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Put simply, an income-related monthly adjustment amount (IRMAA) is an additional charge added to your monthly Medicare Part B and Part D premiums if your income exceeds certain limits. It’s designed to ensure that individuals in higher income brackets contribute more toward the cost of their Medicare coverage. Here’s what you need to know about how IRMAAs work and how they may affect you.
If you need additional help with your finances in retirement, consider speaking with a financial advisor.
What Is IRMAA?
As we mentioned above, IRMAA is a surcharge added to your Medicare Part B and Part D premiums if your income exceeds certain thresholds. It’s designed to ensure that higher-income beneficiaries contribute more to the Medicare system, helping support its long-term sustainability.
When it comes to building and following a retirement budget, it’s important to know how IRMAA is calculated and how it can affect your Medicare costs. Being aware of your income levels and any potential surcharges can help you better plan for your future healthcare expenses.
Here’s what Medicare Parts B and D cover:
- Part B covers medically necessary and preventive services such as doctor visits, lab work, surgeries and home health care.
- Part D helps cover the cost of prescription drugs, protecting you from high out-of-pocket expenses.
The surcharge is based on your modified adjusted gross income (MAGI) from two years prior. So the IRMAA you may owe in 2025 is based on your 2023 MAGI.
How IRMAA Is Calculated
Your IRMAA is primarily based on your MAGI, which includes your adjusted gross income (AGI) plus any tax-exempt interest income. The Social Security Administration (SSA) also considers your tax filing status. Meaning whether you file as single, married filing jointly, head of household or married filing separately.
In addition, the SSA may factor in life-changing events that significantly affect your income. That includes events such as marriage, divorce or the death of a spouse. If you’ve experienced one of these events, you may be able to request a reassessment of your IRMAA.
Here’s how the calculation works:
- Lookback Period: IRMAA is based on your MAGI from two years prior. For example, your 2024 IRMAA is determined using your 2022 tax return.
- Income Brackets: The SSA places beneficiaries into income brackets. Each bracket corresponds to a different IRMAA surcharge, applied to both Medicare Part B and Part D premiums.
- Higher Income = Higher IRMAA: The more you earn, the more you pay in IRMAA surcharges. This increases your total monthly Medicare premiums.
Let’s take a look at an example. If you’re single and your 2023 MAGI was $106,000 or less, you won’t owe IRMAA in 2025. The same goes for it you’re married filing jointly with a MAGI of $212,000 or less for 2023. If your income exceeds those thresholds, you’ll pay an additional IRMAA surcharge on top of your standard Medicare Part B and Part D premiums.
How Much Are IRMAAs and Who Pays Them?
When budgeting for your Medicare expenses, it’s important to factor in the cost of IRMAAs each year. This extra charge is added to your monthly Part B and Part D premiums if your income exceeds a certain limit. And remember, these costs are in addition to your regular Medicare premium amounts.
To provide a clearer picture, below are the IRMAA rates and income thresholds for 2025.
2025 Medicare Full Part B: IRMAAs and Total Premiums
| MAGI for Beneficiaries Who Filed 2023 Individual Tax Returns | MAGI for Beneficiaries Who Filed 2023 Joint Tax Returns | IRMAA | Total Monthly Premium |
|---|---|---|---|
| Up to $106,000 | Up to $212,000 | $0.00 | $185.00 |
| More than $106,000 and less than or equal to $133,000 | More than $212,000 and less than or equal to $266,000 | $74.00 | $259.00 |
| More than $133,000 and less than or equal to $167,000 | More than $266,000 and less than or equal to $334,000 | $185.00 | $370.00 |
| More than $167,000 and less than or equal to $200,000 | More than $334,000 and less than or equal to $400,000 | $259.90 | $480.90 |
| More than $200,000 and less than $500,000 | More than $400,000 and less than $750,000 | $406.90 | $591.90 |
| More than or equal to $500,000 | More than or equal to $750,000 | $443.90 | $628.90 |
However, high-income Medicare beneficiaries are subject to different IRMAAs and premiums if they only have Part B immunosuppressive drug coverage:
2025 Medicare Part B Immunosuppressive Drug Coverage Only: IRMAAs and Total Premiums
| MAGI for Beneficiaries Who Filed 2023 Individual Tax Returns | MAGI for Beneficiaries Who Filed 2023 Joint Tax Returns | IRMAA | Total Monthly Premium |
|---|---|---|---|
| Up to $106,000 | Up to $212,000 | $0.00 | $110.40 |
| More than $106,000 and less than or equal to $133,000 | More than $212,000 and less than or equal to $266,000 | $73.60 | $184.00 |
| More than $133,000 and less than or equal to $167,000 | More than $266,000 and less than or equal to $334,000 | $184.10 | $294.50 |
| More than $167,000 and less than or equal to $200,000 | More than $334,000 and less than or equal to $400,000 | $294.50 | $404.90 |
| More than $200,000 and less than $500,000 | More than $400,000 and less than $750,000 | $404.90 | $515.30 |
| More than or equal to $500,000 | More than or equal to $750,000 | $441.70 | $552.10 |
Part D premiums vary from plan to plan. But about 8% of beneficiaries pay an IRMAA in addition to their premiums, according to Centers for Medicare and Medicaid Services. About a third of beneficiaries have their premiums and IRMAAs deducted from their Social Security checks. The remainder make their payments directly to their plan.
