TN 3 (11-10)
HI 01101.001 Description of the Medicare Income-Related Monthly Adjustment Amount (IRMAA)
1839(i) and Sections of the Social Security Act 1860D(i)
CMS regulations,42 CFR 408.20 – 408.27 and 42 CFR Subpart F;
SSA regulations, 20 CFR Part 418 , Subparts B and C
A. Description of Income-Related Monthly Adjustment Amount
Beneficiaries enrolled in:
Medicare Part B and a Medicare Advantage Plan with prescription drug coverage (MA-PD),
Medicare Part B and a Medicare prescription drug plan (PDP), or
A Medicare prescription drug plan (PD), and
have modified adjusted gross income (MAGI), (see HI 01101.010) above the threshold for their tax filing status pay an IRMAA in addition to the monthly premium. IRMAA may also be referred to as the Medicare subsidy reduction.
The Internal Revenue Service (IRS) electronically provides the Social Security Administration (SSA) with tax information to determine which enrollees must pay an IRMAA. If the data received from IRS does not indicate that a beneficiary must pay an IRMAA, SSA cannot impose an IRMAA. HI 01101.030 explains which tax year we use when calculating IRMAA.
Based on the beneficiary’s tax filing status, there are either two or four levels of IRMAA amounts, which are tied to the beneficiary’s MAGI. The four “sliding scale” levels are described in HI 01101.020.
By statute, the income thresholds and income ranges used to determine whether IRMAA applies, were fixed through 2017. The amount of IRMAA due for each level of income changes each year.
NOTE: The Medicare Access and CHIP Reauthorization Act of 2015 authorized a change in the fixed income thresholds beginning in 2018.
Under certain circumstances, beneficiaries can request that we use a more recent taxable year or alternate income information. See HI 01120.001 through HI 01120.065 for information on new initial determinations using beneficiary information.
B. Description of Income-Related Monthly Adjustment Amount for Medicare Part B (IRMAA-B)
The Federal government subsidizes the Medicare Part B program. Most Part B enrollees pay a monthly premium representing about 25 percent of the estimated actual cost. See an explanation in HI 00805.001, Supplementary Medical Insurance (Part B).
Since January 2007, 4 to 5 % of Medicare Part B enrollees have paid more for their monthly Part B premiums because their income is over a certain level (called an income “threshold”). See HI 01101.010 for an explanation of the MAGI income thresholds.
IRMAA is only one part of the cost of a beneficiary’s Part B premium. The amount an IRMAA beneficiary pays for Part B each month consists of:
The Standard premium, plus
Surcharges for late enrollment or reenrollment (if applicable), plus
Medicare Advantage reduction in premium credited (if applicable, see SM 03040.335, Medicare Advantage (MA) Part B Premium Reduction).
SSA withholds Medicare Part B premiums from a beneficiary’s benefit payment. If the benefit amount is not enough to cover the Part B deduction, SSA withholds as much as possible and bills the beneficiary for the remaining balance due. If a Medicare enrollee does not receive Title II benefits and:
is a Railroad Board(RRB) annuitant, RRB bills for Part B.
is a federal retiree,the Office of Personnel Management (OPM) bills for Part B.
does not receive benefits from SSA, RRB, or OPM, the Centers for Medicare & Medicaid Services (CMS) bills for Part B.
Medicare Part B beneficiaries who pay IRMAA lose any variable Supplemental Medical Insurance (VSMI) premium protection they may have. If a beneficiary loses VSMI protection due to IRMAA, VSMI protection may be reestablished if IRMAA is later removed for that same premium year. To regain the VSMI protection, the conditions for VSMI must be met and the VSMI calculation remains the same.
HI 01001.004, The Variable Supplementary Medical Insurance (VSMI) Premium
SM 00712.000, SMI Premium Determinations
C. Description of Income-Related Monthly Adjustment Amount for Medicare Prescription Drug Coverage (IRMAA-D)
Participation in the Medicare prescription drug coverage program is voluntary. See HI 03001.001, Description of the Medicare Part D Prescription Drug Program.
Starting January 2011, enrollees in Medicare prescription drug plans will pay more for their monthly prescription drug coverage premiums if their income is over a certain level (called an income “threshold”). See HI 01101.010 for an explanation of the income thresholds.
Regardless of how a beneficiary pays his PDP or MA-PD premium and any late enrollment or reenrollment surcharges, the IRMAA-D will be withheld from the Social Security or OPM benefit payment (RRB bills separately). If the benefit payment is not enough to cover the entire monthly IRMAA-D, CMS bills the beneficiary monthly for the IRMAA-D.
Enrollment for Medicare prescription drug coverage is not done with SSA. The beneficiary enrolls or disenrolls with the PDP or MA-PD, who notifies CMS. CMS then notifies SSA of a beneficiary’s enrollment or disenrollment in a Medicare-approved PDP or MA-PD.
CMS tells the PDP or MA-PD to cancel coverage if a beneficiary does not pay the IRMAA-D.
D. Acronyms and Terms
Centers for Medicare & Medicaid Services
Income-Related Monthly Adjustment Amount
Income-Related Monthly Adjustment Amount for Medicare
Income-Related Monthly Adjustment Amount for prescription drug coverage
Internal Revenue Service
Much of the income information used to determine IRMAA comes from IRS, explained in HI 01101.030.
Life Changing Event
See HI 01120.005D. for a list of qualifying life changing events.
Medicare Advantage Plan with prescription drug coverage
Medicare Appeals Council in HHS
Modified Adjusted Gross Income, explained in HI 01101.010.
Office of Medicare Hearings and Appeals in HHS
Office of Personnel Management
Prescription Drug Plan
The year for which SSA is determining the beneficiary’s IRMAA for. PY-2 refers to the tax year that is 2 years prior to the premium year; PY-3 refers to the tax year that is 3 years prior to the premium year.
Railroad Retirement Board
Base Beneficiary Premium
The base beneficiary premium is an amount calculated by CMS. CMS uses the base beneficiary premium to calculate IRMAA-D amounts.
The usual rules for equitable relief Medicare Part B are located in HI 00805.170 through HI 00805.240. Equitable relief for Part B will be offered to a beneficiary when the retroactive IRMAA exceeds five times the current standard Part B premium plus IRMAA.
Equitable relief will be extended for IRMAA-D when the retroactive IRMAA-D exceeds five times the base beneficiary premium plus five times the current IRMAA-D level.
If equitable relief is granted for Part B and there is an IRMAA-D arrearage, the payment plan can include both. See HI 01101.031 for the calculation of base beneficiary premium.
Significant Reduction in MAGI
A reduction in MAGI that reduces or eliminates the IRMAA for a specific year.
The level of modified adjusted gross income above which a Medicare enrollee must pay an IRMAA if there is Part B, prescription drug coverage, or both. See HI 01101.010B. for a description of the MAGI thresholds.
Variable SMI Premium
With certain exceptions, the law prohibits the January Part B premium increase from reducing the Social Security or Railroad Retirement benefit check received in January to an amount lower than received in December for certain beneficiaries.