What Is IRMAA and How Does It Affect My Medicare Premiums?

IRMAA FAQ

• What is IRMAA?

  IRMAA stands for Income-Related Monthly Adjustment Amount. It’s an additional charge added to your Medicare Part B and Part D premiums if your income exceeds certain thresholds.

  It works like tax brackets:

  • The higher your Modified Adjusted Gross Income (MAGI),

  • The higher your monthly Medicare premiums

• How is IRMAA calculated?

  The Centers for Medicare & Medicaid Services (CMS) uses a 2-year look-back on your income.

  Example:

  • In 2025, your IRMAA will be based on your 2023 federal tax return

• Why the 2-year look-back?

  • It ensures CMS uses finalized IRS data

  • It provides a consistent method for calculating IRMAA for all beneficiaries

  ⚠️ If you retired or had high income from one-time events (like a 401(k) withdrawal, RSUs, or real estate gains), you may temporarily fall into a higher IRMAA bracket

• How will I know if I owe IRMAA?

  You’ll receive an official letter from Medicare or CMS if IRMAA applies. The letter includes:

  • Your new Part B and/or Part D premium

  • The income data (MAGI) used

  • How to appeal if the income information is incorrect or your situation has changed

• How can I avoid or reduce IRMAA?

  If your income has dropped due to a Life-Changing Event, such as:

  • Retirement

  • Divorce

  • Death of a spouse

  • Loss of income-producing property

  You may qualify for a reduction or removal of IRMAA by submitting Form SSA-44.

Tips to Plan Ahead and Avoid IRMAA

• Start planning 2–3 years before turning 65

• Work with a CPA or financial advisor to manage your MAGI proactively

• Time large withdrawals or sales carefully to avoid bumping into higher tiers