IRMAA & LEP
Some Medicare beneficiaries may be responsible for extra premiums or fees aside from their Medicare Part B premium due to an IRMAA (Income Related Monthly Adjustment Amount) or an LEP (Late Enrollment Penalty).
PART B IRMAA
The standard Part B premium amount in 2022 is $170.10. Most people pay the standard Part B premium amount. If your modified adjusted gross income as reported on your IRS tax return from 2 years ago is above a certain amount, you'll pay the standard premium amount and an Income Related Monthly Adjustment Amount (IRMAA). IRMAA is an extra charge added to your premium.
PART D IRMAA
Most people only pay their Part D premium. If you don't sign up for Part D when you're first eligible, you may have to pay a Part D late enrollment penalty.
If your modified adjusted gross income is above a certain amount, you may pay a Part D income-related monthly adjustment amount (Part D IRMAA). Medicare uses the modified adjusted gross income reported on your IRS tax return from 2 years ago (the most recent tax return information provided to Social Security by the IRS). You'll pay the Part D IRMAA amount in addition to your monthly plan premium, and this extra amount is paid directly to Medicare, not to your plan. The chart below lists the extra amount costs by income.
Social Security will contact you if you have to pay Part D IRMAA, based on your income. The amount you pay can change each year
LEP- Late Enrollment Penalty
Part B LEP
If you didn't get Part B when you're first eligible, your monthly premium may go up 10% for each 12-month period you could've had Part B, but didn't sign up. In most cases, you'll have to pay this penalty each time you pay your premiums, for as long as you have Part B. And, the penalty increases the longer you go without Part B coverage.
Example:
If you waited 2 full years (24 months) to sign up for Part B and didn’t qualify for a Special Enrollment Period, you’ll have to pay a 20% late enrollment penalty (10% for each full 12-month period that you could have signed up), plus the standard Part B monthly premium ($170.10 in 2022) ($164.90 in 2023).
$170.10 (2022 Part B standard premium) ($164.90 in 2023)
+ $34.00 (20% [of $170.10] late enrollment penalty) ($32.98 in 2023)
$204.10 will be your Part B monthly premium for 2022. ($197.90 in 2023). This amount is rounded to the nearest $.10 and includes the late enrollment penalty.
Part D LEP
The late enrollment penalty is an amount added to your Medicare Part D monthly premium. You may owe a late enrollment penalty if, for any continuous period of 63 days or more after your Initial Enrollment Period is over, you go without one of these:
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A Medicare Prescription Drug Plan (Part D)
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A Medicare Advantage Plan (Part C) (like an HMO or PPO) or another Medicare health plan that offers Medicare prescription drug coverage
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Creditable prescription drug coverage
The cost of the late enrollment penalty depends on how long you went without Part D or creditable prescription drug coverage.
Medicare calculates the penalty by multiplying 1% of the "national base beneficiary premium" ($32.74 for 2023) times the number of full, uncovered months you didn't have Part D or creditable coverage. The monthly premium is rounded to the nearest $.10 and added to your monthly Part D premium.
The national base beneficiary premium may change each year, so your penalty amount may also change each year.
In 2023:
$32.74 (2023 national base beneficiary premium)
X 0.14 (14% penalty)
$4.58 (rounded to the nearest $0.10 = $4.60)
$4.60 will be your penalty for 2023. This amount is added to your plan’s monthly premium for 2023.
