that show how much collecting IRMAA really helps the government in the grand scheme. I’m guessing very little. One report said 5% of all Medicare beneficiaries pay IRMAA. Suppose the 5% pay double the standard premium, it changes the overall split between the beneficiaries and the government from 25:75 to 26:74. Big deal?
The income used to determine IRMAA is your AGI plus muni bond interest from two years ago. Your 2019 income determines your IRMAA in 2021. Your 2020 income determines your IRMAA in 2022.
As if it’s not complicated enough for not moving the needle much, IRMAA is divided into five income brackets. Depending on the income, higher-income beneficiaries pay 35%, 50%, 65%, 80%, or 85% of the program costs instead of 25%. The lines drawn for each bracket can cause a sudden jump in the premiums you pay. If your income crosses over to the next bracket by $1, all of a sudden your Medicare premiums can jump by over $1,000/year. If you are married and both of you are on Medicare, $1 more in income can make the Medicare premiums jump by over $1,000/year for each of you.
* The last bracket on the far right isn’t displayed in the chart.
So if your income is near a bracket cutoff, see if you can manage to keep it down and make it stay in a lower bracket. Using the income from two years ago makes a little harder. Now in 2020 you don’t know where exactly the brackets will be for 2022. Still, you can make reasonable estimates and give yourself some margin to stay clear of the cutoff points.
IRMAA Brackets
The IRMAA income brackets (except the very last one) started adjusting for inflation in 2020. Here are the IRMAA income brackets for 2020 and the projected new brackets for 2021. I made these projections for 2021 based on the inflation numbers so far. Rounding rules make it such that inflation numbers for the upcoming months are unlikely to affect the final results. For example, when a number is rounded to the nearest $1,000, it doesn’t matter whether the number is really $87,600 or $87,800 before rounding. Remember the income on your 2019 tax return (AGI plus muni interest) determines the IRMAA you pay in 2021. The income on your 2020 tax return (to be filed in 2021) determines the IRMAA you pay in 2022.
| Part B Premium | 2020 | 2021 |
|---|---|---|
| Standard | Single: <= $87,000 Married Filing Jointly: <= $174,000 | Single: <= $88,000 Married Filing Jointly: <= $176,000 |
| Standard * 1.4 | Single: <= $109,000 Married Filing Jointly: <= $218,000 | Single: <= $111,000 Married Filing Jointly: <= $222,000 |
| Standard * 2.0 | Single: <= $136,000 Married Filing Jointly: <= $272,000 | Single: <= $138,000 Married Filing Jointly: <= $276,000 |
| Standard * 2.6 | Single: <= $163,000 Married Filing Jointly: <= $326,000 | Single: <= $165,000 Married Filing Jointly: <= $330,000 |
| Standard * 3.2 | Single: <= $500,000 Married Filing Jointly: <= $750,000 | Single: <= $500,000 Married Filing Jointly: <= $750,000 |
| Standard * 3.4 | Single: > $500,000 Married Filing Jointly: > $750,000 | Single: > $500,000 Married Filing Jointly: > $750,000 |
Higher-income Medicare beneficiaries also pay a surcharge for Part D. The income brackets are the same. The surcharges are relatively smaller in dollars.
The standard Medicare Part B premium is $144.60/month in 2020. A 40% surcharge on the Medicare Part B premium is about $700/year per person, or about $1,400/year for a married couple both on Medicare. In the grand scheme, when a couple on Medicare have over $174k in income, they are probably already paying a large amount in taxes. Does making them pay another $1,400/year make that much difference? Nickel-and-diming just annoys people. People caught by surprise when their income crosses over to a higher bracket by just a small amount get mad at the government. Rolling it all into the income tax would be much more effective.
Oh well, if you are on Medicare, watch your income and don’t accidentally cross a line for IRMAA.
IRMAA Appeal
If your income two years ago was higher because you were working at that time and now your income is significantly lower because you retired (“work reduction” or “work stoppage”), you can appeal the IRMAA assessment. The “life-changing events” that make you eligible for an appeal include:
- Death of spouse
- Marriage
- Divorce or annulment
- Work reduction
- Work stoppage
- Loss of income from income producing property
- Loss or reduction of certain kinds of pension income
You file an appeal by filling out the form SSA-44 to show that although your income was higher two years ago, you had a reduction in income now due to one of the life-changing events above. For more information on the appeal, see Medicare Part B Premium Appeals.
Not Penalized For Life
If your income two years ago was higher and you don’t have a life-changing event that makes you qualify for an appeal, you will pay the higher Medicare premiums for one year. IRMAA is re-evaluated every year as your income changes. If your higher income two years ago was due to a one-time event, such as realizing capital gains or taking a large withdrawal from your IRA, when your income comes down in the following year, your IRMAA will also come down. It’s not the end of the world to pay IRMAA for one year.
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FinancialDave says
Harry,
Nice article.
One of the major reasons for many investors problem with IRMAA resides with the size of their taxable account and the investing strategy they use there. Also, in most cases, the first time this shows up is 2 years after they decided (or someone decided for them) it was a good idea to put all their high dividend-paying stocks in the Brokerage account not even realizing that there is an “IRMAA,” let alone that it will add thousands of dollars to their expenses if they go over it.
dennis says
how is the irmaa figured if you were married in 2018 but will be single in 2020? income will be less in 2020 with only person get social security and pension
Harry Sit says
Death of spouse and divorce are two of the qualifying events to appeal the IRMAA assessment. See link in reply to comment #2 below.
