Income Related Monthly Adjustment Amount

Certain high-income retirees are required to pay an extra premium surcharge, known as an Income Related Monthly Adjustment Amount, or IRMAA. This is similar to the surcharge for high-income enrollees in Medicare Part B plan, or Medicare Part D (prescription drug) plan. If you are an individual or a married couple earning more than the threshold, you will be required to pay an extra surcharge for being enrolled in the AlaskaCare Employer Group Waiver Program (EGWP) because it is a group Medicare Part D plan. Retirees whose household income is below this threshold will not be subject to the IRMAA premium surcharge.

If you are subject to the Medicare Part D IRMAA surcharge, you will be reimbursed.

For all Medicare plans, the IRMAA will be deducted directly from your monthly Social Security check (if you qualify for Social Security) or will otherwise be invoiced to you directly each month. If you are charged a Medicare Part D IRMAA for your prescription drug coverage, the Division of Retirement and Benefits will reimburse you for the full cost of the Medicare Part D premium surcharge each month, through a tax-advantaged Health Reimbursement Arrangement (HRA) account. If you receive a bill from Medicare, you should pay the bill timely, and contact the Division to learn about your reimbursement options. Please allow up to 3 weeks for processing new HRA account requests.

How will I know if I have to pay an IRMAA, and how much it will be?

Each year, if you are Medicare-eligible, you will be notified by the Social Security Administration about your plan. This includes if you are required to pay an IRMAA and at what amount. The Social Security Administration uses your Modified Adjusted Gross Income (MAGI) to determine if the IRMAA applies to you and, if so, how much you will have to pay. MAGI is the sum of:

  • Adjusted Gross Income (AGI), which can be found on the last line your IRS 1040 tax form (line 37 on form 1040, line 21 on form 1040A, or line 4 on form 1040EZ), plus
  • Any tax-exempt interest income (line 8b on form 1040).

The Social Security Administration requests income information from the IRS for the tax year that is two years prior to the surcharge year. IRMAA is automatically re-determined each year as long as you file an income tax return. The below table shows the IRMAA for 2020. The MAGI and IRMAA is subject to change from year to year.

For 2020, Medicare has increased the tax return thresholds for the IRMAA based on the 2018 filing year, as well as reduced the monthly IRMAA amount in each bracket.

Individual Modified Adjusted Gross Income (MAGI) based on 2018
Household Modified Adjusted Gross Income (MAGI) based on 2018
Monthly IRMAA (Medicare Part D)
Less than or equal to $87,000
Less than or equal to $174,000
Greater than $87,000 and less than or equal to $109,000
Greater than $174,000 and less than or equal to $218,000
Greater than $109,000 and less than or equal to $136,000
Greater than $218,000 and less than or equal to $272,000
Greater than $136,000 and less than or equal to $163,000
Greater than $272,000 and less than or equal to $326,000
Greater than $163,000 and less than or equal to $500,000
Greater than $326,000 and less than or equal to $750,000
Greater than $500,000
Greater than $750,000

How do I establish a HRA account?

The Division is prohibited from paying your Medicare Part D IRMAA premium surcharge directly and will instead reimburse you. Follow the steps below to establish your 2020 IRMAA reimbursement account:

  1. Scan, copy, or take a photo of your Social Security letter or Medicare bill that shows what your 2020 Part D IRMAA surcharge will be.
  2. Complete the PayFlex Claim form.
  3. Mail, fax, or email your completed form and documentation to:

    Division of Retirement and Benefits
    PO Box 110203
    Juneau, AK 99811-0203
    Fax: (907) 465-3086

The Division will coordinate with PayFlex on your behalf to establish your 2020 HRA account. Please allow up to 3 weeks for processing. For more information, contact PayFlex at (800) 416-7053.

How do I set up direct deposit for my HRA account?

If you are currently set up to receive your Part D IRMAA reimbursement via direct deposit and there are no changes to your banking information, you do not need to resubmit that information for 2020.

If you are not currently enrolled in direct deposit and you wish to do so, you may complete the enclosed Direct Deposit Authorization form and return to the division or enroll online through the member portal at once your HRA account has been established.

What are my options if I am required to pay the extra surcharge?

If you receive notice that you are required to pay the IRMAA surcharge for the enhanced EGWP, notify the Division of Retirement and Benefits as soon as possible. The Division will fund a tax-advantaged HRA account that can be used to reimburse you the surcharge amount by paper check or through electronic funds transfer to a bank account of your choosing. Members are encouraged to set up reimbursement on an automatic monthly basis, but you can elect to submit for reimbursement manually.

What if I refuse to pay the extra surcharge?

If you refuse to pay the extra surcharge for your Medicare Part D coverage, Medicare will cancel your enrollment in the AlaskaCare enhanced EGWP plan. This will be treated as an opt-out from the plan, and you will be placed in a prescription drug program that is much different than the plan prescription drug benefits offered today. This alternative plan may result in increased out-of-pocket expenses for you or your Medicare-eligible dependents. Please contact the Division if you have concerns about this surcharge or would like assistance with understanding the options available to you.

Who can I call if I need assistance understanding this new plan and surcharge?

For general questions about your pharmacy benefits, contact OptumRx, the AlaskaCare pharmacy benefits manager at (855) 409-6999. To find out if you will be subject to IRMAA, you may contact Social Security at (800) 772-1213. For more information about the HRA account, contact the Division at (907) 465-4460 or toll-free at (800) 821-2251.

Additional resources: