What is IRMAA and how does it affect your Medicare costs?

As you approach or settle into Medicare, understanding how your income affects what you pay becomes just as important as understanding what your plan covers. One of the most important and often overlooked cost factors is the Income Related Monthly Adjustment Amount, or IRMAA.

If you’re a Medicare beneficiary with a higher income, IRMAA can significantly increase what you pay for Medicare Part B (which covers doctor visits and outpatient care) and Part D (prescription drug coverage). Let’s break down what IRMAA is, how it’s calculated, how it applies to Medicare Advantage and what you can do about it.

What Is IRMAA?

IRMAA is an additional monthly charge on top of your standard Medicare premiums. It applies only to individuals whose modified adjusted gross income (MAGI) is above a certain threshold, as determined by the IRS.

In simple terms, the higher your income, the more you pay for your Medicare coverage, even though you’re getting the same services as everyone else.

This policy was created to ensure that Medicare remains financially sustainable by asking for higher-income beneficiaries to contribute more.

How Is IRMAA calculated?

IRMAA is based on the income reported on your tax return two years prior. For example, your 2025 IRMAA is based on your 2023 income.

The Social Security Administration (SSA) reviews your income annually and places you into an income bracket. If your income crosses certain thresholds, IRMAA is added to your Part B and Part D premiums.

Here’s a simplified look at the 2025 income thresholds for individual filers:

Note: These amounts are estimates and may change slightly each year.

What about Medicare Advantage — does IRMAA Apply?

Yes — even if you’re enrolled in a Medicare Advantage (Part C) plan, IRMAA can still affect you.

Here’s how:

1. Part B IRMAA:
   Everyone on a Medicare Advantage plan must pay their Part B premium, and if your income is high, your Part B IRMAA is added to it. This charge comes directly from Social Security — not your plan.
2. Part D IRMAA:
   It applies if your plan includes drug coverage. Most Medicare Advantage plans are MAPDs (Medicare Advantage Prescription Drug), meaning they include prescription drug coverage. If that’s the case, you’ll also owe the Part D IRMAA — again, this is billed by Social Security, not by your insurance company.

Let’s look at a real-world example: You choose a $0-premium Medicare Advantage plan that includes drug coverage. If your income is $140,000, here’s what you’d owe:

• Part B premium + IRMAA: About $349.40/month
• Part D IRMAA:  About $33.30/month
  Even with a “$0 premium plan,” your monthly Medicare costs exceed $380 — because of IRMAA.

How IRMAA might affect you

If you’re not expecting it, IRMAA can feel like a penalty, especially if your income was temporarily high due to a one-time event like selling a home, cashing out a retirement account, or receiving a large bonus before retirement.

Some retirees also get caught off guard when Required Minimum Distributions (RMDs) or investment income push their MAGI into a higher IRMAA bracket.

What can you do about it?

1. Request a reconsideration
   If your income has gone down due to a life-changing event (such as retirement, divorce, or death of a spouse), you can file Form SSA-44 to ask Social Security to reassess your IRMAA.
2. Plan ahead with a tax professional
   Strategic planning before and during retirement can help keep your MAGI below IRMAA thresholds. Consider how you withdraw funds from retirement accounts or when you recognize capital gains.
3. Check your SSA letter annually
   Each year, the SSA sends out a notice if IRMAA will apply. Don’t ignore this letter — it includes your right to appeal.

 The bottom line

IRMAA is not a penalty — it’s a policy that adjusts Medicare premiums based on income. But for many, it’s a surprise that can affect their retirement budget.

This is especially true for Medicare Advantage enrollees, who often assume a “$0 premium” plan means zero cost. In reality, your income determines much of what you’ll pay behind the scenes — not just your plan choice.

By staying informed and planning ahead, you can avoid unexpected costs and better manage your retirement finances.

Have questions about IRMAA or want help evaluating your Medicare options? Visit Insure.com/medicare and talk to an agent to explore guides, tools, and expert insights tailored to you.