Luis says
This IRMMA stuff is one of the most infuriating thing I have seem: if you are high income you pay more while working 2.9 % in all your income( no cap like social security), but then double penalized in medicare premium AND medicare part D, when begins in the Medicare plan, the final number could be incredibly high.Besides they go back two years( by contrast in Obamacare is enough your word regarding income). Good look when you call social security and medicare to explain that you retire and your income is well low. Everything thanks to the liberal politics to penalized the successful people.
Harry Sit says
If your income two years ago was higher because you were working at that time and now your income is significantly lower because you retired, you can appeal the IRMAA assessment.
“You had a major life-changing event that significantly reduced your income” is listed as one of the reasons for appealing, and “work reduction” and “work stoppage” are two life-changing events among others.
https://www.hhs.gov/about/agencies/omha/the-appeals-process/part-b-premium-appeals/index.html
Roger says
Actually, the IRMAA law was passed in 2003, when Republicans controlled the House, Senate and Presidency. However, I agree with your point about tax rates. What makes it more confounding is that you probably had a bunch of tax lowering deductions while working, which are no longer available. To add insult to injury, if you contributed to your IRA (or other retirement plan) regularly, you may find that your retirement income is greater than your working income, with few ways to reduce it due to the Required Minimum Distribution rule.
Jon says
IRMAA is pathetically complicated. Only by raising awareness can the public learn what is being done to our elderly who have worked hard to save and invest in order to fund their retirement. IRMAA is a well hidden cost to until one approaches retirement. Each Presidential candidate should be individually questioned and tested on their detailed knowledge of what IRMAA is and how it is calculated. That way voters can determine if each candidate understands what the policies of liberal politics have done…or if the candidate is simply ignorant which is the likely situation. What a wake up call this would be!
FactsPlease says
Liberal Politics? You shouldn’t be allowed to vote. This was part of a Republican (Conservative) bill passed in 2003 and signed into law by George HW Bush:
Medicare Prescription Drug, Improvement, and Modernization Act
Tom Terwilliger says
Yes, it was enacted under the Bush administration, but it wasn’t nearly so bad as long as the threshold was being indexed. That stopped in 2011 when we all know who was in the White House and who had ironclad control of Congress. And “W” was hardly the model conservative; no, anytime the liberal press and others barked, he jumped, and this was one sad example.
But the really immoral aspect of this is the idiotic way “married filing separately” are treated. There is no conceivable reason why they should automatically jump to tier 4, again, just for going $1 over the limit. At least all others only jump 1 tier where the penalty isn’t that great.
d says
indeed a liberal policy; person was correct that this started under Bush (also responsible for Medicare part D) – but if you think Bush was a conservative instead of a flaming liberal you are sadly mistaken!
I pay IRMAA, and as bad as this policy and tax is, wait and see how bad it gets when the liberals take charge.
Read history — when SS started under Roosevelt, the Progressive argued that we “needed” it, and that it was only a 1% tax — now it is a 15% tax!
Laurel says
I’m all in favor of both presidential candidates being “questioned and tested on their detailed knowledge of what IRMAA is and how it is calculated.” Does anyone seriously think the current incumbent has a clue about IRMAA, or that he even cares if you have Medicare coverage?
Lucy Yore says
This is a great article and I wish I’d had this information available to me when I started challenging my own IRMAA. The IRMAA premium “adjustment” came as a surprise to me, too. After working for fifty years, paying taxes, and never using unemployment insurance or disability benefits, I never expected that my reward for paying my way was to be assessed higher Medicare Part B premiums. I retired in 2018 and became eligible for Medicare in July 2019. In 2019, the “look back” income used to determine whether or not I would owe IRMAA was my adjusted gross income on my 2017 tax returns. Because I retired in 2018 and my 2019 adjusted gross income would be significantly less than it was in 2017, I appealed the original decision to raise my Medicare Part B premium. I am a firm believer in dealing, whenever possible, with matters like this face to face. I skipped asking for help by phone and went to my local Social Security office. The first person I met with didn’t use the correct amount of after-retirement income I expect in 2019, and my first appeal was denied. So I made a second trip to re-submit my appeal. The person I met with the second time recognized immediately the mistake the first person had made, corrected it and re-submitted the appeal. Within a week I received a letter from Medicare notifying me that my appeal had been accepted and that I would only owe the ordinary Medicare Part B premium. My perseverance has saved me over $200 a month. If you have been unfairly assessed an IRMAA increase in your premium, appeal the decision in person, and don’t give up until your appeal has been granted.
