Plan Advisors Blog

Sharpen your skills on IRMAA - Income Related Monthly Adjustment Amount

Posted by Lance Hoeltke on Fri, Jan 17, 2020 @ 04:00 PM
IRMAA may impact a higher percentage of your clients than you think. Brush up on these fundamentals of how the rules are applied and see new thresholds for 2020. It’s the first time the thresholds have been adjusted in over a decade!   

IRMAA Basic Facts

  • Determined by applying last 2 years of modified gross income (MAGI) to an established threshold table (see table below)
  • MAGI includes (but is not limited to) the following:  Alimony, Business Income, Capital Gains, Dividends, Interest, Farm Income, Rental and Royalty Income, Retirement Income (401k’s, IRA’s, pensions), Tips, and Wages
  • Impacts Part D and Part B premiums
  • Standard premium is equal to 25% of total premium (balance paid by Federal Gov’t)
  • Income thresholds began in 2007 at $80k single and $160k, designed to increase annually with inflation, but in 2009 the ACA required the thresholds to be frozen at $85k and $170k, which has remained frozen until now
  • Tiers 4 and 5 are not set to increase until 2028 (written into Balanced Budget Act of 2018)
  • Clients can appeal their classification if they feel they’ve been placed at the wrong level, had unforeseen circumstances that lowered income, etc. - Click here for a how-to-guide for IRMAA appeal and an IRMAA appeal form)
  • If your clients sold property, took distributions from a 401k, etc. that boosted their annual income into a new level, they will be impacted by these premium adjustments and should be made aware!  Help educate your clients on what to expect and refer them back to their CPA for guidance on how to avoid or prepare accordingly.  
  • More complete information on IRMAA can be found by clicking here

Threshold Table and YOY Comparison

IRMAA Threshold Level-2
Click here for a downloadable version of the IRMAA Threshold Table.