Understanding Medicare IRMAA

You’re enjoying your retirement, living within your retirement budget, and suddenly your Medicare premium goes up. What gives?

While Medicare premiums typically change every year, you may also be subject to a surcharge, called IRMAA, that’s assessed on your Medicare Parts B and D. 

What Is IRMAA?

IRMAA, or Income Related Monthly Adjustment Amount, is a surcharge assessed on some Medicare recipients based on their income. The surcharge applies to Part B premiums and Part D prescription drug plans for those who are above the IRMAA threshold.

The Social Security Administration (SSA) determines who is subject to the IRMAA surcharge based on income reported two years prior. For example, IRMAA surcharges for 2025 are based on your income for the 2023 tax year. 

More specifically, the IRMAA calculation is based on your modified adjusted gross income (MAGI) which is the adjusted gross income on your tax return plus any untaxed foreign income earned plus non-taxable Social Security benefits plus any tax-exempt interest earned. For many people the MAGI amount will be the same or very close to their AGI (Adjusted Gross Income). 

2025 Medicare premiums and surcharges

The base Part B Medicare premium for 2025 is $185.00 per month. This represents a 5.9% increase over the base amount of $174.70 for 2024. Part D premiums are set by the insurance company that provides the coverage.¹

The IRMAA calculation is based on your modified adjusted gross income (MAGI). For 2025, monthly Medicare Part B and Part D premiums are adjusted for IRMAA surcharges based on income tax filing status and MAGI for the 2023 tax year as follows:²

As you can see, the higher your income in a given tax year, the higher your Medicare premiums will be two years on.

How Do I Know if I’m Impacted by IRMAA?

The Social Security Administration (SSA) is responsible for reviewing your tax return data for the appropriate tax year. If you’re subject to the IRMAA surcharge, SSA will notify you via a predetermination notice.

That being said, there’s no set deadline for SSA to notify you if you’re subject to the IRMAA surcharge. It can happen that they notify you after you’ve already paid premiums for the relevant year and you’ll owe the difference after they notify you.

Does IRMAA Apply to Both Traditional Medicare and Medicare Advantage?

Any IRMAA surcharges will be applied to your Part B and Part D prescription drug coverage whether you have Traditional Medicare with a Part D prescription drug plan from an insurer or if you’re covered by a drug plan through a Medicare Advantage plan. The IRMAA surcharge also applies to Part B coverage whether you have Traditional Medicare or are covered by a Medicare Advantage plan.

Can I Appeal an IRMAA Decision?

Yes, you can appeal the IRMAA premium sent to you by SSA in their predetermination notice. 

People typically appeal an IRMAA determination because they’ve experienced a life changing event that will adversely impact their income going forward or because SSA used incorrect or outdated information in doing the IRMAA calculation.

There are three ways to file an appeal, including:

• Requesting a new initial determination from SSA
• Submitting a form SSA-44
• Contacting Social Security by phone at 800-772-1213

Examples of a life changing event include:

• The death of a spouse
• Getting married
• Divorce or a marriage annulment
• You or your spouse stopping work or working a reduced number of hours
• Loss of an income-producing property due to a natural disaster, disease, fraud or other adverse circumstances
• Loss of a pension
• Receiving a settlement payment from a former employer due to the employer’s closure or bankruptcy

An appeal due to incorrect or outdated information used by SSA might entail:

• Having filed an amended tax return for the tax year covered in the initial IRMAA determination
• Having filed a more recent tax return with a lower level of income than the return used by SSA.

Reducing IRMAA for Future Years

There are a number of steps you can take to reduce the impact of the IRMAA surcharge on your Medicare premiums in future years. These generally mirror the things you might consider doing to lower your taxable income. 

• If you’re able to itemize deductions on your tax return, charitable contributions can be a solid way to reduce your taxable income. This can include direct cash donations, contributions to a donor advised fund (DAF) and donating shares of appreciated securities. 
• If you’re working, via employment or self-employment, contributing to a traditional retirement plan on a pre-tax basis can reduce your AGI. This includes contributions to a traditional IRA, a 401(k) or other workplace retirement plan, or a self-employed retirement plan like a traditional solo 401(k) or a traditional SEP-IRA.
• Consider a Roth conversion. Roth conversions reduce the amount in a traditional IRA or that will be subject to required minimum distributions (RMDs) which are taxable. Additionally, Roth IRAs offer the ability to make tax-free withdrawals if certain conditions are met. This can provide tax diversification within your retirement nest egg. 
• Make sure that your overall retirement withdrawal strategy is as tax-efficient as possible. This includes planning for which accounts to tap and when.  

Conclusion 

While no one likes paying more, IRMAA premiums are a fact of life when you’re covered by Medicare. Knowing how they’re assessed can help you plan ahead financially as well as think strategically about how you can reduce them in the future.