Kenneth Setter says
In 2020 with the COVID problems, the local offices are all working online – no face to face meetings. I retired the first of this year and made application to have IRMAA removed once I knew pretty closely what my 2020 income would be. The phone experience was MUCH better than going and sitting in the SS office half the day. The agent I dealt with was very knowledgable and told me exactly what they needed – mainly just the SSA-44 forms, documentation to establish that I had retired, and an estimate of what my 2020 income would be. They take your word for it but you have to send a copy of your 2020 tax return when it is filed to document that you were actually below the thresholds. I sent the documents and a letter of explanation. The approval of the removal of the IRMAA happened within 5 days (the agent thought it might take 1-2 weeks). I was due refunds for the 6-7 months of IRMAA we had already paid in 2020 and these were deposited in my checking account within another 2 weeks. All in all a very easy process. I hope they never go back to face to face meetings.
Lucy Yore says
Kenneth Setter – thanks for your thoughtful reply. My experience was pre-COVID. I initially tried to handle my situation by phone, and the person I spoke with was clueless, didn’t know the IRMMA appeal procees, and told me that I owed based on prior income. Not helpful at all. Once I spoke person-person at the SS office, the matter was settled quickly.
Roger says
I had a similar experience, but a phone call worked fine for me. One call to say my wife and I retired and they refunded the IRMAA that had already been collected.
IRMAA Needs to Go says
To be excruciatingly precise, can we state that the bracket amounts (when finalized) for calendar year 2020 will be used with the calendar year 2018 income amount to determine the amount of IRMAA, if any, a medicare recipient would be assessed by CMS/SS during calendar year 2020? Similarly, the CY 2021 bracket amounts would be used with CY 2019 income to determine IRMAA to be assessed/paid during CY 2021?
Harry Sit says
Yes your AGI plus tax-exempt interest reported on your 2018 tax return (filed in 2019) will be checked against the bracket numbers in the 2020 column to determine the Medicare Part B and Part D premiums you will pay starting in January 2020. My table only showed Part B. Part D uses the same brackets but different surcharges.
sscrla says
Since the August, 2019 CPI numbers were announced on September 12 and the law says the inflation adjustment is based on “the percentage (if any) by which the average of the Consumer Price Index for all urban consumers (United States city average) for the 12-month period ending with August of the preceding calendar year exceeds such average for the 12-month period ending with August 2006 (or, in the case of a calendar year beginning with 2020, August 2018),” you now know all the numbers. Therefore, there is no need to use the word projected, unless you expect the BLS to revise an already published CPI figure.
Harry Sit says
This was posted on September 3, before the latest CPI release, which now confirmed all the numbers in the table.
CHRIS KELLY says
What about the 2 years we went from 104 dollars to 136 dollars ? This is monthly. That is 32 dollars a month for 2 years. Do we get reimbursed.
gary says
i have seen 2 articles that used the cpi and have different results. another article used the same 1.7% and showed the first bracket increasing to 86,000 not 87,000 because 85,000 with a 1.7% increase is 86,445.xx so the nearest number rounded down. So it is already rounded up (87,000) or is it rounded to the nearest 1000 which would mean it shouldbe 86,000?
Harry Sit says
It is rounded to the nearest $1,000 but the 1.7% number used in the other article isn’t correct. The correct CPI increase to use is 1.9%. When you raise $85,000 by 1.9%, it rounds to $87,000.
gary says
I check the gov’t cpi website and it is showing annual for august of 1.7% is it a different month that is used sep 2018 cpi was 252.146 and aug 2019 256.558 which is 1.7%. is it a different indicator or timeframe?
Harry Sit says
See comment #6 above.
Marcia Mantell says
There is a typo in your bracket for single filers: second row. Should be above $85k up to $107 (not $170). That also throws off your 2020 estimate. Please correct. Thanks!
Harry Sit says
The table is correct. $170k is the threshold for paying 1.4x standard premium for married filing jointly. $107k is the threshold for paying 2.0x standard premium for single.
Bob says
I have been paying irmaa for three years and I understand the concept and I can manage my income. I file married/joint tax return. I am currently projecting MAGI of $212,000 for 2019 tax year. How much higher can I push my income before moving to the next irmaa bracket?
Harry Sit says
The next bracket starts at $218k in 2020. If you add 1.5% inflation, you get $221k for 2021. If you’d like to avoid surprises, you may want to stay below $220k.
Sammy III says
When will medicare come out with the final part b premiums and irmaa surcharge for 2020?
Harry Sit says
Hopefully soon. They announced on October 12th in 2018.
BobH says
We have kept my future wife income below 85K. She will be retiring in Jan 2020 because she has PPO time that will bump her above 85K so we delayed the retirement to Jan 2020. So, could I do a 70K Roth conversions in 2019 which would cause her income to be about 85+70= 155K. Then file the life changing event of not working SSA-44. Her IRA withdrawal in retirement will be about 60K a year normally. If they throw out her salary then we would be below 85K.
The Wizard says
Nothing wrong with higher income oldies paying a little more for Medicare; I always will be under current law. But it’s good to project your AGI into your 70’s and then not do Roth conversions in your 60’s that are TOO big for your present IRMAA bracket. I call this Levelizing your AGI…
Rich Tedoni says
Approximately when will the IRS send the 2018 agi to medicare/SS to determine if there will be an IRRMA
Harry Sit says
No idea, but if by the time they charge you the Medicare premium for January they still haven’t figured it out, they will eventually bill you the difference when they determine you are subject to IRMAA.
