At age 65 if you do not have additional health insurance options through an employer or a spouse’s employer you will likely enroll in Medicare Part B. Part B covers “medical” expenses like doctors visits and outpatient care. There is a monthly premium associated with Medicare Part B. As people approach 65 (or after they have enrolled in Medicare Part B), many are surprised to learn that they may need to pay more than expected for their Part B premiums.

There is an income-driven surcharge that is added to Medicare premiums known as “income-related monthly adjusted amount” (IRMAA). If your income is above certain thresholds, your Part B and Part D premiums will be increased for the year. For 2023, anyone with Modified Gross Income (MAGI) below $97,000 for single filers and $194,000 for married filing jointly (MFJ) would pay the base rate with no adjustment which is: $164.90 per month for 2023.

Below are the income brackets and corresponding total Part B premiums including the IRMAA surcharge for the higher income earners. Medicare premiums are per beneficiary, so a couple with both spouses receiving Medicare Part B will need to pay these premiums twice. As you can see to the right, the increases are significant- especially multiplied out over the entire year.

The income that is considered when determining if a Medicare recipient must pay an IRMAA surcharge is from two years prior. This means for 2023 Part B premiums, the income that is considered would be 2021. This two-year gap can create a situation where people pay more than expected for Medicare Part B and D premiums- especially early in their Medicare years. Higher income at age 63 for any number of reasons can trigger IRMAA and often comes as a surprise.

If you have a situation where your income from two years ago is higher than it is now, you can appeal your IRMAA surcharge. This is a good option for people who perhaps were working, but now are not or had some other life event that temporarily raised their income. There is an appeal form from the Social Security Administration (SSA-44) that you can fill out and mail in for review.

Although it is not always possible to avoid IRMAA surcharges, careful financial planning can often help you avoid these higher premiums. We always keep these surcharges in mind when we are building financial plans for clients. We can also help clients with the appeals process if necessary. Contact us if you have any questions about IRMAA and your specific situation.