Reform Alert - News from the Blues' Office of National Health Reform

High-income individuals to pay higher premiums for Medicare Part D coverage

Dec. 17, 2010

Beginning Jan. 1, 2011, Medicare beneficiaries who are considered high-income earners will pay a higher premium for their Part D Medicare prescription drug coverage. The government will deduct the additional premium amount from the beneficiary’s Social Security benefit payment. The increase will not impact the rates charged by their health insurance company.

Individuals with an income of $85,000 or above, or married couples filing jointly with an income of $170,000 or above, must pay an extra premium amount for Part D coverage. This extra premium amount is called the income-related monthly adjustment amount (IRMAA). This amount is based on modified adjusted gross income as reported on the beneficiary’s most recent IRS tax return.

CMS recently provided the following tables showing the Part D premium adjustment amount based on income threshold. If the beneficiary is single and filed an individual tax return, or married and filed a joint tax return, the following chart will apply:

  Beneficiaries who file individual tax returns with income that is: Beneficiaries who file joint tax returns with income that is: Part D-Income Related Monthly Adjustment Amount will be:
Income Threshold Tier 1 Less than or equal to $85,000 Less than or equal to $170,000 $0.00
Income Threshold Tier 2 Greater than $85,000 and less than or equal to $107,000 Greater than $170,000 and less than or equal to $214,000 $12.00
Income Threshold Tier 3 Greater than $107,000 and less than or equal to $160,000 Greater than $214,000 and less than or equal to $320,000 $31.10
Income Threshold Tier 4 Greater than $160,000 and less than or equal to $214,000 Greater than $320,000 and less than or equal to $428,000 $50.10
Income Threshold Tier 5 Greater than $214,000 Greater than $428,000 $69.10

If beneficiary is married and lived with their spouse at some time during the taxable year, but filed a separate tax return, the following chart will apply:

  Beneficiaries who are married but file separate tax returns from their spouses with income that is: Part D-Income Related Monthly Adjustment Amount will be:
Income Threshold Tier 1 Less than or equal to $85,000 $0.00
Income Threshold Tier 2 Greater than $85,000 and less than or equal to $129,000 $50.00
Income Threshold Tier 3 Greater than $129,000 $69.10

CMS also provided the following frequently asked questions and answers:

1. What is the income-related monthly adjustment amount (IRMAA)? 

Changes in the law affect how Medicare prescription drug coverage premiums are calculated for those with higher incomes. Beginning January 1, 2011, if you have a higher income, you will pay a higher premium for your Medicare prescription drug coverage (Part D). If your income is $85,000 or above (individual) or $170,000 or above (married filing jointly), you must pay an extra premium amount for your Medicare Part B and Medicare prescription drug coverage. This extra premium amount is called the income-related monthly adjustment amount (IRMAA). This amount is based on your modified adjusted gross income as reported on your IRS tax return from 2 years ago (your most recent tax return).

2. How will I know if I have to pay Part D-IRMAA?

Social Security will send you a letter if you have to pay an extra amount for your Medicare prescription drug coverage. This letter will explain how they determined the amount you must pay and the actual IRMAA amount.

Your health plan does not determine who will be subject to the Part D-IRMAA. Therefore, if you disagree with the amount you must pay, you must contact the Social Security Administration. You can visit the Social Security website, call 1-800-772-1213, or visit your local Social Security office. TTY users should call 1-800-325-0778.

3. Do I have to pay the Part D-IRMAA?

Yes. You must pay both the extra amount, as well as your plan’s premium each month in order to keep Medicare prescription drug (Part D) coverage.

4. Why am I subject to Part D-IRMAA in addition to my standard prescription drug premium?

A new law changes how Medicare prescription drug coverage premiums are calculated for those with higher incomes. Social Security will send you a letter if you have to pay an extra amount for your Medicare prescription drug coverage. This letter will explain how they determined the amount you must pay and the actual amount.

Your health plan does not determine who will be subject to the Part D-IRMAA. Therefore, if you disagree with the amount you must pay, you must contact the Social Security Administration. You can visit the Social Security website, call 1-800-772-1213, or visit your local Social Security office. TTY users should call 1-800-325-0778.

5. Why am I receiving a bill from the Centers for Medicare & Medicaid Services (CMS) for my Part D-IRMAA, rather than Social Security withholding the amount from my check?

By law, income-related monthly adjustment amount (IRMAA) for prescription drug coverage must be withheld from Social Security, Railroad Retirement Board, or Office of Personnel Management benefit checks unless the monthly payment isn’t enough to cover the entire amount owed. If your check isn’t enough to cover the entire amount, you will get a bill from Medicare. For more information about the Part D-IRMAA withholdings from your benefit check, visit the Social Security website, call 1-800-772-1213, or visit your local Social Security office. TTY users should call 1-800-325-0778. For more information about the bill you received from Medicare, visit Centers for Medicare and Medicaid Services resources are available at www.medicare.gov or by calling 1-800-MEDICARE (1-800-633-4227; TTY 1-877-486-2048).

Note: If you get railroad retirement benefits, you will initially get bills from the Railroad Retirement Board (RRB) for this amount each month. The RRB will send you these bills until it has a system in place to withhold this amount from your monthly benefit check.

6. Can I pay my Medicare prescription drug plan premium and my Part D-IRMAA premium together? 

No. By law, the income-related monthly adjustment amount (IRMAA) for Medicare prescription drug coverage is deducted from your Social Security, Railroad Retirement Board, or Office of Personnel Management benefits if your monthly payment can cover this amount. If not, you will get a bill from Medicare. Your drug plan is responsible for billing and collecting the non-IRMAA part of your premium. Since these two amounts are billed and collected by two separate entities, you will get two separate bills and need to pay each of them separately.

Note: If you get railroad retirement benefits, you will get bills from the Railroad Retirement Board (RRB) for this amount each month. The RRB will send you these bills until it has a system in place to withhold this amount from your monthly benefit check. 

7. Will an individual be charged the Part D-IRMAA if they do not have a Medicare prescription drug plan?

If an individual does not have or no longer has Medicare prescription drug coverage, they shouldn’t be charged the Part D-IRMAA. However, if someone didn’t pay the Part D-IRMAA that was owed before disenrolling from their prescription drug coverage, they are responsible for the past due amount. 

8. How can I get more information about the Part D-IRMAA?

  • Visit the Medicare website or call 1-800-MEDICARE (1-800-633-4227). TTY users should cal l1-877-486-2048. 
  • Visit the Social Security website, call 1-800-772-1213, or visit your local Social Security office. TTY users should call 1-800-325-0778.

Source:

Anthony Culotta, Director Medicare Enrollment & Appeals Group.

DEPARTMENT OF HEALTH & HUMAN SERVICES, Centers for Medicare & Medicaid Services

Part D-Income Related Monthly Adjustment Amount—Frequently Asked Questions & Answers

December 10, 2010

The information on this website is based on BCBSM's review of the national health care reform legislation and is not intended to impart legal advice. Interpretations of the reform legislation vary, and efforts will be made to present and update accurate information. This overview is intended as an educational tool only and does not replace a more rigorous review of the law's applicability to individual circumstances and attendant legal counsel and should not be relied upon as legal or compliance advice. Analysis is ongoing and additional guidance is also anticipated from the Department of Health and Human Services. Additionally, some reform regulations may differ for particular members enrolled in certain programs such as the Federal Employee Program, and those members are encouraged to consult with their benefit administrators for specific details.

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