Joe Pereira says
November 2020 I turn 65 I been getting social security pay from 62, my total income is lower than the normal threshold bracket, however in 2018 I received money from my 401K causing a high income for the year 2018. for 2019 I’m back to a normal income, according to social security my Medicare start in November 1st 2020, I’m a little confused if medicare irmaa
part B and D surcharge going to apply for the whole year 2020 or year 2021
Cynthia Siebert says
I was notified that I will be paying an IRMAA fee starting January 2020 due to us withdrawal from IRA… This was a one time withdrawal! Can I go to SS office in March and show them my income from 2019 is MUCH lower now and get rid of the IRMAA?
Harry Sit says
Just showing it was one-time IRA withdrawal isn’t enough. You need to show one of seven qualifying life-changing events:
– Death of spouse
– Marriage
– Divorce or annulment
– Work reduction
– Work stoppage
– Loss of income from income producing property
– Loss or reduction of certain kinds of pension income
MRO says
I recently started with Medicare and am paying IRMAA adjustments for Parts B and D. I am healthy and do not take any prescription drugs. My premium for Part D just increased as will my IRMAA for Part D as well I imagine. I do not believe in paying the IRMAA penalty (for Part D knowing that I have no choice with Part B) and only wanted to be compliant by taking Part D but am planning on dropping it as my premium increased and my tolerance decreased. My question is if I am not participating in Part D am I still responsible for paying the IRMAA penalty or does it go away as well?
Harry Sit says
Medicare Part D IRMAA basically means a higher price for Part D. If you drop Part D you don’t pay it any more. However, if you re-enroll in Part D at a later time, you may pay a permanent penalty based on the number of months you went without it.
https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/part-d-late-enrollment-penalty
IRMAAA Need to Go says
Maybe I missed it in the comments here, but doesn’t the “2020” table at the bottom of this web page https://www.medicare.gov/your-medicare-costs/medicare-costs-at-a-glance prove (finally) that the IRMAA threshold has been announced as $174K for the first bracket above baseline?
IRMAA Needs to Go says
Sorry, forgot to mention that you have to click on the Part D in the page to see the rest of the text which includes the tables.
Harry Sit says
Yes! All the other bracket cutoffs match what I had here as well. No idea why they buried them so deeply.
Robert Burger says
IRMAA is not just determined by AGI plus muni bonds. It is actually AGI plus all un-taxed income.
Harry Sit says
Not all untaxed income. Untaxed Social Security benefits are not included in the definition of Modified AGI for Medicare. See Table I starting on page 5 of this PDF document:
The Use of Modified Adjusted Gross Income (MAGI) in Federal Health Programs
Ann Brown says
If the CPI used to determine the percentage increase (CPI-U?) were to show a negative number, would the brackets stay intact or would they be adjusted downwards? I can manage my income but the underlying question is whether I can be assured that the $87K threshhold for single filers would at least remain the same in future years.
Harry Sit says
The law only talks about “increase” and “exceed.” I assume it means if the change is negative they will just freeze in place until inflation catches up. We haven’t seen a real example of negative inflation since IRMAA went into effect though.
Ann Brown says
Thank you for your prompt response. I agree we haven’t seen a real example of negative inflation since IRMAA but we are seeing other unexpected financial developments (increasing talk of negative interest rates in the US, for example). The fact that the thresholds are based on events 2 years in the past means that there could be an unpleasant surprise in store at some point.
We can rail against IRMAA (and I agree with all the comments) and it would certainly be frustrating to fall into the next higher threshold by a few dollars. On the other hand being impacted by IRMAA signals that we have some meaningful/above average level of income. As a 16 year old, I remember complaining to my father about the deductions and taxes in my first paycheck. His question to me: “Would you rather have the income and pay taxes on it or not have it and not pay taxes on it?” In my volunteer work I see seniors who are just keeping their heads above water (for various reasons) so I feel grateful to have an IRMAA concern.
Thank you again, I appreciate all the great information.
Han Ngo says
IRMAA is so confused.
I am paying IRMAA for my medicare part B. My wife will be eligible for medicare next year, will she pay the same amount of IRMAA as I do? I think for a married couple, they should only pay IRMAA once, not both husband and wife have to pay IRMAA because it counts and is calculated for a married couple. If both husband and wife have to pay IRMAA on each account, is it a double dip?
Thank you.
Harry Sit says
If you are married filing jointly, when the joint income exceeds the threshold, both of you will pay IRMAA.
Sharon Wallace says
Why can’t I find out ANYTHING about the Part D IRMAA surcharges for 2020?? I find all kinds of info for the Part B…but not Part D.
Harry Sit says
Click on the link in comment #19. Then click on the link at the bottom of that page for Part D.
Bob Land says
What happens if your MAGI drops 2 brackets? Will the tax brackets be lowered two steps at once or one at a time/year in the reduction of the additional insurance premiums?
Harry Sit says
At once. Whichever bracket your income two years ago belongs, you pay the corresponding premium.
John Tenfelder says
If I get married in Dec 2019 to a woman who earned less than $80,000 annually in 2017, 2018, and 2019, but I made enough to put me in the IRMAA B/D 320%/574% bracket in each of those years, will she still be charged zero IRMAA or will she be charged in my bracket retroactively for 2019 (based on my 2017 AGI) if we file jointly in 2019? What about 2020 and 2021? Are our then single incomes used?
