As you may know, there were some cost increases for Medicare Part B in 2020. For more information on these increases, you can CLICK HERE.
Medicare is so complicated, and different rules impact different things, and in this blog post, I want to cover one particular rule that can make you pay more for Medicare.
This rule deals with IRMAA. IRMAA stands for income-related monthly adjustment amount. This rule states that you are required by law to pay more for your Medicare Part B and Medicare prescription drug plans if you have a higher income.
The standard monthly rate in 2020 for Medicare Part B is $144.60, but the additional penalty can cost you from $57.80 to $347.00 extra a month. The more you make, the more you pay.
These additional fees can quickly add up, so there are two things to be aware of:
1. Specific income levels that are penalized
Medicare uses your most recent federal tax return from the IRS to determine your modified adjusted gross income (MAGI).
You will pay more for Medicare Part B and prescription drug coverage if you file your taxes as:
- Married, filing jointly and your MAGI is greater than $170,000
- If you file using a different tax status, and your MAGI is greater than $85,000
Please note, MAGI is not the same as your income but is based on your income.
The many numbers that go into calculating your MAGI include:
- Income from an employer
- Income from investments (this includes rental property)
- Money that is taken out of retirement accounts
Another thing to note on MAGI, Medicare uses the most recent number that the IRS has, but they can also look at your income up to two years back.
IRMAA rules will likely apply to you if your income was at or over these levels over the past two years.
2. You can appeal the penalty if you qualify
It’s important to understand that Medicare can waive these fees, but they won’t do it proactively.
If your income goes down and you are below the IRMAA income levels, you may be able to get the additional fees waived.
We help our clients to get these additional fees waived for many situations.
To know if you are going to hit IRMAA levels, check your tax returns to get an idea of what your income was.
My final piece of advice, please make sure you understand what you are expected to pay for Medicare before you join. Knowing the cost in advance can help you plan for the payments and to ensure that you’re doing what’s best for you.
To easily make your right Medicare decision, you can join our Medicare Enrollment Concierge program by CLICKING HERE.
