What Rich is referring to is known as IRMAA, which stands for Income Related Monthly Adjustment Amount. Those who make over a specific income threshold pay more, not only for Medicare Part D prescription coverage, but also for Part B which is actually much more significant. The standard monthly Medicare Part B premium is $170.10. However, there are six different levels of IRMAA which start at $68 extra per month for Part B and $12.40 for Part D assessed to any single individual whose Modified Adjusted Gross Income (MAGI) was $91,000 to $114,000 or married couple who had a MAGI of $182,0000 to $228,000. The highest level of IRMAA is assessed to individuals whose MAGI was $500,000 or more and married couples with a MAGI exceeding $750,000. Those in this category pay $408/month in addition to the standard Part B premium of $170.10 and $78/month extra for D. Medicare beneficiaries whose incomes meet the IRMMA guidelines and have Advantage Plans that include drug coverage will pay the extra amount. Again, there are four levels in between those I listed here and please be advised that because there are a few deductions that can’t be used when calculating MAGI, it can be higher and is a different figure than Adjusted Gross Income (AGI).

In addition, and to answer part of Rich’s question, MAGI is not found on your tax return. According to an Intuit Turbo Tax document published online and reviewed by one of their CPAs, “To calculate your MAGI, take your AGI and add-back certain deductions. Many of these deductions are rare, so it’s possible your AGI and MAGI can be identical. Different credits and deductions can have differing add-backs for your MAGI calculation. According to the IRS, your MAGI is your AGI with the addition of the appropriate deductions, potentially including: Student loan interest, one-half of self-employment tax, qualified tuition expenses, tuition and fees deduction, passive loss or passive income, IRA contributions, non-taxable social security payments, the exclusion for income from U.S. savings bonds, foreign earned income exclusion, foreign housing exclusion or deduction, the exclusion under 137 for adoption expenses, rental losses, and any overall loss from a publicly traded partnership

To calculate if IRMAA needs to be assessed and at what level, Social Security actually looks back at tax returns from two years prior. For example, 2020 MAGI is used to determine what Parts B and D will cost in 2022. For 2023, they will look back at 2021 and so on. What we often run into is an individual or married couple’s MAGI being less the year they retire as well as ensuing years because they will no longer be working and receiving a paycheck, living off Social Security, pensions, and/or investment income instead. “Why should I have to pay more Part B and D premiums if I’m going to be making less than $91,000 this year and next?” The answer is you don’t have to in this situation. There’s an appeal that can be filed to eliminate or reduce IRMAA if the current year’s MAGI is going to be less than two years prior. We always provide our clients with the necessary documents and walk them through this process as well as applying for Part B, both of which can be confusing. And for those of you who aren’t aware, consultations with any of our licensed agents, including myself, as well as the support we provide prior to and after choosing a Medicare Supplement, Part D prescription coverage, or Advantage Plan HMO/PPO are always provided at no cost. And as brokers, we’re appointed to offer Medicare, individual or group health, and life insurance plans from virtually every competitive company on the market, assuring unbiased advice. And when we discover the better option is a plan someone has access to from a company they are employed with or retired from, we always recommend they go that route and will even assist in filling out the application. It’s always been our mission to help anyone who calls, emails, or walks through the door even if it doesn’t result in a commission.

If you have any questions or concerns regarding this column topic, or would like to make an appointment for a no-cost consultation, please feel free to give us a call – we would be happy to help. I’d like to remind everyone that I do a live call-in talk show called Medicare A to Z every 1st and 3rd Monday of the month on WMBS Uniontown, 590AM and 101.1FM, from 1 to 3 PM. You can listen in on their website, wmbs590.com.