Did you know that your Medicare premiums can go up if your income is above certain thresholds? If you’re nearing retirement—or already enrolled in Medicare—this is something you can’t afford to ignore. In this post, we’ll explain what IRMAA is, how it affects your Medicare premiums, who’s at risk of paying more, and what you can do to avoid or appeal it. Let’s dive in.
What Is IRMAA?
IRMAA stands for Income-Related Monthly Adjustment Amount. It’s an extra charge added to your Medicare Part B and/or Part D premiums if your income exceeds specific thresholds set by the federal government. This isn’t a penalty—it’s a way for the government to ask higher-income beneficiaries to pay more for their Medicare coverage.
How Does IRMAA Work?
Each year, the Social Security Administration (SSA) reviews your income using your IRS tax return from two years prior. Based on that income, they determine whether you’ll owe IRMAA. For example:
Your 2025 Medicare premiums are based on your 2023 Modified Adjusted Gross Income (MAGI).
If your 2023 MAGI was above $106,000 (for individuals) or $212,000 (for married couples filing jointly), you’ll pay more for your premiums in 2025.
Part D (prescription drug coverage) also sees IRMAA surcharges ranging from $12.90 to $81.00 per month, depending on your income tier.
Please see CMS.Gov Fact Sheets for IRMAA amount for 2025.
Note: Roughly 80% of Medicare beneficiaries pay only the standard premium. But if your income climbs above the threshold—even temporarily—you could be in for a surprise.
What Counts as Income?
IRMAA is based on your Modified Adjusted Gross Income (MAGI), which includes:
Adjusted Gross Income (AGI) from your tax return and other items such as below.
- Tax-exempt interest (like municipal bond income)
- Foreign earned income excluded from taxes
Common IRMAA Triggers
It’s easy to accidentally push your income over the IRMAA threshold. Here are a few examples:
- Taking a large 401(k) distribution in retirement
- Roth IRA conversions during a low-tax year
- Selling real estate or other investments
- Receiving a retirement bonus or unused vacation payout before retirement
These can all lead to temporary income spikes, triggering higher Medicare costs for the next two years.
Is There a Way to Avoid or Reduce IRMAA?
Yes! With smart planning, you may be able to avoid unnecessary IRMAA charges:
- Manage timing – Spread income over several years instead of taking large amounts in one.
- Use QCDs – Make Qualified Charitable Distributions from IRAs if you’re over age 70½ to reduce taxable income.
- Delay taxable withdrawals – Coordinate your retirement income sources for tax efficiency.
- File appeals – If your income dropped due to a major life event (see below), you may qualify for a reduction.
Can You Appeal an IRMAA Decision?
Absolutely. If your income dropped due to a Life-Changing Event, you can file an appeal using Form SSA-44.
Eligible life-changing events include: Retirement, Death of a spouse, Divorce, Loss of income from work or property, Pension changes. SSA reviews these on a case-by-case basis. Note that approval isn’t guaranteed, and processing times can vary depending on your state.
Medicare Basics: A Quick Refresher
If you’re still learning the ropes of Medicare, here’s a brief overview:
- Part A covers hospital stays. It’s usually free if you or your spouse paid Medicare taxes.
- Part B covers outpatient care, doctor visits, and tests. It requires a monthly premium.
- Part D covers prescription drugs and is purchased separately or included in Part C (Advantage Plans).
- Medigap (Supplement Plans) or Medicare Advantage can help with costs not covered by Original Medicare.
- Enrollment starts around age 65, during a 7-month window around your birthday. Delays can lead to penalties.
Original Medicare doesn’t have an out-of-pocket maximum, so many people add private coverage for better protection.
Final Thoughts
IRMAA can catch retirees off guard—especially if they unknowingly trigger income increases through well-meaning financial moves. But with a little awareness and careful planning, you can minimize or even avoid its impact.
If you received an IRMAA notice, don’t panic. Review your income situation and consider whether you’re eligible to appeal. And for future planning, work with a professional who understands how Medicare and taxes intersect.
Need Help?
At Kamitani Financial Solutions, we help clients design tax-efficient retirement strategies and navigate Medicare confidently. Please contact Info@kamitanifs.com for consultation.