When Did IRMAA Start for Medicare Part B and Part D?
Understand the origins and application of Medicare's income-related premium adjustments (IRMAA) for Part B and D.
Medicare beneficiaries may encounter an additional cost known as the Income-Related Monthly Adjustment Amount (IRMAA), which can affect their overall healthcare expenses. This adjustment represents an added charge to the standard premiums for both Medicare Part B and Medicare Part D.
Understanding IRMAA
IRMAA is an additional amount added to the standard monthly premiums for Medicare Part B (medical insurance) and Medicare Part D (prescription drug coverage). This surcharge applies to individuals whose modified adjusted gross income (MAGI) surpasses specific income thresholds set by the Social Security Administration (SSA). It functions as an income-based supplement designed to ensure that those with higher earnings contribute a greater share towards Medicare program costs. This adjustment reflects a policy approach where beneficiaries with greater financial capacity share a larger portion of the overall Medicare expenses. Most Medicare beneficiaries do not pay IRMAA surcharges. Approximately 7% of Part B enrollees and a similar percentage of Part D enrollees are subject to these additional amounts.
The Genesis of IRMAA
The concept of income-related adjustments to Medicare premiums was introduced to strengthen the program’s financial standing. IRMAA for Medicare Part B became effective in 2007, established as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
IRMAA was later expanded to include Medicare Part D. The surcharge for Part D premiums took effect in 2011, implemented under the provisions of the Affordable Care Act.
How IRMAA is Assessed
The Social Security Administration (SSA) determines whether an individual is subject to IRMAA based on their tax return information from two years prior. For instance, the IRMAA for 2025 premiums will be based on income reported on 2023 tax returns. The income considered for this assessment is Modified Adjusted Gross Income (MAGI). This MAGI includes an individual’s Adjusted Gross Income (AGI) as reported on IRS Form 1040, line 11, with the addition of any tax-exempt interest income from Form 1040, line 2a, and items like capital gains and dividends.
The SSA automatically assesses IRMAA using data received from the IRS, and individuals are notified if they are subject to this additional premium. The income thresholds are organized into a tiered structure, and these thresholds are adjusted annually to account for inflation.