IRMAA and Medicare: How Higher Incomes Can Raise Your Premiums

If you’re on Medicare and your premiums are higher than what you see advertised, IRMAA may be the reason. Understanding how it works can help you avoid surprises and plan ahead.

What Is IRMAA?

IRMAA (Income-Related Monthly Adjustment Amount) is an extra charge added to your Medicare Part B (medical insurance) and Part D (prescription drug) premiums if your income is above certain limits.

A few key points:

• It is not a separate plan—it’s an add-on to your standard Part B and Part D premiums.
• It is based on your modified adjusted gross income (MAGI) from two years ago. For example, your 2024 IRMAA is generally based on your 2022 tax return.
• The higher your income bracket, the higher your IRMAA.

How IRMAA Affects Part B and Part D

For Medicare Part B, everyone pays a standard monthly premium. If your income is above the IRMAA threshold, you pay:

• The standard Part B premium, plus
• An additional IRMAA surcharge determined by your income tier.

For Medicare Part D, IRMAA works similarly, but the adjustment is:

• Added on top of the premium for whatever Part D plan you choose (stand‑alone plan or drug coverage in a Medicare Advantage plan).

Plan providers don’t keep this IRMAA amount—it goes directly to Medicare, usually deducted from your Social Security benefit. If you’re not receiving Social Security, you may be billed.

How Social Security Determines IRMAA

Social Security reviews your IRS tax data and:

1. Looks at your MAGI from two years prior.
2. Compares it to the annual IRMAA income brackets set by law.
3. Sends you an “Initial Determination” notice if IRMAA applies, listing your income, filing status, and the new monthly amounts for Part B and/or Part D.

If your income later decreases, IRMAA may drop as brackets are recalculated each year.

When You Can Ask to Reduce or Remove IRMAA

You can request a reconsideration from Social Security if:

• You believe the income information is wrong (for example, due to an amended tax return), or
• You’ve had a qualifying life-changing event that significantly reduced your income, such as:
  • Retirement or reduced work hours
  • Marriage, divorce, or annulment
  • Death of a spouse
  • Loss of income-producing property or pension

In those cases, you can file a request for reconsideration and provide documentation of your new, lower income.

Planning Ahead for IRMAA

To manage potential IRMAA charges:

• Be aware that large one-time income events (such as big capital gains, Roth conversions, or large withdrawals from retirement accounts) can trigger higher premiums two years later.
• Consider discussing tax-efficient withdrawal strategies and timing for income with a qualified financial or tax professional.
• Review your Social Security IRMAA notices each year to ensure the information used is accurate.

Understanding IRMAA helps you see the full cost of Medicare, especially if your income fluctuates. With some planning and prompt action when your income drops, you may be able to limit how much this surcharge affects your premiums.