How Income Can Affect Your Medicare Premiums

Understanding IRMAA and Planning Ahead

When it comes to Medicare, many people are surprised to learn that your income can directly impact how much you pay in monthly premiums. This is due to a provision called IRMAA—short for Income-Related Monthly Adjustment Amount.

Whether you’re approaching Medicare eligibility or already enrolled, it’s important to understand how IRMAA works and how you can plan ahead to avoid unexpected costs.

What Is IRMAA?

IRMAA is an additional charge added to your Medicare premiums if your modified adjusted gross income (MAGI) exceeds certain thresholds. This applies specifically to:

• Medicare Part B (medical insurance)

• Medicare Part D (prescription drug coverage)

The Social Security Administration uses your tax return from two years ago to determine whether IRMAA applies. For example, your 2025 Medicare premiums will typically be based on your 2023 tax return.

2025 IRMAA Income Brackets (Based on 2023 Tax Return)

While the exact brackets may adjust yearly, here’s a general breakdown of how IRMAA tiers work:

Filing Status	MAGI Threshold
Individuals earning above $103,000	Part B + Part D
Married couples filing jointly earning above $206,000	Part B + Part D

As income increases, so do the additional amounts you’ll pay—sometimes significantly. This can come as a shock if you're not expecting it.

How IRMAA Impacts Your Medicare Costs

Let’s say your income places you in a higher bracket. Here’s how that might play out:

• Your Part B premium could increase by $69.90 to over $419 per month (on top of the standard premium).

• Your Part D premium could increase by $12.90 to $81.00 per month, depending on your income level and chosen plan.

These charges are deducted automatically from your Social Security check or billed separately if you're not yet receiving benefits.

Can IRMAA Be Appealed?

Yes. If your income has recently decreased due to a life-changing event—such as retirement, divorce, job loss, or the death of a spouse—you can file an appeal using Form SSA-44 to request a lower IRMAA.

Strategies to Help Manage or Reduce IRMAA

IRMAA is based on taxable income, so thoughtful planning can help reduce its impact. A few strategies to consider:

• Roth Conversions: Pay taxes now to reduce taxable income later.

• Tax-Efficient Withdrawals: Coordinate withdrawals from different accounts (e.g., Roth IRAs, HSAs, or taxable accounts) to manage your MAGI.

• Delay Social Security: Postponing benefits can help control your reported income in certain years.

• Charitable Contributions: Qualified charitable distributions (QCDs) from IRAs can reduce taxable income if you're 70½ or older.

Work With a Financial Advisor

Medicare premiums are just one piece of your broader financial picture. A financial advisor can help you:

• Understand how IRMAA fits into your retirement income strategy

• Explore tax planning opportunities to help reduce income-related charges

• Coordinate Medicare decisions with your long-term goals

If you have questions or want guidance tailored to your situation, we recommend reaching out to your financial advisor.

Bottom Line

Medicare isn’t one-size-fits-all—and neither are the costs. Being proactive about your income can help you manage premiums and avoid surprises in retirement.