Is Irmaa based on taxable income or AGI?
SSA determines if you owe an IRMAA based on the income you reported on your IRS tax return two years prior, meaning two years before the year that you start paying IRMAA. The income that counts is the adjusted gross income you reported plus other forms of tax-exempt income.
That means your 2024 premiums and IRMAA determinations are calculated based on MAGI from your 2022 federal tax return. MAGI is calculated as Adjusted Gross Income (line 11 of IRS Form 1040) plus tax-exempt interest income (line 2a of IRS Form 1040).
We use the most recent federal tax return the IRS provides to us. If you must pay higher premiums, we use a sliding scale to calculate the adjustments, based on your “modified adjusted gross income” (MAGI). Your MAGI is your total adjusted gross income and tax-exempt interest income.
Medicare premiums are calculated using your Modified Adjusted Gross Income (MAGI) from your tax return for two years prior to the current year. For example, if you're paying premiums in 2024, these will be based on your 2022 MAGI.
- the beneficiary's adjusted gross income (AGI) (found on line 11 of the Internal Revenue Service (IRS) tax filing form 1040), plus.
- tax-exempt interest income (line 2a of IRS Form 1040).
The amount you pay depends on your modified adjusted gross income from your most recent federal tax return.
What is an IRMAA? People with Medicare who earn a high income have to pay an IRMAA, an extra charge on Medicare Parts B and D. The fee kicks in if you make more than $97,000 (going up to $103,000 in 2024) or if you and your spouse collectively earn over $194,000 (going up to $206,000 in 2024).
The income-related monthly adjustment amount (IRMAA) is a fee applied to your Medicare premiums that can kicks in if your modified adjusted gross income is above a certain amount. Depending on your income, it could heavily impact your Medicare costs.
For 2024, if your income is greater than $103,000 and less than $397,000 the IRMAA amount is $384.30. If income is greater than or equal to $397,000 the IRMAA is $419.30. Medicare Part D. If your income is greater than $103,000 and less than $397,000, the IRMAA amount is $74.20.
The Medicare IRMAA for Part B and Part D is based on your income and is calculated on a sliding scale. When calculating whether IRMAA charges apply to you, Medicare uses the adjusted gross income amount you reported on your IRS tax return from two years prior to the current year.
What is the two year rule for Irmaa?
The Social Security Administration (SSA) sets four income brackets that determine your (or you and your spouse's) IRMAA. SSA determines if you owe an IRMAA based on the income you reported on your IRS tax return two years prior, meaning two years before the year that you start paying IRMAA.
| Single | Couple MAGI | Part B |
|---|---|---|
| < $103,000 | < $206,000 | $174.70 |
| $103,000 to $129,000 | $206,000 to $258,000 | $244.60 |
| $129,000 to $161,000 | $258,000 to $322,000 | $349.40 |
| $161,000 to $193,000 | $322,000 to $386,000 | $454.20 |
- Make charitable contributions to lower your MAGI. ...
- Utilize Roth IRA funds instead of an IRA for some cash withdrawals.
- Spread out withdrawals for cash needs across a few years. ...
- If you have earned income, continue to make tax-deductible retirement contributions.
If you earn more than $103,000 ($206,000 if you're married), you pay higher monthly rates for both Medicare Part B and D. For 2024, your costs for Medicare Parts B and D are based on the income on your 2022 tax return.
Premium adjustments are two years behind.
Your 2023 income determines your IRMAA in 2025. Your 2022 income determines your IRMAA in 2024. Your 2021 income determines your IRMAA in 2023. Your 2020 income determines your IRMAA in 2022.
Social Security income can be taxable no matter how old you are. It all depends on whether your total combined income exceeds a certain level set for your filing status. You may have heard that Social Security income is not taxed after age 70; this is false.
When you sell an asset, like a house, the profits are known as capital gains. Capital gains are a type of income, so they may affect how much you pay for Medicare coverage.
| Single | Couple MAGI | Part D |
|---|---|---|
| $131,000 to $163,000 | $262,000 to $326,000 | Premium + $35.30 |
| $163,000 to $196,000 | $326,000 to $392,000 | Premium + $57.00 |
| $196,000 to $500,000 | $392,000 to $750,000 | Premium + $78.60 |
| > $500,000 | > $750,000 | Premium + $85.80 |
No, most seniors pay between $175 and $371 per month depending on what kinds of Medicare coverage they buy. However, seniors who have a low income can qualify for free or reduced-cost Medicare.
High earners often face higher Medicare IRMAA charges due to their elevated MAGI levels. One approach might be making maximum contributions into retirement accounts like traditional IRA or Roth IRA as well as Health Savings Accounts (HSA) if eligible.
What is modified adjusted gross income for Medicare Irmaa?
Essentially MAGI refers to total gross income including certain non-taxable social security benefits while IRMAA, which stands for Income-Related Monthly Adjustment Amount acts as an extra charge added onto Parts B and D of standard premium payments if your earnings exceed basic limits set by legislation.
Does IRMAA Apply to Both Spouses? IRMAA applies to both spouses when both are on Medicare. Medicare premiums are charged to each individual beneficiary as there is no “family plan.”
Some examples of income used from IRMAA are: Taxable Social Security benefits, Wages, Interest, Capital Gains, Pension and Rental Income, Dividends and any distribution from any tax-deferred investment like a Traditional 401(k), IRA or 403(b).
The Social Security Administration (SSA) uses your income tax information from 2 years ago to determine if you owe an IRMAA in addition to your monthly premium. The surcharge amount you'll pay depends on factors like your income bracket and how you've filed your taxes.
From 2007 to 2024, IRMAA bracket increases ranged from 4.73% to 8.02%. The 2025 IRMAA brackets will be based on your 2023 Modified Adjusted Gross Income (MAGI). Reducing your Modified Adjusted Gross Income (MAGI) will help you reduce (or avoid) IRMAA in future years.
