2023 2024 2025 Medicare Part B IRMAA Premium MAGI Brackets

[Updated on October 12, 2023 after the release of the inflation number for September 2023.]

Seniors 65 or older can sign up for Medicare. The government calls people who receive Medicare beneficiaries. Medicare beneficiaries must pay a premium for Medicare Part B which covers doctors’ services and Medicare Part D which covers prescription drugs. The premiums paid by Medicare beneficiaries cover about 25% of the program costs for Part B and Part D. The government pays the other 75%.

What Is IRMAA?

Medicare imposes surcharges on higher-income beneficiaries. The theory is that higher-income beneficiaries can afford to pay more for their healthcare. Instead of doing a 25:75 split with the government, they must pay a higher share of the program costs.

The surcharge is called IRMAA, which stands for Income-Related Monthly Adjustment Amount. This applies to both Traditional Medicare (Part B and Part D) and Medicare Advantage plans.

According to the Medicare Trustees Report, 7% of Medicare Part B beneficiaries paid IRMAA. The extra premiums they paid lowered the government’s share of the total Part B and Part D expenses by two percentage points. Big deal?

MAGI

The income used to determine IRMAA is your Modified Adjusted Gross Income (MAGI) — which is your AGI plus tax-exempt interest and dividends from muni bonds — from two years ago. Your 2021 MAGI determines your IRMAA in 2023. Your 2022 MAGI determines your IRMAA in 2024. Your 2023 MAGI determines your IRMAA in 2025.

There are many definitions of MAGI for different purposes. The MAGI for subsidies on health insurance from the ACA marketplace includes untaxed Social Security benefits. The MAGI for IRMAA doesn’t include untaxed Social Security benefits. If you read somewhere else that says that untaxed Social Security benefits are included in MAGI, they’re talking about a different MAGI, not the MAGI for IRMAA.

You can use Calculator: How Much of My Social Security Benefits Is Taxable? to calculate the taxable portion of your Social Security benefits.

As if it’s not complicated enough while not moving the needle much, IRMAA is divided into five income brackets. Depending on the income, higher-income beneficiaries pay 35%, 50%, 65%, 80%, or 85% of the program costs instead of 25%. As a result, they pay 1.4 times, 2.0 times, 2.6 times, 3.2 times, or 3.4 times the standard Medicare premium.

The threshold for each bracket can cause a sudden jump in the monthly premium amount you pay. If your income crosses over to the next bracket by $1, all of a sudden your Medicare premiums can jump by over $1,000/year. If you are married filing a joint tax return and both of you are on Medicare, $1 more in income can make the Medicare premiums jump by over $1,000/year for each of you.

* The last bracket on the far right isn’t displayed in the chart.

So if your income is near a bracket cutoff, see if you can manage to keep it down and make it stay in a lower bracket. Using the income from two years ago makes it more difficult to manage.

2023 IRMAA Brackets

The income on your 2021 IRS tax return (filed in 2022) determines the IRMAA you pay in 2023.

Source: Medicare Costs, Medicare.gov

The standard Part B premium is $164.90 in 2023.

Higher-income Medicare beneficiaries also pay a surcharge for Part D. The income brackets are the same. The Part D IRMAA surcharges are relatively smaller in dollars.

2024 IRMAA Brackets

The income on your 2022 IRS tax return (filed in 2023) determines the IRMAA you pay in 2024.

Source: Medicare Costs, Medicare.gov

The standard Part B premium is $174.70 in 2023. Higher-income Medicare beneficiaries also pay a surcharge for Part D. The income brackets are the same. The Part D IRMAA surcharges are relatively smaller in dollars.

I also have the Social Security COLA and the tax brackets for next year. Please read 2024 Social Security Cost of Living Adjustment (COLA) and 2024 Tax Brackets, Standard Deduction, Capital Gains, etc. if you’re interested.

2025 IRMAA Brackets

We have one data point out of 12 right now for the IRMAA brackets in 2025 (based on 2023 income). However, you can make some preliminary estimates and give yourself some margin to stay clear of the cutoff points.

If annualized inflation from October 2023 through August 2024 is 0% (prices staying flat at the latest level) or 3% (approximately a 0.25% increase every month), these will be the 2025 numbers:

Because the formula compares the average of 12 monthly CPI numbers over the average of 12 monthly CPI numbers in a base period, even if prices stay the same in the following months, the average of the next 12 months will still be higher than the average in the previous 12 months.

To use exaggerated numbers, suppose gas prices went up from $3/gallon to 4.50/gallon over the last 12 months. The average gas price in the last 12 numbers was maybe $3.70/gallon. When gas price inflation becomes 0%, it means it stays at the current price of $4.50/gallon. The average for the next 12 months is $4.50/gallon. Brackets based on an average gas price of $4.50/gallon in the next 12 months will be higher than brackets based on an average gas price of $3.70/gallon in the previous 12 months.

If you really want to get into the weeds of the methodology for these calculations, please read comment #79 and comment #164.

Nickel and Dime

The standard Medicare Part B premium is $174.70/month in 2024. A 40% surcharge on the Medicare Part B premium is about $840/year per person or about $1,700/year for a married couple both on Medicare.

In the grand scheme, when a couple on Medicare has over $206,000 in income, they’re already paying a large amount in taxes. Does making them pay another $1,700 make that much difference? It’s less than 1% of their income but nickel-and-diming just makes people mad. People caught by surprise when their income crosses over to a higher bracket by just a small amount are angry at the government. Rolling it all into the income tax would be much more effective.

Oh well, if you are on Medicare, watch your income and don’t accidentally cross a line for IRMAA.

IRMAA Appeal

If your income two years ago was higher because you were working at that time and now your income is significantly lower because you retired (“work reduction” or “work stoppage”), you can appeal the IRMAA initial determination. The “life-changing events” that make you eligible for an appeal include:

• Death of spouse
• Marriage
• Divorce or annulment
• Work reduction
• Work stoppage
• Loss of income from income producing property
• Loss or reduction of certain kinds of pension income

You file an appeal with the Social Security Administration by filling out the form SSA-44 to show that although your income was higher two years ago, you had a reduction in income now due to one of the life-changing events above. For more information on the appeal, see Medicare Part B Premium Appeals.

Not Penalized For Life

If your income two years ago was higher and you don’t have a life-changing event that makes you qualify for an appeal, you will pay the higher Medicare premiums for one year. IRMAA is re-evaluated every year as your income changes. If your higher income two years ago was due to a one-time event, such as realizing capital gains or taking a large withdrawal from your IRA, when your income comes down in the following year, your IRMAA will also come down automatically. It’s not the end of the world to pay IRMAA for one year.

Roth Conversion Tools

When you manage your income by doing Roth conversions, you must watch your MAGI carefully to avoid accidentally crossing one of these IRMAA thresholds by a small amount and triggering higher Medicare premiums.

I use two tools to help with calculating how much to convert to Roth. I wrote about these tools in Roth Conversion with Social Security and Medicare IRMAA and Roth Conversion with TurboTax What-If Worksheet.

Learn the Nuts and Bolts

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