Overview

Main Menu Name: IRMAA

Calculates the additional monthly premium for Medicare coverage paid by high income individuals, or couples filing joint returns. Most people will pay the standard premium amount, which for 2023 is $164.90 per month ($1,978.80 per year).  However, individuals earning more than $97,000, or joint filers earning more than $194,000, are required to pay an additional monthly premium designated as the "Income Related Monthly Adjustment Amount (IRMAA)".

In this article:

• Background
• Getting Started
• Entering Data
• Results

Background

MAGI: modified adjusted gross income (from two years prior to the calculation year - the "prior-prior" year).

Part B premiums (Medical Insurance) ("IRMMA-B")

Most people will pay the standard monthly premium amount. For 2023, this amount is $164.90 per month ($1,978.80 per year).

If your MAGI is above a certain amount, however, you may need to pay an "Income-Related Monthly Adjustment Amount" (IRMAA-B). For 2023, the MAGI bracket changes (applicable to 2021 income) appear below.

Depending on your filing status and your MAGI, this IRMAA-B (increase) will range from $65.90 to $395.60 per month (or $790.80 to $4,747.20 per year).

For Individual and Joint (married), if you are even $1 into the next MAGI bracket, your annual IRMAA-B will jump by $790.80 from the first to the second bracket, by an additional $1,186.80 in each of the next three brackets, and by an additional $396.00 in the last bracket. 

For Other (married filing separately, widowed, or head of household), your annual IRMMA-B will jump by $790.80 from the first to the second bracket, by an additional $3,560.40 from the second to the fifth bracket, and by an additional $396.00 in the last bracket.  

Part D premiums (Prescription Drug Benefit) ("IRMMA-D")

Most Medicare Prescription Drug Plans charge a monthly fee that varies by plan.

If your MAGI is above a certain amount, however, you may need to pay an additional IRMAA-D. For 2023, the IRMAA-D (increase) will range from $12.20 to $76.40 per month ($146.40 to $916.80 for the year).

Thus, your combined IRMAA-B and IRMAA-D can increase by anywhere from $937.20 to $5,664.00 for the year:

                            IRMMA-B +  IRMMA-D    Combined
    Bracket #2:  $    790.80 + $ 146.40 = $     937.20

    Bracket #6:  $ 4,747.20 + $ 916.80 = $ 5,664.00

Getting Started

Medicare provides broad-based health care coverage for most retired people, with eligibility generally beginning at age 65. The cost of health care, including Medicare and supplements, has become an important factor in the budgeting process. This program will help financial planners to make their clients aware of the full cost of Medicare and not to be surprised by the extra premium they may be required to pay. The output may also be helpful in determining whether or not to retire, and to give up employer-based health care coverage.

The determination of high income is based on your "modified adjusted gross income" (MAGI) reported to the IRS for two years prior to the calculation year (the "prior-prior" year). For example, for the calculation year 2023, you would input the MAGI amount reported on your 2021 tax return.

Entering Data

1. Calculation Year:  Enter the year of the calculation.
   
   
2. Modified Adj. Gross Income:  Enter the Modified Adjusted Gross Income.
   
   
3. Filing Status:  Single/Joint/Separate/Head of Household.
   
   
4. Monthly RX Plan Premium:  Enter the monthly premium for prescription plans.

Results

The results show the standard, IRMAA, and total monthly medical premiums for both Part B and Part D plans.