How much you make has an impact the cost of Medicare. In this article, we will be going over the Medicare income limits in 2021 and their effects on the various parts of Medicare. The income-related monthly adjustment amount (IRMAA) is a surcharge for high-income people that affects how much they have to pay for Medicare Part B and Part D premiums. The IRMAA, which applies to Medicare Part B premiums, went into effect in 2007, while the IRMAA impacting Part D premiums was implemented in 2011. IRMAA adjustment payments are paid directly to Medicare or can be withheld from your Social Security Benefits. This is true even if you pay monthly premiums to an insurance company for Medicare Advantage or Part D coverage.
The Social Security Administration (SSA) decides if you have to pay more based on IRMAA. The income used to determine what, if any, IRMAA applies is the income you reported on your tax return two years ago. For example, in 2021, the SSA will look at your 2019 tax return to make your IRMAA determination. IRMAA is calculated every year and may change if your income changes. You may be subject to Medicare premium income limits one year, but not the next if your income falls below the lower limit.
Medicare Income Limits
When you first become eligible for Medicare, you will get an initial IRMAA determination notice if you have Medicare Part B and/or Part D and Social Security determines IRMAA applies to you. This notice includes information about Social Security’s determination and appeal rights.
The table below outlines the various Medicare premium income limits and associated IRMAA adjustments for 2021.
|If your yearly in 2019 (for what you pay in 2021) was||For Part B, you pay each month (in 2021)||For Part D, you pay each month (in 2021)|
|File individual tax return||File joint tax return||File married & separate tax return|
|$87,000 or less||$174,000 or less||$87,000 or less||$148.50||your plan premium|
|above $87,000 up to $109,000||above $174,000 up to $218,000||Not applicable||$207.90||$12.30 + your plan premium|
|above $109,000 up to $136,000||above $218,000 up to $272,000||Not applicable||$297.00||$31.80 + your plan premium|
|above $136,000 up to $163,000||above $272,000 up to $326,000||Not applicable||$386.10||$51.20 + your plan premium|
|above $163,000 and less than $500,000||above $326,000 and less than $750,000||above $87,000 and less than $413,000||$475.20||$70.70 + your plan premium|
|$500,000 or above||$750,000 and above||$413,000 and above||$504.90||$77.10 + your plan premium|
IRMAA Pre-Determination Notice
Newly eligible Medicare beneficiaries will be charged the standard Part B premium or the prescription drug plan premium without an IRMAA until the SSA receive your Modified Adjusted Gross Income (MAGI) from IRS. If IRS data indicates the beneficiary’s income is above the defined threshold, the SSA will send a pre-determination notice. This notice will explain:
- That IRMAA will apply
- What information was used to compute IRMAA
- What the beneficiary can do if the tax information provided by IRS is wrong
- What the beneficiary can do if SSA used PY-3 information and the beneficiary has a copy of his filed PY-2 tax return
- What the beneficiary can do if the tax filing status of “Married, Filing Separately” for the tax year was used and lived apart from his spouse for the entire year
- What the beneficiary can do if there was an LCE with a reduction in income
After 20 days, the SSA will send an initial determination notice with appeal rights
IRMAA Initial Determination Notice
When SSA makes their final initial determination regarding IRMAA, they will send a notice that will contain appeal rights and tell you to contact SSA if one of the following situations apply:
- The beneficiary experienced a Life-Changing Event (LCE) that caused a significant reduction in MAGI (i.e., caused MAGI to go down at least one range in the tables).
- SSA used PY-3 data (tax information from three years before the premium year), and the beneficiary can supply a copy of the PY-2 (tax information from two years before the premium year) Federal income tax return
- The beneficiary filed, and IRS accepted an amended income tax return for the year we are using to set the IRMAA,
- There was an error in the information provided to SSA by IRS, and the beneficiary can provide proof from IRS acknowledging the error and the correction, or
- The beneficiary had a filing status of “Married, Filing Separately” and reports living apart from his or her spouse at all times during that tax year.
To make an appeal regarding your IRMAA determination because you feel the Medicare income limits applied are incorrect, you need to request a reconsideration of the initial determination from the SSA. A request for reconsideration can be by calling the SSA at 800-772-1213 or by writing to the SSA using the Medicare Income-Related Monthly Adjustment Amount Life-Changing Event form.
If your reconsideration is approved, your Part B or Part D premiums will be corrected. If your reconsideration is denied, you can appeal to the Office of Medicare Hearings and Appeals (OMHA) within 60 days of the date on the reconsideration denial. The denial letter will contain information on how to file an appeal at the OMHA level. If you decide to appeal to the OMHA level, you may want to hire a lawyer knowledgeable in this area to help you with this or any further appeals.
If your OMHA level appeal is approved, your Part B or Part D premiums will be corrected. If your appeal is denied, you can choose to appeal to the Council within 60 days of the OMHA level denial date.
If your Council appeal is successful, your Part B or Part D premiums will be corrected. If the Council denies your appeal, you can choose to appeal to the Federal District Court within 60 days of the Council denial date.