2025 Medicare Part D IRMAAs
| MAGI for Beneficiaries Who Filed 2023 Individual Tax Returns | MAGI for Beneficiaries Who Filed 2023 Joint Tax Returns | IRMAA |
|---|---|---|
| Up to $106,000 | Up to $212,000 | $0.00 |
| More than $106,000 and less than or equal to $133,000 | More than $212,000 and less than or equal to $266,000 | $13.70 |
| More than $133,000 and less than or equal to $167,000 | More than $266,000 and less than or equal to $334,000 | $35.30 |
| More than $167,000 and less than or equal to $200,000 | More than $334,000 and less than or equal to $400,000 | $57.00 |
| More than $200,000 and less than $500,000 | More than $400,000 and less than $750,000 | $78.60 |
| More than or equal to $500,000 | More than or equal to $750,000 | $85.80 |
Appealing Your IRMAA
If you disagree with your IRMAA determination, or if your income has significantly decreased due to certain life-changing events, you have the right to appeal the decision. The appeal process involves filling out a form called SSA-44. On Form SSA-44, you can explain why you believe the IRMAA determination is incorrect. You’ll also need to provide evidence to support your claims. This could include documentation of your life-changing event or proof of a reduction in income.
Once completed, the form should be submitted to your local Social Security office for review. You’ll then receive a new determination based on the information you provided.
If you’re not satisfied with the decision, there are other levels of appeal available to you. These include requesting a hearing by an administrative law judge, requesting a review by the Appeals Council or taking the matter to federal court.
Paying Your IRMAA
When it comes to paying your IRMAA charges, you have several options. If you receive Social Security or Railroad Retirement Board benefits, your Medicare Part B premium and IRMAA surcharge are typically deducted automatically from your monthly benefit. This can be a convenient way to manage your payments without having to take extra steps.
If you don’t receive these benefits, you’ll be billed directly. You can pay your IRMAA charges in one of the following ways:
- By mail using a payment coupon
- In person at your local Social Security office
- Online through your bank’s bill pay system
- Online via Medicare’s Biller Direct Express service
The best payment method depends on your personal preferences and financial situation. Automatic deductions work well for those who receive regular benefits and prefer a hands-off approach. But maybe your income varies or you like to have more control over when and how you pay. In that case, direct billing might be a better fit.
Don’t Forget Late Enrollment Penalties
It’s also important to stay on top of enrollment deadlines.
For Part D, the penalty is 1% of the national base premium multiplied by the number of full months you didn’t have creditable prescription drug coverage.
If you delay enrolling in Part B, you could face a 10% penalty for each full 12-month period you were eligible but didn’t sign up.
Bottom Line
The income-related monthly adjustment amount (IRMAA) represents an essential component of Medicare, acting as a mechanism to ensure fairness and financial stability within this healthcare system. It adjusts the Medicare Part B and Part D premiums based on a beneficiary’s income, requiring those with higher incomes to contribute more. The implications of IRMAA can significantly impact individuals’ budget planning, particularly during retirement.
Healthcare Planning Tips
- Medical bills and healthcare expenses can quickly drain your savings in retirement. A financial advisor can help you plan for these costs. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area. You can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- If you’d prefer to go it alone, be sure to familiarize yourself with the various ways to guard against medical costs that could derail your financial plans in retirement.
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