Key Takeaways

• IRMAA (Income-Related Monthly Adjustment Amount) affects your Medicare Part B and Part D premiums based on your income, potentially increasing your costs.

• Understanding how IRMAA is calculated and what triggers it can help you plan your finances and possibly reduce future Medicare expenses.

What Is IRMAA and Why Does It Matter for Your Medicare Costs?

If you’re on Medicare, your premiums aren’t necessarily set in stone. The Income-Related Monthly Adjustment Amount (IRMAA) is an extra charge that applies to your Medicare Part B and Part D premiums if your income exceeds certain limits. In 2025, IRMAA continues to impact higher-income Medicare beneficiaries, meaning you could end up paying more than the standard Medicare premiums.

This adjustment isn’t based on what you earn today but on your income tax return from two years ago. So, in 2025, your IRMAA determination is based on your 2023 tax return. If your income has decreased significantly since then, there are ways to appeal, but you’ll need to take specific steps to get that adjustment reconsidered.

How Is IRMAA Calculated in 2025?

IRMAA is based on your Modified Adjusted Gross Income (MAGI) from two years prior. This means that your 2025 IRMAA is calculated using your 2023 tax return. MAGI includes:

• Wages, salaries, and self-employment income

• Taxable interest and dividends

• Pensions and annuities

• Social Security benefits (if taxable)

• Capital gains

• Rental income and more

The 2025 income thresholds determine whether you pay the standard Medicare premium or an IRMAA surcharge. These thresholds change annually based on inflation, so even if your income stays the same, you might still end up in a higher IRMAA bracket over time.

What Are the 2025 IRMAA Income Thresholds?

For 2025, the IRMAA brackets start at $106,000 for individuals and $212,000 for couples filing jointly. If your income exceeds these limits, you’ll pay more for Medicare Part B and Part D. Here’s a general breakdown:

• Under $106,000 (individual) / $212,000 (couples) – Standard Medicare premium

• Above $106,000 up to higher thresholds – Higher IRMAA surcharges apply

Each bracket has an increased premium, and the more you earn, the higher your IRMAA charge. The exact amount you pay depends on where your income falls within these tiers.

Can You Avoid or Reduce IRMAA?

Since IRMAA is based on past income, avoiding it requires strategic planning. Some ways to minimize or reduce your IRMAA impact include:

1. Adjusting Your Retirement Withdrawals

If you have tax-deferred accounts like a traditional IRA or 401(k), large withdrawals can push your MAGI over the IRMAA threshold. Planning your withdrawals wisely—such as converting to a Roth IRA or spreading distributions over multiple years—can help keep your income lower.

2. Utilizing Tax-Efficient Investment Strategies

Interest, dividends, and capital gains count toward MAGI. Tax-efficient investing, such as holding long-term investments in taxable accounts or using tax-free municipal bonds, may help lower your reportable income.

3. Reporting a Life-Changing Event to Appeal IRMAA

If your income has dropped due to a life-changing event—such as retirement, job loss, divorce, or death of a spouse—you can request a reconsideration of your IRMAA determination. Medicare allows beneficiaries to file Form SSA-44 to appeal their IRMAA if their financial situation has changed significantly.

How Does IRMAA Impact Medicare Part B and Part D?

IRMAA applies separately to both Medicare Part B (medical insurance) and Part D (prescription drug coverage). Here’s what to expect:

• Medicare Part B: If you owe IRMAA, your premium will be higher than the standard Part B rate, which is $185 per month in 2025.

• Medicare Part D: The IRMAA surcharge is added to your Part D premium, meaning your total drug coverage cost increases based on your income level.

These additional costs are automatically deducted from your Social Security check or billed directly to you if you’re not receiving Social Security benefits.

What Happens If You Don’t Pay IRMAA?

If you fail to pay your IRMAA surcharge, Medicare could terminate your Part B and/or Part D coverage. You would then need to re-enroll during an eligible period, which could leave you without coverage for a time and potentially subject to late enrollment penalties.

Why Should You Plan for Future IRMAA Adjustments?

IRMAA thresholds are not fixed and increase annually with inflation. If your income hovers near the cutoff points, a slight increase could push you into the next IRMAA bracket, resulting in higher Medicare costs.

Planning ahead—whether through tax strategies, controlled withdrawals, or investment choices—can help reduce your future Medicare expenses. If you anticipate a drop in income, preparing an appeal in advance ensures you don’t overpay due to outdated financial data.

How Can You Get Help with IRMAA Planning?

Navigating IRMAA and Medicare costs can be challenging, but you don’t have to figure it out alone. Speaking with a licensed agent listed on this website can help you understand your options, evaluate potential savings strategies, and avoid unnecessary premium surcharges. Reach out today to make sure you’re making the best financial decisions for your Medicare coverage.

Understanding IRMAA Can Help You Manage Your Medicare Costs

Being aware of IRMAA and how it works can help you avoid unexpected Medicare costs in 2025 and beyond. Since IRMAA is based on past income, planning in advance and taking steps to reduce your taxable income can make a significant difference. Whether it’s adjusting withdrawals, appealing due to life changes, or working with a professional, you have options to manage your Medicare expenses effectively.