Download “Medicare Surcharges: The Impact of Indexing IRMAA Brackets”
MEDICARE SURCHARGES: THE IMPACT OF INDEXING IRMAA BRACKETS
On January 1, 2020, Medicare surcharges will undergo a significant change to their calculation. For the first time in a decade, the brackets used to determine IRMAA sucharges will be indexed to the CPI-U. This legislation will have a number of consequences for current and future retirees, including an anticipated reduction in the number of Americans who will be subject to the surcharges.
While this may seem like welcome news, these modifications must be viewed in the broader context of Medicare solvency. Since the new policy will reduce revenue to the Medicare Trust Fund, there is no guarantee that indexing will not be suspended again in the future, or that the income brackets will not be lowered at some point. This short paper highlights the history of these surcharges and income brackets, offers case studies to illustrate the impact of indexing, and examines related Medicare cost shifting trends.