The Income-Related Monthly Adjustment Amount (IRMAA) is an additional premium charged to individuals with higher incomes who are enrolled in certain parts of Medicare. Medicare is primarily designed to provide healthcare coverage for seniors and individuals with disabilities, but it is not free. Most beneficiaries are required to pay premiums for different parts of Medicare, and for those with higher incomes, IRMAA increases the amount they must pay. This article explores what IRMAA is, how it works, and how it may affect your Medicare premiums.

What is IRMAA?

IRMAA stands for Income-Related Monthly Adjustment Amount, and it is an additional charge applied to Medicare beneficiaries with higher income levels. The IRMAA is added to the standard premiums for Medicare Part B (medical insurance) and Medicare Part D (prescription drug coverage). Essentially, IRMAA is a way for the federal government to increase premiums for individuals with higher earnings, helping to offset the costs of Medicare. It is important to note that IRMAA does not apply to everyone, but only to those whose modified adjusted gross income (MAGI) surpasses a certain threshold set by the government. If you fall within this higher-income bracket, you will be required to pay more for your Medicare coverage.

How Does IRMAA Work?

Medicare Part B and Part D premiums are generally standardized, based on a fixed amount each year. However, for higher-income beneficiaries, an additional premium increase is applied through IRMAA, which is calculated based on income from two years prior. For example, if you are applying for Medicare in 2025, the IRMAA calculation will be based on your income from 2023. The Social Security Administration (SSA) is responsible for determining if you will be charged IRMAA, using your tax return from two years earlier to assess your income. Adjustments to IRMAA are made annually, with income thresholds and premium amounts potentially changing from year to year.

Income Thresholds for IRMAA

The income thresholds for IRMAA are determined based on your filing status and your MAGI, which includes both taxable income and any tax-exempt interest income. The thresholds vary depending on whether you file as an individual or jointly as a married couple. For 2025, the income thresholds (based on 2023 tax returns) for Medicare Part B and Part D are as follows:

Individuals with a MAGI of $97,000 or less, or married couples filing jointly with a MAGI of $194,000 or less, will not face any IRMAA surcharge. However, individuals and couples with MAGI exceeding these thresholds will be required to pay an additional premium, with the amount increasing as their income rises. The surcharge increases at various levels, with the highest surcharges applying to individuals with MAGI over $153,000 and couples with MAGI above $306,000. The income brackets for Part D follow the same guidelines, though the specific surcharge amounts differ.

How Much Is the IRMAA Premium?

The amount you will pay for IRMAA depends on your income. For both Medicare Part B and Part D, IRMAA adds a surcharge to the standard premium, which can vary each year. For example, in 2025, the standard Part B premium is expected to be about $174.70 per month. If your income places you in an IRMAA surcharge bracket, you may see an additional charge ranging from $69.60 to $402.20 per month. The surcharge for Medicare Part D ranges from $12.40 to $77.90 per month, again depending on your income level. These surcharges are added on top of the standard premiums, making it important for high-income individuals to plan for these additional costs.

How Does IRMAA Affect Your Total Medicare Costs?

For higher-income individuals, IRMAA can significantly increase the total cost of Medicare premiums. If you fall into one of the higher IRMAA brackets, you may end up paying more than $500 per month in premiums for Medicare Part B and Part D combined. This can be a substantial increase compared to the standard premiums. It is important to keep in mind that IRMAA only applies to individuals enrolled in Medicare Part B and Part D. If you are not enrolled in these parts of Medicare, you will not be charged the additional IRMAA surcharge.

Appealing the IRMAA

If you believe that your IRMAA surcharge is incorrect, or if your income has significantly decreased since the tax year used to calculate your IRMAA, you may be eligible to appeal the decision. Certain life events, such as retirement, divorce, or the death of a spouse, can cause a significant drop in income, and you may request a new IRMAA determination under these circumstances. Other life-changing events, such as large medical expenses or a change in your living situation, may also warrant an appeal. To begin the appeals process, you can contact the Social Security Administration and submit the necessary documentation for reconsideration.

Key Takeaways About IRMAA

IRMAA applies to higher-income Medicare beneficiaries, increasing their monthly premiums for both Parts B and D. Income thresholds are based on MAGI from two years ago and vary depending on whether you file taxes as an individual or jointly as a married couple. The IRMAA surcharge can be significant, particularly for individuals or couples with higher incomes. If your income changes significantly due to certain life events, you may appeal the IRMAA decision to ensure that you are paying the correct amount.

Conclusion

IRMAA is an additional charge that applies to higher-income Medicare beneficiaries to help cover the costs of the Medicare program. While it can increase your healthcare expenses, understanding how IRMAA works, and being aware of the income thresholds and surcharges, can help you plan for your Medicare costs. If you feel that your IRMAA surcharge is unfair or inaccurate, don’t hesitate to explore the appeals process to ensure you are paying the appropriate amount.

The commentary on this blog reflects the personal opinions, viewpoints and analyses of the author, Katherine Sullivan, and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security, or any security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary.