Turning to the age of 65 means a lot is coming. Well, it is the time when people usually enjoy their retirement and try to fulfill their dreams they could not live in the past. But it is true that the old age comes with many health issues. If you want to reduce the medical expenses after the age of 65, then choose the Medicare health insurance. But if you have turned 65 this year and have high income and you are on Medicare, then you are most likely going to become a victim of Income related monthly adjustment amounts.
What is IRMAA?
Income-related monthly adjustment or IRMAA is an additional amount some people might be paying with their Medicare premium. They have to pay IRMAA only when their MAGI (modified adjusted gross income) is higher than a particular threshold. It was first introduced in the year 2003 and was applied to the high-income enrollees of Medicare Part B.
How to calculate IRMAA?
You know that your MAGI help in determining your monthly IRMAA payment. The adjusted gross income along the specific costs added back to it is your modified adjusted gross income. The following deductions can be added back to your modified adjusted gross income:
- IRA contribution
- Deductions for tuition and fee
- Student loan interest
- Taxable social security amount
Medicare Part B premiums and IRMAA:
A subsidized health care program for the people who are above the age of 65 is Medicare. If you have worked for at least forty quarters in your life, then you are eligible to get the Medicare benefit. Medicare benefits fall under the part A in which you have to pay through the payroll deductions and the Part B, C, D in which you pay monthly. The excess premium charged on Medicare Part B is the IRMAA.
You are aware of the fact that the Medicare Part B covers:
- Durable medical equipment
- Lab tests
- Outpatient services in the hospital
- Physician’s expenses
The standard premium amount for the year 2018 is $134 per month. But when an individual starts hitting a certain income threshold, this amount begins to increase. According to the social security administration, you can afford you must have to pay it. If your calculated MAGI is above the threshold, you have qualified to pay the additional premium amount.
Do I have to pay IRMAA?
To pay 2018 IRMAA if your and your spouse’s income is less than $170,000 then you do not need to pay IRMAA adjustment. SSA calculates IRMAA Part B premium adjustments after getting the information you submit to the IRS. Remember that your IRMAA will be based on the data you reported two years ago. However, if you get the Original Medicare benefits through MA Plan, you may have to pay IRMAA Part B. IRMAA Part B and D are not as same as the late enrollment penalty. You can assess the IRMAA adjustments at any time with the help of your income data.