Irmma Law: Understanding The History And Impact

The Income-Related Monthly Adjustment Amount (IRMAA) was created in 2003 through the Medicare Modernization Act. IRMAA is a surcharge added to the year's Medicare Part B and Part D premiums for those with an income above a certain threshold. The first year of its implementation was in 2007, with a surcharge placed only on Medicare Part B.

IRMAA was created in 2003 through the Medicare Modernization Act

The Income-Related Monthly Adjustment Amount (IRMAA) was created in 2003 through the Medicare Modernization Act (MMA) of 2003. The Act was signed into law by the President on December 8, 2003.

The Medicare Modernization Act brought about significant changes to the Medicare program, including the introduction of a prescription drug benefit and the redesign of Parts B and C. The Act also renamed Part C to Medicare Advantage.

The IRMAA was implemented as a way to address the fiscal challenges facing the Medicare program. It is a surcharge added to the current year's Medicare Part B (hospital coverage) and Part D (prescription drug coverage) premiums for those with incomes above a certain threshold. The surcharge is determined using a sliding scale based on adjusted gross income.

The first year of IRMAA implementation was in 2007, with a surcharge placed on the Medicare Part B premium. Changes to IRMAA over the years include the expansion of IRMAA surcharges to Part D in 2010 and the creation of a 5th bracket for IRMAA in 2018.

IRMAA is a surcharge added to Medicare Part B and Part D premiums

The Income-Related Monthly Adjustment Amount (IRMAA) is a surcharge added to the current year's Medicare Part B and Part D premiums for those with a yearly income above a certain threshold. IRMAA was created in 2003 through the Medicare Modernization Act of 2003, with the first year of implementation in 2007.

IRMAA is calculated on a sliding scale with five or six income brackets, depending on the year, topping out at $500,000 for individual filers and $750,000 for joint filers. These figures are adjusted annually for inflation. Whether an individual pays an IRMAA surcharge in a given year depends on their tax returns from two years prior. For example, IRMAA in 2024 was calculated based on 2022 tax returns.

The Social Security Administration (SSA) determines who pays an IRMAA surcharge based on the income reported two years prior. If the SSA determines that an individual must pay an IRMAA, they will send a notice with the new premium amount and the reason for their determination. The IRMAA surcharge is added to the individual's monthly premium bill.

In addition to income, IRMAA can also be influenced by one-time spikes in income, such as a Roth conversion. Properly timing a Roth conversion can help individuals avoid paying the IRMAA surcharge when they convert and when they take distributions.

IRMAA is based on income from two years prior

The Income-Related Monthly Adjustment Amount (IRMAA) was created in 2003 through the Medicare Modernization Act of 2003. IRMAA is a surcharge that is added to the current year's Medicare Part B and Part D premiums for those with an income above a certain threshold. The surcharge is based on an individual's modified adjusted gross income (MAGI) from two years prior.

The MAGI is an individual's adjusted gross income (AGI) with certain costs added back to it. The AGI includes an individual's total income for a year with certain deductions subtracted. The MAGI is, therefore, usually equal to or slightly higher than the AGI. Deductions that are added back to the MAGI include student loan interest, passive income loss, deductions for tuition and fees, and taxable social security payments.

The IRMAA was first implemented in 2007, with a surcharge placed upon the Medicare Part B premium. In 2010, the Affordable Care Act (ACA) expanded the IRMAA to include Part D (prescription drug coverage). The ACA was the biggest change to the IRMAA since its creation.

The IRMAA brackets have changed over the years, with the most recent brackets, as of 2025, being as follows:

• >$106,000 and < $133,000 for individuals, and >$212,000 and < $266,000 for married couples filing jointly: Plan Premium + $13.70
• > $133,000 and < $167,000 for individuals, and >$266,000 and < $334,000 for married couples filing jointly: Plan Premium + $35.30
• > $167,000 and < $200,000 for individuals, and >$334,000 and < $400,000 for married couples filing jointly: Plan Premium + $57.00
• > $200,000 and < $500,000 for individuals, and >$400,000 and < $750,000 for married couples filing jointly: Plan Premium + $78.60
• > $500,000 for individuals, and >$750,000 for married couples filing jointly: Plan Premium + $85.80

It is important to note that IRMAA amounts change every year, and qualifying for IRMAA in one year does not mean an individual will qualify for it in subsequent years. Individuals can appeal their IRMAA determination if they believe their circumstances warrant a change.

IRMAA is only for those with income above a certain threshold

The Income-Related Monthly Adjustment Amount (IRMAA) is a surcharge applied to the current year's Medicare Part B and Part D premiums for those with incomes above a certain threshold. IRMAA was created in 2003 through the Medicare Modernization Act of 2003 and first implemented in 2007.

The income that determines IRMAA is defined by Medicare as "adjusted gross income plus any tax-exempt interest" or everything on lines 2a and 8b of the IRS form 1040. This includes wages, social security benefits, capital gains, dividends, pension and rental income, and distributions from tax-deferred investments.

IRMAA is not part of a plan's premium and is paid directly to Medicare (the Centers for Medicare and Medicaid Services). It is important to note that IRMAA is based on income from two years prior to the current year. For example, 2024 Medicare premiums are based on 2022 income tax returns.

There are ways to appeal or reduce IRMAA surcharges. Individuals can appeal to the Social Security Administration if they believe there was an error in the Initial IRMAA Determination Notice or if they experience a significant life change that reduces their income. Additionally, certain financial strategies, such as smaller Roth conversions over several years or Qualified Charitable Distributions, can help reduce Modified Adjusted Gross Income and potentially lower IRMAA surcharges.

IRMAA has been adjusted several times since its inception

The Income-Related Monthly Adjustment Amount (IRMAA) was created in 2003 through the Medicare Modernization Act. However, it was first implemented in 2007, with a surcharge placed only on the Medicare Part B premium. Since then, IRMAA has undergone several adjustments.

In 2010, the Affordable Care Act (ACA) expanded IRMAA to include Part D (prescription drug coverage). This change aimed to strengthen the financial stability of the Medicare program. The expansion of IRMAA under the ACA resulted in adjustments to the income thresholds and surcharges.

The Bi-Partisan Budget Act of 2018 introduced another significant change by creating a fifth bracket for IRMAA and stipulating that this additional bracket would not be adjusted for inflation until at least 2028.

Over the years, the income thresholds and surcharges for IRMAA have generally increased. For instance, between 2007 and 2021, the average IRMAA brackets inflated as follows:

1st Surcharge Bracket: 4.94%

2nd Surcharge Bracket: 6:42%

3rd Surcharge Bracket: 7.36%

4th Surcharge Bracket: 8.02%

5th Surcharge Bracket: 4.73% (2019 – 2021)

While IRMAA has been adjusted multiple times, its fundamental purpose remains unchanged: to adjust Medicare premiums for high-income individuals with a modified adjusted gross income above specific annual thresholds.

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