Harry Sit says
Not retroactively. She will pay IRMAA starting in 2021 based your joint 2019 tax return to be filed in 2020, but your IRMAA in 2021 may drop a tier or two based on your married status.
Caught in the Middle says
One thing not mentioned here is if you are married but file separately (and are over the lowest bracket) you have to pay the 3.2 rate regardless of your individual MAGI.
Planning Stage says
What if you downsized in retirement and found selling your house left you with enough taxable capital gains to push you into the next IRMAA bracket? I don’t see any option in the appeals process link for such a situation. Would both my wife and I both be penalized for life?
Harry Sit says
Not for life. Your higher income in one year only triggers IRMAA for one year. When your income falls back down the following year, you will stop paying IRMAA.
Tony Frank says
Medicare is worse than private industry. Increase monthly social security payments by 1.6% versus 7% increases in Parts A, B and D medicare premiums.
No wonder so many retirees are or will be eating spam, assuming they can afford it.
A bunch of predators in dc.
Linda Somma says
My husband died in May 2018 and We filed married that year. My Part B/D premium for 2020 will be in the second tier (twice as much as the standard tier) due to higher income.
In 2019 my MAGI is half of what my husband and I earned in 2018. When I file SINGLE for 2019, I’ll still be in the second tier. is there any reason I should appeal?
Thomas Schamp says
There are seven life changing events that can be the basis for an appeal. It’s not clear that you qualify for any of them…
Sherry Wiser says
I turned 65 in Oct 2019…I was charged an IRMAA because in 2017 I went over the $85000 AGI. However, that was because I withdrew $50000 to purchase a new vehicle which I had been saving for while I was working. The 2 years before and the 2 years after 2017 my AGI was/is approximately 45,000. Does the Medicare/Social Security Dept. look at your AGI each year? If you are accessed an IRMAA the first year you get Medicare, will you always be charged that IRMAA in the future years? Will my IRS Tax Returns be looked at again for the year 2018 for 2020 Medicare payments and the IRMAA not applied…Or do I need to go to the Social Security office and appeal?
Harry Sit says
Your income is looked at each year. When it comes down you will stop paying IRMAA.
The Wizard says
This is why it’s usually a good idea to “Levelize” your AGI from year to year in retirement, including withdrawals from tax-deferred for Roth conversion…
Sherry Wiser says
Harry
Thank you so much for taking the time to answer my question and all of the other questions as well.
SBW
Sherry Wiser says
The Wizard
Thanks for your input…I now realize that I should have done that…25000 in 2017 and 25000 in 2018…However, I was NOT aware that there was a additional charge (IRMAA) if you went over a certain amount. And had no idea that they would go back two (2) years for your AGI.
Thank you
SBWiser
Joe P says
You charged irmaa for 2019..did you received another letter from SS for the normal amount for 2020 since you income dropped to $45000..
I’m in the same situation they charge me irmaa for the month of November And December 2019, because I sold some stock in 2017 to buy a home..I hope they look again at my 2018 my income was around $60000 I dont want pay irmaa for 2020 since my income is $60000 ..any suggestions what to do..thank you
Sherry Wiser says
Joe P
I just read my letter from SS and beginning in Jan. 2020, my SS deposit will NOT have the IRMAA deduction. YAY!!! Everything is back to normal.
Joe P says
Great that’s good news
Richard Persram says
I would appreciate any guidance on IRMAA determination. Is the information SSA provided this morning correct?
I retired in April of 2019 and started Part B in May 2019. I was immediately hit with IRMAA which I expected and my initial determination was based on 2017 taxes. My income for 2017 through 2019 places me above the IRMAA MAGI limit.
I called Social Security this morning to gain a better understanding of the IRMAA appeal process.
I was told that since 2020 would be the first year in which my income falls below the IRMAA limits, I would have to wait for 2021 to file form SSA-44 and if my income was below the IRMAA limit, they would then retroactively credit me my IRMAA payments for the entire year of 2020.
I thought previous to my call, that I could file SSA-44 now or early 2020 and they would use my 2020 income estimate from SSA-44f for the 2020 IRMAA determination.
The Wizard says
That info sounds correct and was what I did. I had $35,000 of part-time W2 income in 2016 on top of retirement income which put me in a higher IRMAA tier for 2018.
I did my taxes for 2017 (with zero W2 income) in February 2018 and then sent in form SSA-44 with a copy of my 2017 form 1040. They accepted that and put me back in a lower IRMAA tier for 2018, refunding the overcharge for the first few months…
Winston Bowen says
Harry Sit writes that if your income drops to lower IRMAA brackets you will automatically be dropped into the new category and pay that rate for Parts B and D. I just got my 2020 earnings summary, and while they show the lower MAGI they have kept me and my wife in the previous, higher bracket and show our IRMAA payments at the higher amount. How do we appeal?
