Robert Klein, CPA from the Retirement Income Center discusses some pitfalls to avoid when planning for Medicare’s income related adjustments.
What Is IRMAA?
IRMAA, or Income-Related Monthly Adjustment Amount, is an additional charge that some Medicare beneficiaries may have to pay for their Medicare Part B (outpatient medical services) and Part D (prescription drug) coverage. The charge is based on the beneficiary’s income, as reported on their federal tax return from two years prior.
IRMAA is determined by the Centers for Medicare and Medicaid Services (CMS) and is intended to ensure that higher-income beneficiaries pay a larger share of the costs for their Medicare coverage. The income thresholds for IRMAA are adjusted each year and are based on the beneficiary’s filing status, such as single or married filing jointly. Beneficiaries with income above certain thresholds will pay higher premiums for Part B and/or Part D coverage.
It’s important to note that beneficiaries who are subject to IRMAA may be able to appeal the charges if their income has decreased or if there are other extenuating circumstances that would make paying the additional charges a financial hardship.
In summary, IRMAA is an additional charge for Medicare Part B and Part D coverage that is based on the beneficiary’s income and is intended to ensure that higher-income beneficiaries pay a larger share of the costs for their Medicare coverage.