Key Takeaways

• In 2025, higher-income seniors are paying significantly more for Medicare due to updated IRMAA brackets and premium increases.

• Strategic income planning is essential to avoid crossing into a higher premium tier that could sharply raise your healthcare costs.

What Changed for 2025?

In 2025, Medicare premiums for Parts B and D are directly impacted by your income, just as they have been for years. However, the income thresholds that determine these premiums—known as IRMAA (Income-Related Monthly Adjustment Amount)—have changed. The income brackets were adjusted for inflation, but not enough to prevent more seniors from crossing into higher-cost tiers.

For individuals with modified adjusted gross income (MAGI) above $106,000, and couples filing jointly above $212,000, premiums for Medicare Parts B and D are higher than the base rate. These thresholds were previously $103,000 and $206,000, respectively, in 2024.

The outcome? More retirees are falling into higher IRMAA tiers, even if their income has remained relatively stable. If your investments or withdrawals from retirement accounts pushed you above a threshold—even by just one dollar—your Medicare premiums can rise dramatically.

How IRMAA Affects You

The IRMAA surcharge is a monthly premium add-on applied to Medicare Parts B and D. It is calculated based on the income you reported on your tax return from two years prior.

In 2025:

• Your 2023 tax return is used to determine your 2025 IRMAA.

• There are six income brackets, each associated with increasingly higher surcharges.

• Even a slight increase in income can cause a bracket jump, potentially doubling your premium.

This means that a one-time capital gain, an unplanned Roth conversion, or even delayed Required Minimum Distributions (RMDs) can all cause an unexpected spike in your premiums.

Medicare Part B Premium Costs in 2025

Medicare Part B covers outpatient care, doctor visits, and preventive services. In 2025, the standard monthly premium is $185. But for higher-income enrollees, IRMAA surcharges raise this amount significantly:

• Premiums can range from $185 up to nearly $600 per month, depending on income tier.

• Each bracket jump adds a new surcharge, ranging from a few hundred dollars to thousands annually.

This increased cost is deducted directly from your Social Security benefit if you’re receiving it, reducing your monthly income.

Medicare Part D and Prescription Costs

Medicare Part D plans have also been affected by IRMAA since 2011. For 2025, the standard deductible for Part D is $590, and there is now a $2,000 out-of-pocket cap for prescription drug costs—a welcome change. However, higher-income enrollees still pay an additional surcharge on their Part D premium:

• This surcharge is not paid to your plan directly but is instead collected by Medicare.

• It is based on the same income tiers as Part B.

• The monthly surcharge for Part D in 2025 ranges from $13 to over $80.

Again, these amounts are deducted from your Social Security check or billed directly.

Avoiding IRMAA Surprises

Because IRMAA is based on your income from two years ago, planning ahead is crucial. Here are steps you can take to reduce or prevent a jump in Medicare costs:

1. Monitor Taxable Income

Track your MAGI closely, especially if you receive income from multiple sources:

• Traditional IRA or 401(k) withdrawals

• Capital gains from stock or property sales

• Dividends and interest

• Required Minimum Distributions (RMDs)

If your income is approaching a higher IRMAA threshold, consider ways to delay or reduce taxable income.

2. Time Roth Conversions Carefully

Roth IRA conversions are taxable and can easily push your income above a bracket limit. Instead of large one-time conversions, consider spreading them over several years to stay within a lower bracket.

3. Use Qualified Charitable Distributions (QCDs)

If you are 70½ or older, you can donate up to $100,000 per year from your IRA directly to a qualified charity. QCDs count toward your RMD but do not increase your MAGI, helping you stay under IRMAA limits.

4. Appeal If Your Income Dropped

If you had a life-changing event that significantly reduced your income—such as retirement, divorce, or death of a spouse—you can appeal your IRMAA determination by submitting Form SSA-44 to Social Security.

Approved events include:

• Marriage or divorce

• Death of a spouse

• Work stoppage or reduction

• Loss of income-producing property

Providing documentation can help you reduce your premiums going forward.

The Long-Term Impact of IRMAA

IRMAA isn’t just a short-term cost increase; it can compound over time, particularly for those with long retirements and rising investment income.

• A 65-year-old retiree who crosses an IRMAA bracket could pay thousands more per year, every year.

• If you are married, both spouses may be subject to IRMAA surcharges.

• These costs are not capped unless your income falls below the IRMAA thresholds.

This makes Medicare planning a key component of retirement financial strategy. It’s not just about what your investments earn—it’s about what you get to keep after healthcare costs.

How RMDs and Asset Withdrawals Play a Role

Required Minimum Distributions (RMDs) begin at age 73 in 2025 and can significantly raise your MAGI if you hold large tax-deferred accounts. Some strategies include:

• Reducing tax-deferred balances early: Begin withdrawals before age 73 to spread out the tax impact.

• Shifting to Roth accounts: Roth IRAs do not have RMDs and do not count toward your MAGI.

• Utilizing HSAs and other tax-advantaged accounts: These funds can be used for qualified medical expenses without adding to your MAGI.

Social Security Timing Can Also Affect IRMAA

When you claim Social Security may influence when Medicare premiums start getting deducted from your benefits. If you delay claiming, you’ll need to pay premiums directly until benefits begin.

Also, higher Social Security income may push you closer to IRMAA thresholds. Coordination between when to claim and how much you withdraw from other accounts is essential.

Legislative Changes and Outlook for the Future

While 2025 has seen an increase in IRMAA thresholds, inflation adjustments remain modest. Policymakers continue to review the sustainability of Medicare financing, which may lead to:

• More frequent IRMAA adjustments

• Increased reliance on income-based premium models

• New policy proposals to offset rising healthcare costs

Being proactive now may help you avoid steeper costs in the coming years.

What You Can Do Right Now

Start by reviewing your:

• 2023 tax return (used for your 2025 IRMAA)

• Expected income sources for 2024 and 2025

• Medicare notices from Social Security regarding your premiums

You should also consult with a financial advisor or tax professional about strategies to manage MAGI and reduce potential surcharges.

And if you’re unsure about your current Medicare costs or projected expenses, speaking with a licensed agent listed on this website can help you find options that align with your income situation.

Rising Medicare Costs Deserve Your Attention

For higher-income seniors, the impact of IRMAA in 2025 is more than a line item. It influences how much you pay every month and how far your retirement dollars will stretch. Taking the time to understand how your income affects your premiums can help you avoid costly surprises.

Even small changes in financial decisions can have a large effect on what you pay for Medicare. If you’re near a threshold, act now. A few adjustments could save you hundreds or even thousands annually.

To make sense of your Medicare premiums and find a plan that suits your needs and income level, speak with a licensed agent listed on this website for personalized help.