Ken says
I have purposely stayed under the MFJ $170k MAGI to avoid and IRMMA surcharges the past few years of retirement. In 2019, I want to make a larger than usual IRA withdrawal that will bring the MAGI into the IRMMA surcharge category, and I would like to come close to the ceiling for the first level (of 40% B, & D surcharge), which for MFJ has been $214K for several years. It is now dawning on me that there is no place to lookup what the IRMMA $$ brackets will be in 2021, since my reading is telling me that the 2019 one that is published, is not for tax year 2019 MAGI, but is being used for current 2019 year IRMMA surcharges on 2017 MAGI. Does it even make sense that we don’t know the ceiling that will apply in 2021 when they penalize us for our 2019 MAGI, or do I have this wrong???? IF that is true, am I safe, if I stick with the $218K that is announced for 2020 (to be used for 2018 MAGI brackets)? It seems that one should know the different ceilings prior to making a mistake in a current tax year that could bump you into an even higher bracket when assessed 2 years later, or make you go over the ceiling for no surcharge, which has been $170k for me the past few years. I guess I am just figuring out that it is more confusing than I thought. ANY THOUGHTS WOULD BE APPRECIATED!
Harry Sit says
Yes the 2021 brackets will be for your MAGI in 2019. The numbers should be slightly higher than those for 2020. If you keep your 2019 MAGI under the published numbers for 2020 you should be OK in 2021.
brian birner says
I submitted the form SSA-44 to my local Social Security office about three weeks ago. Do you know how long it takes to process this form?
I had a recent reduction in income. This was in reference to my IRMAA.
Thank you
Bob L. says
I am curious that the incremental increase for the top bracket(>750,000) is significantly less the lower ones. I’m guessing that may be because the total amount cannot exceed the average cost of each program. Is that correct?
Harry Sit says
The shares of program cost paid in each IRMAA bracket are 35%, 50%, 65%, 80%, and 85%. Congress could’ve made the top bracket pay 90%, 95%, or 100% of the program cost but they stopped at 85%.
Songbill says
Yikes! I just learned about the existence of the IRMAA surcharge. We have had our joint MAGI stay under the IRMAA threshold every year since I retired over 5 years ago. However, this year we get to enjoy a one-time-only, unusually massive capital gains on a particular stock we’ve owned for the past 15 years. (Our NYSE-listed firm was bought out by a much larger NYSE firm that paid a total cash buy-out to shareholders rather than offering stock shares conversion, thus we’re experiencing the capital gains — whether we wanted it or not.)
I’ve looked at your chart and done some computations and can see that I and my wife’s monthly Medicare premiums (+IRMMA) will rise from the standard basic deduction from Social Security benefits ($135 per month per person) to at least $462 per month PER PERSON starting in 2021. Not happy with this discovery but OK, I understand that is what the IRMMA calls for. HERE IS MY CONCERN: After our annual AGI drops back down, for 2020, to the level of just a standard basic Medicare premium, how do I get the SS & Medicare folks to NOT keep taking out $462 per month out of each of our SS benefits during 2022? They do a “two year look back” in doing their calculations, not an annual one, so who should I talk to or what should I do after I file my Federal taxes in 2021, for year 2020, in order to prevent them from taking out the $462 each month for a second full year (2022)?
The Wizard says
They do the 2-year lookback thing Every Year.
So you should just have a single year of elevated IRMAA payments…
Doron Steger says
Do IRMAA Medicare part B charges apply to families in Medicare Advantage Programs?
Do IRMAA Medicare Part D charges apply to families receiving drug coverage in Medicare Advantage Programs?
Thanks!
The Wizard says
Yes and yes. This is exactly what I have and I will be paying IRMAA “forever”…
b. lolr says
I am so confused with IRMAA this year. I want to do a Roth conversion again in 2019, (next 2 weeks) which will put me in Tier 2 of IRMAA in 2021. I am trying to figure out what the MAGI cutoff is for my 2019 tax return so I can determine how much I can convert from Traditional to Roth without going into Tier 3 in 2021. Should I stop at $213,999 or 217,999?
Any help will be appreciated!
The Wizard says
We won’t know the tier thresholds for 2021 based on 2019 MAGI until 11 months from now.
But you can safely get your MAGI up to $218k, MFJ, which is this years threshold.
Any higher and you’re betting on what next year’s inflation percentage will be. Not good to lose that bet…
b lolr says
What does MFJ stand for?
Ken Fitzgerald says
b lolr, MFJ = Married Filing Jointly (for tax return)
Bev Lolr says
If I can safely get the MAGI to $218K for tax year 2019 and remain in Tier 2, that answers my question. Now instead of staying at $214K for Tier 2, they are going to be inflation adjusted, right? Thanks again.
Gail says
Can you explain why people collecting social security who are married but file separate returns are penalized with a substantially higher irmaa? For married filing separately, there is no tier 1-2-3, irmaa starts at tier 4? Isn’t this actual discrimination?
Harry Sit says
When they do something to collect revenue, they don’t want to see it easily defeated by couples rearranging their income and filing separately. Suppose a married couple’s income is $300k. If they file jointly, they will pay $376/month each in 2020. If the couple split their income to $80k for one and $220k for the other, they will pay $144.60 plus $462.70, which is already less than $376 * 2. If Congress didn’t make the higher income person go to tier 4, IRMAA will be defeated even more.
