Medicare Part D IRMAA 2021

Medicare Part D IRMAA 2021

Lets start by explaining what the Medicare Part D IRMAA 2021 is.  IRMAA stands for income related monthly adjustment amount.  This is a surcharge/additional premium that applies only to higher earning Medicare beneficiaries.  It is based on the income that was earned 2 years prior. (example: 2021 IRMAA is based on your 2019 tax return)  People who earn above certain levels of income must pay a higher Medicare Part D premium.  Medicare Part D covers prescription drugs.  You can get part D either through a stand alone PDP or through a Medicare Advantage plan with prescription drugs

The Social Security Administration (SSA) makes the determination about whether or not you’re subject to IRMAA based on the income you reported in your tax return two years ago. For example, in 2020, the SSA looks at the 2018 income data you filed with your tax return.

Unlike late enrollment penalties for Part D and B, which can last as long as you have Medicare coverage, IRMAA is calculated every year. You may have to pay the adjustment one year, but not the next if your income falls below the threshold.

Medicare Part D IRMAA 2021: percentages

The premiums paid by Medicare beneficiaries cover about 25% (on average but there are a number of factors) of the program costs for Part B and Part D. The government pays the other 75%.

Medicare imposes surcharges  that higher-income beneficiaries will need to pay for Rx coverage. Essentially, they are paying more than the 25% of costs paid by those without an IRMAA increase

The income used to determine IRMAA is your adjusted gross income (AGI)which incudes interest from various investments. Your 2019 income determines your IRMAA in 2021. Your 2020 income determines your IRMAA in 2022 and so on.

Income brackets

Just to keep everyone on their toes, IRMAA is divided into 5 income brackets.  The higher the bracket you fall into the more you will pay toward the part D IRMAA

See the 2021 IRMAA income brackets

If your income was substantially higher in prior years because you were working at that time and now your income is significantly lower because you no longer work (Work stoppage or reduction), you can appeal the IRMAA increase. These situations are life changing events.  Examples of them are.

• Spouse passes away
• New marriage or divorce
• less hours at work
• No longer working
• Lower or loss of income from a property
• Pension reduction or loss

Get your hands on the form SSA-44 to appeal the IRMAA if you feel you have a reason to do so.

IRMAA is re-evaluated every year.  This is important to keep in mind in the event of income spikes or reductions in a given year.

Notes:  IRMAA for Part D will be an addition to the premium for stand alone part D plans and Medicare Advantage plans (only Advantage plans that have prescription drug coverage)

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