We talked about how the Income Related Monthly Adjustment Amount, known as IRMAA, affects Medicare Part B premiums in an earlier post. IRMAA also affects Medicare Part D prescription drug coverage.
Most people don’t have to pay this. However, if your income is above a certain limit, you’ll pay an extra amount to Medicare in addition to your Part D plan premium. In this video, we’ll go through the Part D IRMAA numbers for 2022 and give possible options for avoiding Part D IRMAA.
Confused about your Medicare coverage options? Watch our free video: How to Find the Best Medicare Coverage Without Paying More Than You Need To…
Income Related Monthly Adjustment Amount – Part B and Part D
Part D IRMAA comes as a shock to some people.
Part B IRMAA seems to be more well-known, and frankly, having an extra charge for Part D in addition to Part B seems like extra punishment for people who worked hard and have done well. But I don’t make the rules.
I can’t change Medicare, but what I can do though is help you find legal, legitimate ways of avoiding this penalty if at all possible.
Who Owes Part D IRMAA?
The chart here lists the extra amount you will owe for Medicare Part D based on your income. You’ll have to pay this extra amount whether you have a standalone Part D plan or you’re in a Medicare Advantage Plan that includes drug coverage.
Social Security will contact you if you have to pay Part D IRMAA, based on your income. The amount you pay can change each year.
Just like Part B, Part D IRMAA charges are calculated using your tax returns from two years ago. If your income has gone down in the past two years, you can dispute the IRMAA charge with Social Security. Here is the form to use when disputing IRMAA with Social Security: https://www.ssa.gov/forms/ssa-44-ext.pdf.
Medicare Part D prescription drug coverage is not offered by Medicare itself. It is coverage you purchase from private insurance companies.
If you owe an Income Related Monthly Adjustment Amount, the IRMAA payment does not go to the insurance company that sponsors your Part D plan. Insurance agents and brokers do not earn any commission from IRMAA payments.
Instead, the IRMAA payment goes directly to Medicare. You can choose to have this amount deducted from your Social Security payment, or you can choose to receive a bill from Medicare.
If you do not pay your Part D IRMAA, Medicare can disenroll you from your Part D plan.
What if your employer pays your Part D premiums?
Regardless of who pays for your Part D plan, you are responsible for your Part D IRMAA payment. If you do not pay your IRMAA charge and are disenrolled from a Part D plan paid for by your employer, you may be unable to rejoin your employer coverage, so this is not a bill to ignore.
As I wrote at the beginning, most people don’t have to worry about this, but if your income, always looking back two years, falls into the chart shown, be aware that you will have this extra charge payable to Medicare for Part D prescription drug coverage.
What are some ways to get around having to pay Part D IRMAA?
Not everyone has a way to circumvent paying the Part D IRMAA, but it’s certainly worth checking whether a viable option is available to you.
1. Go without Part D coverage.
I don’t recommend this option because if you need Part D coverage later and try to enroll, you will be hit with a late enrollment penalty, explained in the video here, that will only make your out-of-pocket payments even worse.
Some people do choose to go without Part D and self-fund any medication costs that come up, but know your risks before making that decision.
Take a look at the retail cost of things like cancer drugs to get an idea of how quickly going without Part D could deplete your retirement savings.
2. Find other creditable coverage.
This isn’t available to everyone, but here’s where to look.
First, VA coverage or Tricare for Life, if you’re eligible.
Second, state pharmaceutical assistance programs. These are not available in every state and not all are considered creditable coverage by Medicare.
Check with your state’s department of insurance to find out if you have a program and if that program is creditable coverage. In the states where we hold licenses, Wisconsin, in particular, has a very strong creditable coverage state pharmaceutical assistance program.
Third, employer sponsored retiree drug coverage. You may have this option through your employer or your spouse’s employer. You need all the details on this one too because in some cases, it isn’t an option to just enroll in drug coverage without other retiree coverage.
Have Questions? We Can Help!
The Income Related Monthly Adjustment Amounts can throw off a person’s expected savings when switching from under age 65 health insurance to Medicare. Let us help you know what your real costs will be before you enroll in Medicare, so you can be prepared.
If you would like assistance finding a plan that covers your medications through your preferred pharmacies at the best overall cost available in your area, please feel free to give our office a call at 877-312-1414 or schedule a free, no obligation Medicare Plan Consultation.
We’re here to help you find the best Medicare coverage at the lowest cost possible!
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