Gail says
In my case, i was over the limit by 4000.00, I asked that be used to pay irs taxes on a roth conversion. When they wanted to add almost 400 per month to my medicare costs, i was angry. I do understand your explanation, but I don’t agree. My spouse barely made 50000. So we filed an amended return jointly whech fell well below the limit.
Thus, instead of collecting an additional 4665.60 (388.80/month) from me they ended up getting no irmaa at all.
I wish to add that if they had fairly assessed the irmaa at 66.50 per month, I would have paid without question. Social security has always been based on individuals, earning etc, never before has my marital status been used against me.
There are reasons for filing separate returns that have nothing to do with avoiding taxes. So, I still feel that the assessment of excessive payments to people who file separately to be severely discriminatory.
The Wizard says
Looking forward, it’s generally better to withdraw amounts from tax-deferred each year to keep your AGI just slightly increasing and below the next IRMAA tier threshold. As opposed to withdrawing a lump in one year for a large purchase like a new car.
Good news is, your additional IRMAA amount is for only the twelve monthly payments in 2020, after which it should go away, assuming your 2019 MAGI was low enough…
IBM says
Don’t forget to thank President Obama for adding in the Part D IRMMA
Harry Sit says
See reply to comment #3. IRMAA came about in 2003, as a part of the law that created Medicare Part D. President George W. Bush signed it.
David Taylor says
In their booklet “Medicare Premiums: Rules For Higher-Income Beneficiaries” the Medicare folks claim that only 5% of Medicare recipients quality for IRMAA. But every independent survey of personal income that I can find claims that at least 20% of all seniors make more than $87,000! So, is the government just lying to us, or am I missing something?
Kenneth Fitzgerald says
Perhaps many of the over $87K retirees you have seen cited in those counts have a spouse who is not in the same category (in the other 80% of retirees), and together they stay under the now $174K Married Filing Jointly limit before IRMMA affects them?
The Wizard says
I’m not sure how this matters. My AGI is way over the starting point for IRMAA and always will be. So I pay a bit more for Medicare than lower income folks do.
I’m perfectly okay with that…
David Taylor says
You might be right. On the other hand, you shouldn’t be. Those counts just say “individual” income, and to me that means unmarried. If they are indeed including individual incomes within married couples, then that is very confusing. Sigh. That’s the trouble with the three-word data descriptions you find on-line. You are never quite sure what assumptions they are making.
David Taylor says
To The Wizard: If the percent of seniors affected by IRMAA is really 20% rather than 5%, then the government should admit it. A government that lies is not a good thing. The IRMAA booklet almost apologizes for IRMAA by implying that it is not a big deal because “only” 5% pay it. Is this Truth? Or propaganda? Or imaginative accounting? I’d like to know.
The Wizard says
Yes, I completely agree that we want truthful info. The lower IRMAA tiers are x2 for MFJ vs Single so not so hard for them to report.
But my impression is that Medicare is underfunded, rather than generating a surplus each year. So an IRMAA-like scheme for higher income oldies seems to make sense…
Larry Burdick says
I have had a two-year stepdown in terms of retirement and income reduction. I have filed requests for IRMMA reconsideration a couple times and after some hassle, have had both approved. Here is my problem, I filed the paperwork in early 2019 so my wife (the only one of us getting Medicare that year) would have here IRMMA based upon an estimated 2019 income instead of our much higher, preretirement income from 2017. Well, my estimated was between the $170,000 and $214,000 bracket. I was sloppy last year relative to income, and when I did my taxes last week, my 2019 income was $214,023!! Now, not sure what to do. Do I report this or just let it “catch up” to me in the future for the expected payback for the IRMMA required for the next higher bracket. And, I just got them to adjust our premium for 2020 for the estimated much lower income we will have, which I worry will be all fouled up again. Ugh.
Larry Burdick says
From Harry (above):
Yes the 2021 brackets will be for your MAGI in 2019. The numbers should be slightly higher than those for 2020. If you keep your 2019 MAGI under the published numbers for 2020 you should be OK in 2021.
So Harry, am I okay? Is the $214,000 or $218,000 what is used for 2019 AGI? So confusing . . .
Harry Sit says
In late 2020, Medicare will announce a new number, which will be used to measure against your 2019 MAGI, to determine how much you will pay IRMAA in 2021. If the inflation is positive, which is usually the case, that number for the second tier should be slightly higher than $218,000. If the inflation is negative, it can also be lower. We don’t know what that number will be until later this year.
Tom K. says
More lame fake news from the right. It was during W’s reign, not Obama’s that IRMAA was added. With Trump driving us further into debt, and Congressional republicans too afraid of him to find their spines, be prepared for even more increases in the future, and not just to IRMAA. True facts matter…
The Wizard says
I’m not sure we care about when or under whose admin that IRMAA got started.
It’s a good way for us wealthy folks to help the poor people.
What’s wrong with that?
