2500. Description of Medicare Part B Income-Related Monthly Adjustment Amount (IRMAA)

A new law changes how Medicare Part B 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.

Starting in 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) which may also be referred to as the Medicare subsidy reduction.

This increase will be phased in from 2007 to 2009. In 2007, affected beneficiaries will pay 33 percent of the Income-Related Monthly Adjustment Amount. In 2008, affected beneficiaries will pay 67 percent and in 2009, affected beneficiaries will pay the entire Income-Related Monthly Adjustment Amount.

Last Revised: May 22, 2007