Medicare beneficiaries with incomes above a certain threshold are charged higher premiums for Medicare Part B and Part D. The premium surcharge is called an Income-Related Monthly Adjustment Amount, or IRMAA. Here’s our overview of how IRMAA works.
In 2022, IRMAA surcharges apply to individual Medicare beneficiaries who earn more than $91,000, and to couples who earn more than $182,000. For 2023, these limits are projected to increase to roughly $97,000 and $194,000, respectively.
The IRMAA limits are based on income earned two years prior to the coverage year in question, since that’s the last income tax return that the IRS has on file. So a person enrolling in Part D coverage for 2022 would pay an IRMAA surcharge if their 2020 tax return shows an income in the surcharge range (but there’s an appeals process people can use if they have experienced a life change that has reduced their income since then).
Although very few Medicare beneficiaries pay IRMAA surcharges, the effect on premiums is significant for those who do. The standard Part B premium in 2022 is $170.10/month. But for those subject to IRMAA, the Part B premium ranges from $238.10/month to $578.30/month. And for Part D, the IRMAA surcharge amounts to an extra $12.40/month to $77.90/month, in addition to the regular premium for the plan you select.