Why Some Medicare Beneficiaries May Pay More With MACRA


The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) changes the way Medicare calculates payment models and helps streamline systems. These changes affect many aspects of the Medicare system, including the Income Related Monthly Adjustment Amount (IRMAA).

Since 2007, IRMAA has established that people with higher incomes will pay a larger percentage of their Medicare monthly premiums. For single individuals, the surcharge begins on adjusted gross income of over $85,000; for married couples, it’s income over $170,000. This surcharge affects less than 5 percent of Medicare beneficiaries.

Prior to MACRA, there were five levels to the IRMAA income threshold. After 2018, there will be six levels. Upon implementation, the income level will be determined by 2018 income taxes. From the chart below, you can see that only people with incomes of $133,501 to $214,000 and over will be affected by the MACRA change.

Individuals with incomes from $133,501 to $160,000 will pay 65 percent of Medicare Part B & D costs, up from 50 percent. And individuals with incomes from $160,001 to $214,000 will go from paying 65 percent to 80 percent. All other income levels will remain the same.

Income for a Single Person Percentage of Costs Paid – Prior to 2020 Average Part B&D Cost 2018 Percentage of Costs Paid- Starting in 2020 Estimated Part B & D Average Cost
Up to $85,000 25% $170 25% $170
$85,000 – $107,000 35% $236 35% $236
$107,001 – $133,500 50% $338 50% $338
$133,501 – $160,000 50% $338 65% $439
$160,001 – $214,000 65% $439 80% $540
Over $214,000 80% $540 80% $540

Sources: https://www.ncoa.org/wp-content/uploads/part-d-costs.pdf | https://www.forbes.com/sites/ashleaebeling/2017/11/20/medicare-part-b-premiums-rise-for-most-in-2018-stealth-hit-to-high-earners/#5cd653b33c47 | https://www.cms.gov/Outreach-and-Education/Training/CMSNationalTrainingProgram/Downloads/2018-Medicare-Amounts-Job-Aid_508-FINAL.PDF | http://files.kff.org/attachment/Issue-Brief-Medicares-Income-Related-Premiums-Under-Current-Law-and-Proposed-Changes | https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/MACRA-MIPS-and-APMs/MACRA-LAN-PPT.pdf

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