Why is Medicare Part D’s IRMAA premium so high?

Dear Toni:

I am turning 65 in June, self-employed, and my income together with my wife’s is over $300,000. Recently I received a letter from Social Security telling me that my monthly Medicare Part B premium of $174.70 would double to $349.40 per month due to 2022 reported income. That was no surprise, but Social Security also said that the monthly adjustment for prescription drug coverage would be an additional $33.30 a month. What is this all about?

I am in excellent health and take NO prescriptions. If I do not apply for a Medicare prescription drug plan, do I still have to pay the “extra” $33.30?

Does applying for a Medicare Advantage plan including Part D, instead of Original Medicare and a Medicare supplement, help me to avoid the additional $174.70 per month for Part B and the $33.30 per month extra premium for the Medicare Part D prescription drug plan? Thanks, Toni.

--Mike from Oklahoma City

Hello Mike:

Sorry, but you cannot avoid the additional IRMAA (Income Related Monthly Adjusted Amount) premiums if your income is above a certain limit, no matter whether you chose to enroll in Original Medicare and a Medicare Supplement with a stand-alone Medicare Prescription drug plan (Part D) or a Medicare Advantage plan (Part C) with a prescription drug plan. It is going to happen anyway!

Enrolling in a Medicare Advantage plan instead of Original Medicare with a Medicare Supplement and a Medicare Part D plan does NOT keep Medicare or Social Security from charging the additional IRMAA premium for both Medicare Parts B and D.

The IRMAA rule for Medicare Part D’s additional IRMAA premium went into effect on January 1, 2011, and new Medicare Part B and D premiums for all income levels are released every fall.

Social Security bases your rates on both your and your spouse’s income (whether they are Medicare age or not). The income levels are based on individual or joint tax return yearly filings. The MAGI (Modified Adjusted Gross Income) amount reported on your yearly income taxes is what triggers the IRMAA increase.

As you stated, Mike, your joint income is over $300,000 and your Medicare prescription drug plan, from either a Medicare Advantage with a Prescription Drug Plan or a stand-alone Medicare Prescription Drug plan, will include the additional $33.30 IRMAA premium for Medicare Part D.

Mike, although you are not taking prescriptions, it is not a wise Medicare decision to not enroll in a Medicare Part D plan at the time you enroll in Medicare because you will receive a Medicare Part D penalty when you do enroll in Part D at a later date. This penalty lasts for as long as you are on Medicare.

Since you are turning 65 and self-employed, I would advise you to enroll in both Medicare Part B and a Part D prescription drug plan, whether with Original Medicare and a Medicare supplement and a stand-alone Part D plan or a Medicare Advantage plan with Part D, during your Medicare Initial Enrollment Period (IEP), to avoid a Medicare B and Part D penalty. Medicare’s IEP is the 3 months before turning 65, the month you turn 65 and 3 months after.

During a Toni Says Medicare consultation, we are careful to personalize your Medicare Part D planning because once enrolled you cannot change until the Medicare Annual Enrollment Period, October 15 - December 7. (Chapter 5 of Toni’s Medicare Survival Guide Advanced edition explains Medicare Part D in detail.)

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Toni King is an author and columnist on Medicare and health insurance issues. She has spent nearly 30 years as a top sales leader in the field. If you have a Medicare question, email info@tonisays.com or call 832-519-8664. The “Medicare Survival Guide Advanced” edition and her new “Confused about Medicare” video series are available at www.tonisays.com.