Ria jensen says
I personally worked hard to put as much income away as possible in my 401K. I’m a single parent and tax status is the same. My retirement income from former employer plus social security has my earnings at less then 40% of my pre retirement income. I never asked nor received any government assistance, etc during the 48 years I worked. But now that I can fix my home, make travel plans etc I find Im going to pay the IRMAA because I was smart in saving. The amount I’m going to pay has taken away a good portion of my plans. So yes, I have a problem with paying this. I’m not rich, I saved and now I cannot live as I planned in retirement. Not fair to middle class citizens like myself I also pay for supplemental insurance and a drug plan Based upon calculations, I’ll be paying over $700 a month for insurance; that’s insane.
Kenneth Fitzgerald says
Tom K- I think the earlier poster ‘s comment was that that Obama added the newer Part D surcharge to (the already existing) IRMMA, and not that Obama created IRMMA.
David Walton says
I retired in 2019 at 65. I am married and my wife and I had enough income to be affected by IRMMA. My wife is younger and continued to work until mid year 2019 when she retired but she is not 65 and is not eligible for Medicare. Our income for 2019 was more than in 2018 due to significant bonuses. In 2020 however we will have significant reduction in income. If I appeal IRMMA now, because of our retirements, would I likely be eligible for a reduction in the premium? In other words would my Medicare premium for 2020 likely be adjusted based on our estimated 2020 income?
Ken says
My brother had the same problem when he retired in Jan 2018, and it straddled two tax years, in terms of high income in 2017, and again in year he was was retired for 11 months at age 70. He appealed it two times, (for 2019 and 2020 surcharges) and got relief on both. I don’t think you can appeal it until you get the letter telling you that IRMMA has kicked in. For him, it was December of the year before the hike was taking effect, so for you, I guess your first letter will be in Dec 2020, for 2021 IRMMA surchange based on 2019 tax return income. If they already assessed a surcharge for 2020 Medicare cost, based on your 2018 income, before retirement, you should certainly appeal that now, and should have gotten a letter about Dec 2019. No expert here, just going on what I read and heard about it.
CathyKate says
I agree with Tom T.
I don’t understand why married filing separate jumps from the Part D first tier to tier 4. If you make a dollar over $85,000 you are put in a category that goes up to $415,000. If someone could explain that I would surely appreciate it.
Thank you
sscritic says
There is an ACA subsidy. When you make too much, you lose your subsidy. No one calls it a surcharge.
IRMAA is no different; it is a reduction in your subsidy. All you have to do is read the law:
“(i) Reduction in Premium Subsidy Based on Income.—
(1) In general.—In the case of an individual whose modified adjusted gross income exceeds the threshold amount under paragraph (2), the monthly amount of the premium subsidy applicable to the premium under this section for a month after December 2006 shall be reduced (and the monthly premium shall be increased) by the monthly adjustment amount specified in paragraph (3).”
V.F. says
My spouse died from Covid 19 this year but I will file joint tax return. If I convert a large sum from IRA to Roth IRA it will make my MAGI approach 213K. What will my premium surcharge be in 2022 when I will file as single? Is it $60 if my income as a single taxpayer is less than $109K in 2022 or is it $144.60 because 2 years earlier joint income was 213K, assuming Medicare premiums and surcharges don’t change between 2021 and 2022?
Ken Fitzgerald says
I found this article had a lot of info about IRMMA. It may help you. Note the IRMMA APPEAL section that may work for you once you get the surcharge notice.
https://thefinancebuff.com/medicare-irmaa-income-brackets.html
Vince Pellettier says
Was your column updated for new cpi-u figures on August 12,2020? You said 2021 brackets should be $88k/$176k because of rounding up each $1000 but I’m thinking there maybe won’t be an increase from $87/$174. Someone said they are now using chained (c-cpi-u) instead of cpi-u. Do they also use seasonally adjusted cpi? I guess there’s one more month of figures so nothing is definite but we are at $174,174 for income 2019 so I’d like to see a little increase. I wish it wasn’t rounded up by $1000 because they may not adjust anything is there is just a small increase.
Harry Sit says
The July CPI released on August 12 didn’t change the projections. Even if the August CPI goes back to the low seen in April, the first bracket for 2021 will still be $88k/$176k.
MJM says
When during the year do IRMAA adjustments occur (January 1 or based on my initial Medicare sign-up date)?
Ken says
The IRMAA surcharges are by calendar year starting in January. Tha date you started is immaterial.
Eric says
Is the non-taxable portion of social security benefits included in MAGI? I see contradictory information on the internet.
Harry Sit says
The non-taxable portion of Social Security benefits is not included in the definition of MAGI for Medicare. See reply to comment #20.
Vince says
The CPI-U figures came out an hour ago at 1.3% so can you know calculate exactly what the new high income brackets will be for 2021? Would you take $87,000 x 1.3% = $1131 and $88,131 ($88,000 rounded down)? And thus $176,000 for joint?
Or do you have to wait for more info from the government? Thanks Harry
Harry Sit says
The latest CPI data point confirms the numbers in the blog post. The first tier for IRMAA in 2021 will be $88k for single and $176k for married filing jointly, based on income in 2019.
Carl Widerquist says
So will the MFJ 2020 income bracket of $272000 definitively go to $27200 X 1.3% = 275536 and then be rounded up to $276000 for 2021? Thxs
Harry Sit says
It’s not exactly calculated that way, but yes the limit for the third tier in 2021 will be $276,000 (based on 2019 income), as shown in the table.