What is IRMAA?

by Jan 18, 2024All, Retirement

What is IRMAA?

IRMAA (Income-Related Monthly Adjustment Amount) is an increase in Medicare Part B & Part D premiums based on a taxpayer’s income. In particular, the premium adjustment utilizes your MAGI (modified adjusted gross income) from two years ago. The MAGI used to calculate for IRMAA is your AGI plus any tax-exempt interest. Since IRMAA is backward-looking, carefully planning your income may help avoid bumping into a new IRMAA bracket. Although the current year’s earnings brackets won’t be released until two years after you earn the income, it is safe to assume that the brackets will be slightly higher than today’s brackets due to inflation (CPI) adjustment.

Below are the current IRMAA surcharges based on your 2022 MAGI. The base Part B premium is $174.70 in 2024, and the Part D base premium depends on your specific drug plan.

IRMAA Surcharges for 2024

Individual Tax Filer’s 2022 MAGIJoint Tax Filer’s 2022 MAGIPart B IRMAA SurchargePart D IRMAA Surcharge
$0 – $103,000$0 – $206,000$0$0
$103,001 – $129,000$206,001 – $258,000$69.90$12.90
$129,001 – $161,000$258,001 – $322,000$174.70$33.30
$161,001 – $193,000$322,001 – $386,000$279.50$53.80
$193,001 – $499,999$386,001 – $749,999$384.30$72.40
$500,000+$750,000+$419.30$81.00

 

How Can I Avoid or Pay Less in IRMAA?

First, be aware when you’re close to an IRMAA bracket, and consider delaying or reducing a retirement account withdrawal or realizing a capital gain until the next tax year.

Second, the Social Security Administration (SSA) allows you to report certain life changes that can lower the income they used to calculate IRMAA. You can notify the SSA of these changes via form SSA-44, which can be mailed or faxed to your local Social Security office. The complete list of life changes is as follows:

  • Marriage
  • Divorce/Annulment
  • Death of Your Spouse
  • Work Stoppage
  • Work Reduction
  • Loss of Income-Producing Property
  • Loss of Pension Income
  • Employer Settlement Payment

Sources

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