I’m Being Charged More for Medicare: IRMAA Explained

When signing up for Medicare, most people expect to pay the standard premium, which is currently $174.70 per month for Medicare Part B in 2024. However, if you’re a higher-income earner, you may notice an unexpected increase in your premium, possibly paying over $500 a month! This additional charge is called IRMAA, or Income-Related Monthly Adjustment Amount.

If this has caught you by surprise, don’t worry—you’re not alone. We will explain what IRMAA is, why you’re being charged more, how much it might cost, and how to reduce it if your circumstances have changed.

What Is IRMAA?

IRMAA is a Medicare surcharge applied to your monthly premiums for Part B (medical services) and Part D (prescription drugs) if your income exceeds a certain level. The Social Security Administration (SSA) uses your income from two years ago to decide if you owe IRMAA.

How does IRMAA work?

Income Assessment:

The government uses your tax return from two years ago to determine whether you owe IRMAA.

For example:

2025 premiums are based on your 2023 tax return.
2026 premiums are based on your 2024 tax return, and so on.

MAGI Calculation:

IRMAA is calculated using your Modified Adjusted Gross Income (MAGI), which starts with your Adjusted Gross Income (AGI) (Line 11 on your tax return). Then, they add any tax-exempt foreign income or interest to get your MAGI.

Income Thresholds:

If your MAGI exceeds the following limits, you will pay an IRMAA surcharge:

Single filers: Over $103,000.
Married filing jointly: Over $206,000.
Married filing separately: Over $103,000 (higher brackets apply for incomes over $300,000).

Why does IRMAA use old tax returns?

To get the most up-to-date information, Medicare uses tax records from two years ago to figure out rates. If your income has dropped since you last used this method to figure out your rates, it can be annoying.

Key points to remember

Your MAGI determines your IRMAA bracket, which sets how much more you’ll pay for Medicare.
The surcharge applies to both Medicare Part B and Medicare Part D premiums.
Your IRMAA will only decrease when your income tax returns from two years ago show a lower income level.

How Much Could IRMAA Cost You?

The majority of people will pay the standard Part B premium of $174.70 per month in 2024. However, if your income is over the thresholds, you’ll fall into one of five IRMAA brackets. The more you earn, the more you’ll pay.

For example:

If your income is over the limit, you may pay about $69 more per month.
If your income is much higher, your Part B premium could exceed $500 a month.

It also applies to Medicare Part D (prescription drug coverage). Even if you don’t use many medications, you’ll still pay an extra charge each month for Part D if your income exceeds the limits.

For Part D, the extra charge ranges from about $12.90 per month to over $80 per month, depending on your income bracket.

How Can You Avoid or Reduce IRMAA?

If your income has decreased since the tax year they’re using (two years ago), you might be able to appeal the IRMAA decision. The SSA allows appeals in cases of significant life changes that have lowered your income.

What qualifies as a life-changing event?

The following situations are considered valid reasons to appeal IRMAA:

Marriage: If you got married recently, your income might have decreased if you’re now filing taxes jointly.
Divorce: If you divorced within the last two years, your income might now be lower without your ex-spouse’s earnings.
Death of a Spouse: Losing your beloved spouse can result in a drop in income.
Retirement or Stopping Work: If you retired or stopped working, you likely no longer have the same income level.
Reduced Work Hours: Switching to part-time work or cutting back your hours can affect your earnings.
Loss of Income-Producing Property: If you sold a rental property or other income-generating asset, your income may have dropped.
Loss of Pension Income: If your pension benefits ended or decreased, this could also qualify.

How to appeal

To appeal IRMAA, you’ll need to fill out Form SSA-44 from the Social Security Administration. This form asks for details about your life-changing event and requires documentation, such as:

A letter from your employer confirming a job loss or reduced hours.
A recent tax return showing your lower income.
Proof of a pension reduction or loss.

Once you’ve completed the form, please submit it to your local Social Security office. If approved, they’ll recalculate your Medicare premiums based on your current financial situation.

Important things to remember

IRMAA is not permanent: If your income drops below the thresholds in future tax years, you’ll no longer have to pay the surcharge.
IRMAA applies to both Part B and Part D: This means the extra charges can add up quickly if your income is above the limits.
Appeals take time: If you think you qualify for an appeal, act as soon as possible to avoid overpaying.

Final Thoughts

Medicare premiums can be more expensive because of IRMAA. This can be annoying if your income has changed since the tax year they are using. If you have had a qualified life change, the good news is that you can appeal and lower your costs.

Learning about IRMAA and your choices can help you avoid spending money on things you do not need and keep your Medicare costs in check.

Medicare payments and IRMAA can be hard to understand, but you do not have to do it by yourself. We at LMS Insurance Group are experts at planning for Medicare and can help you through the whole process, from figuring out your charges to appealing IRMAA if you need to.

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