When you enroll in Medicare, some programs charge premiums to help cover costs. Depending on your income, you could owe an extra surcharge on top of the normal premiums. This charge is called the Medicare Income Related Monthly Adjustment Amount, or IRMAA for short.

Here's a look at how IRMAA works, as well as ways to appeal if you don't think it should apply to you.

What Is IRMAA?

The Medicare Income Related Monthly Adjustment Amount is an extra surcharge that the government charges high-income earners. IRMAA applies to Medicare Part B (outpatient doctor services) and Medicare Part D (prescription drugs). Both of these programs usually charge a premium:

• For Medicare Part B, the government deducts the premium from your Social Security check. With IRMAA, they end up taking more.
• For Medicare Part D, an insurance company charges you a premium to join the plan, but IRMAA would require you to pay an additional surcharge on top of any insurance company premium.
• You could also owe IRMAA if you use a Part C Medicare Advantage plan that includes Part D prescription drug coverage.

However, IRMAA doesn't apply to Medicare Part A (hospital services).

When Do You Owe IRMAA?

You only owe IRMAA if your adjusted gross income is higher than a certain amount. The Social Security Administration (SSA) handles this calculation by looking at your taxable income from two years ago. This is because it can take time for people to finish filing their return from the previous year, whereas the government must set your annual IRMAA rate in January.

For 2022, they would look at your 2020 income. In 2022, you owe IRMAA if you're an individual who had a modified adjustable gross income (MAGI) above $91,000 in 2020 or if you're married and had joint MAGI over $182,000 in 2020. If you earned less than these cutoffs in 2020, then you will not owe the Medicare Income Related Monthly Adjustment Amount.

How Is IRMAA Calculated?

The government charges different IRMAA rates for different ranges of income. In 2022, here are the IRMAA rates for Medicare Part B:

Individual Income	Joint Income	Monthly Premium
$91,000 or less	$182,000 or less	$170.10 (no IRMAA)
$91,001 – $114,000	$182,001 – $228,000	$238.10
$114,001 – $142,000	$228,001 -$284,000	$340.20
$142,001 – $170,000	$284,001 – $340,000	$442.30
$170,001 – $500,000	$340,001 – $750,000	$544.30
Over $500,000	Over $750,000	$578.30

Here are the IRMAA-adjusted premiums for Medicare Part D:

Individual Income	Joint Income	Monthly Premium
$91,000 or less	$182,000 or less	Drug plan premium only (no IRMAA)
$91,001 – $114,000	$182,001 – $228,000	$12.40 + drug plan premium
$114,001 – $142,000	$228,001 -$284,000	$32.10 + drug plan premium
$142,001 – $170,000	$284,001 – $340,000	$51.70 + drug plan premium
$170,001 – $500,000	$340,001 – $750,000	$71.30 + drug plan premium
Over $500,000	Over $750,000	$77.90 + drug plan premium

If you're married, both you and your spouse would need to pay the higher IRMAA rates for your Medicare premiums.

Can You Appeal IRMAA?

Two types of scenarios allow you to file an appeal for IRMAA.

The first is if you believe there is a mistake with your tax calculation and the Social Security Administration used the wrong numbers. This may be because they received incorrect data from the IRS or because you amended your tax return later, which changed what numbers should have been used for the IRMAA calculation.

You can also file an appeal if you had a major life-changing event in the past year that reduced your income. Some possibilities include:

• You quit/lost/retired from your job
• You earned less from working fewer hours
• You got married or divorced
• Your spouse died
• Your pension and/or investment income fell

If one of these situations applies, you can submit Form SSA-44 to the SSA, which explains your situation. You can also call them to schedule an in-person appointment. If you are not happy with their decision, you can file an additional appeal via the Office of Medicare Hearings and Appeals.

Medicare premiums could become a considerable retirement expense, especially if you owe IRMAA. A financial advisor can help you set your budget and potentially find strategies to avoid this surcharge.