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Medicare Part D IRMAA 2025 is important for beneficiaries and agents to understand. The Social Security administration adds the IRMAA costs for Medicare Part D into the plan premium for each enrollee’s plan. Part D plans have a wide range of premiums. They can range from $0 to as much as $150 or more per month. The price of each plan depends on the area each beneficiary lives in as well as the plan they choose.

What is IRMAA

IRMAA (income-related monthly adjustment amount) is a surcharge on Medicare Part B as well as Medicare Part D plan premiums. It applies to Medicare beneficiaries who have gross income over a specific amount.

Click here to learn about Medicare Part B IRMAAs

How IRMAA amounts are decided

The IRMAA Income amounts are decided annually on a sliding scale and include 5 different income brackets. In the event the Social Security administration determines a client must pay an IRMAA, they will send a premium notice that includes an explanation of the charge.

The IRMAA amounts are based on the beneficiaries’ income from 2 years before the present year.  For example: a 2025 IRMAA is based on the beneficiary’s income from 2023.  Because income changes from year to year, the IRMAA amount also changes accordingly.

The following IRMAA Part D premium surcharges are based on 2023 income amounts.

Please note: individuals enrolled in a Medicare Advantage plan that includes prescription drug coverage, will pay the Part D IRMAA as well as the plan premium. If their plan has a $0 premium, they will still have to pay the Part D IRMAA. Social Security also adds The IRMAA to the beneficiaries’ Part B premium.

How to appeal the IRMAA

Beneficiaries can appeal an IRMAA determination in the event they feel it is an error or if they experience a life changing event that results in lower income. Some events that can result in loss of income include divorce, loss of a spouse or loss of employment or other sources of income. The beneficiary can file for a redetermination with the Form SSA-44.

In the event the beneficiary disagrees with the redetermination, they can request a third level appeal through OMHA (Office of Medicare Hearings and Appeals).

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Medicare Part D enrollment period

Medicare plans all have specific periods of time that beneficiaries can use to enroll in each type of plan.  Medicare Part D (prescription drug coverage) is no different.  There is more than one Medicare Part D enrollment period available to beneficiaries.

Please note: Beneficiaries can get Medicare Part D coverage from either a stand-alone PDP plan or from an MAPD plan.

Why enrolling in Part D is important

If your client asks why they should enroll in Part D coverage, you need to tell them about the late enrollment penalty (LEP). Once a beneficiary incurs a penalty, they have to pay it for as long as they have Medicare Part D coverage.  It is added to The Medicare Part D plan premium.  This penalty amount is determined by the number of months the beneficiary has gone without creditable drug coverage.  The penalty applies after a beneficiary goes 63 days or more without creditable coverage. Creditable coverage means a drug plan that provides coverage at least equal to what Medicare part D provides.

Here are a few instances that can result in an LEP

1. When a client Neglects to enroll in Part D as soon as they are eligible.  Enrollment in Medicare Part A & Part B is a great indicator of when to enroll in part D coverage.  It is important to enroll even if the client is not currently taking any prescription drugs.
2. If the beneficiary loses other health coverage such as employer coverage, it is important beneficiaries do not go without creditable coverage for 63 days in a row.
3. Once clients are eligible for Medicare, be sure they maintain records of creditable coverage in the event Medicare asks for proof of previous coverage.

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Medicare prescription payment plan

The Medicare prescription payment plan is also referred to as “smoothing“. This is a way to help Medicare beneficiaries pay for the high cost of prescription medications.  The Medicare prescription payment plan is one small part of the inflation reduction act of 2022.

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When will the program start

In 2025, Medicare Part D (PDP) plan enrollees have a chance to opt for a prescription payment program.  The plan will help beneficiaries pay out-of-pocket costs for prescriptions.  Everyone in a PDP plan has a chance to enroll in the payment program, it is not based on income.  Enrollees have the option to enroll before the plan year starts or during any month of the year.   Please note, the payment plan does not include plan premium payments.

Here are some of the details

Participation in the Medicare prescription payment plan is optional.  PDP plan enrollees must choose to be part of the program.  Once an enrollee joins the program, and has out-of-pocket prescription costs, they receive a monthly bill to cover those costs.  Any out-of-pocket costs for prescriptions are included even during the deductible phase of PDP coverage.  There is no minimum out-of-pocket amount required before anyone can join.  Participants receive a monthly bill as long as they remain part of the program.

How is the monthly payment amount decided

There will be an annual cap of $2,000 on out-of-pocket costs in 2025.  The amount each beneficiary pays for their monthly plan depends on a few different factors.  It is not as easy as dividing $2,000 over the course of 12 months.

Learn more about the Part D drug cap

1. The Medicare prescription payment plan will deduct the out-of-pocket amount beneficiaries have already paid before enrollment in the program.
2. Any remaining costs are then divided by the number of months left in the year.

CMS will create a payment calculator so Part D beneficiaries can decide if enrolling in the payment plan is a good idea or not.

CMS is still working out the details of this program

We do not know exactly how the prescription payment program will work yet because the details have not been finalized by CMS yet.  We will post additional details as they are available to the public.

Please note:  This program is set to start in 2025, the same year the annual drug cap will be set at $2,000.  In other words, no Part D enrollee will pay more than $2,000 out-of-pocket for their prescriptions.

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