2500.Description of Medicare Income-Related Monthly Adjustment Amounts (IRMAA)

Two Medicare laws changed how Medicare Part B and D premiums are calculated for some higher income beneficiaries.

Historically, the government has paid approximately 75 percent of the Part B premium and the beneficiary paid the remaining 25 percent.

As of January 2007, beneficiaries enrolled in Medicare Part B with modified adjusted gross incomes (MAGI) above a set threshold are required to pay a higher percentage of their total Part B premium costs. This is the Income-Related Monthly Adjustment Amount (IRMAA), also referred to as the Medicare subsidy reduction or IRMAA-B.

As of January 2011, beneficiaries enrolled in a Medicare prescription drug plan also known as Medicare Part D, with modified adjusted gross incomes (MAGI) above a set threshold are required to pay an Income-Related Monthly Adjustment Amount (IRMAA). The Income-Related Monthly Adjustment Amount for prescription drug coverage is also referred to as IRMAA-D.

Last Revised: Aug. 10, 2011