Have you ever been surprised by an increase in your Medicare premium? Or is it your first year on Medicare and you’re wondering why your premium is surprisingly high? If you’re like most people, you may be unaware of the income-related monthly adjustment amount (IRMAA), a surcharge added to Medicare Part B and Part D. Since 2007, high-income Medicare recipients have been required to pay the surcharge in addition to their monthly premium. Even if you’re not yet near your desired retirement age, understanding the income-related monthly adjustment amount (IRMAA) – and its appeals process – can help you craft a proactive plan that might reduce your future Medicare premiums.
Understanding IRMAA’s sliding scale and income brackets
Early projections for Medicare’s 2025 IRMAA are out, and now is the time to review your 2023 tax return to see if you might owe an additional surcharge in 2025. The IRMAA uses a sliding scale with five income brackets, capping at $500,000 for single filers and $750,000 for joint filers. Updated annually based on inflation, IRMAA calculations are determined by your income from two years prior. That means for 2025, your 2023 income will decide if you’re liable for this additional charge.
Currently, the projected IRMAA brackets and surcharge amounts for 2025 are estimates, as official figures are usually released by Medicare each fall in time for Open Enrollment, which started October 15. Final numbers for the Part B premium, Part A deductible, and the IRMAA are typically confirmed around then, although the Centers for Medicare & Medicaid Services (CMS) has yet to publish final rates for 2025.
Projected premiums for Medicare Advantage and Part D plans in 2025
There’s good news for Medicare beneficiaries on average Part D premiums. Premiums are expected to drop by $7.45, from $53.95 in 2024 to $46.50 in 2025. The average premium for standalone Part D plans will decrease from $41.63 to $40.00.1
For Medicare Advantage plans, including those with drug coverage, the average premium will dip from $18.23 to $17.00 per month. CMS estimates that 83% of enrollees will see no change or a reduction in their premiums in 2025 if they stick with their current plan.1
The IRMAA applies to all Medicare beneficiaries meeting income criteria, even those on Medicare Advantage plans, which include the Part D IRMAA if the plan covers prescriptions.
How IRMAA is determined
You can appeal your IRMAA if you believe the calculation was incorrect or if you’ve experienced a life-changing event that reduced your household income. This calculation is renewed annually, meaning your IRMAA can fluctuate or disappear as your income changes.
For Medicare purposes, you can find your Modified Adjusted Gross Income (MAGI) by locating your adjusted gross income (AGI) on line 11 of Form 1040 and adding tax-exempt interest income from line 2a. Common sources for retirees include IRA withdrawals, dividends, and the taxable portion of Social Security benefits.
Appealing the IRMAA for Medicare Parts B and D
If you can demonstrate to Social Security that a “life-changing event” has affected your income, they may reduce or waive the surcharge. These events include:
- Marriage
- Divorce/annulment
- Death of a spouse
- Work stoppage
- Work reduction
- Loss of income-producing property
- Loss of pension income
- Employer settlement payment
For more information, contact your advisor.
2025 IRMAA brackets and surcharges
Medicare’s official 2025 IRMAA brackets will be set in late 2024, based on your 2023 filing status and income, using Consumer Price Index (CPI) data to adjust for inflation. Here’s an overview of projected IRMAA amounts and income thresholds:
Projected IRMAA for 2025
| Single | Married filing jointly | Part B Income-Related Monthly Adjustment Amount | Part D Income-Related Monthly Adjustment Amount |
| Less than or equal to $106,000 | Less than or equal to $212,000 | $0.00 | $0.00 |
| Greater than $106,000 and less than or equal to $133,000 | Greater than $212,000 and less than or equal to $265,000 | $71.90 | $13.30 |
| Greater than $133,000 and less than or equal to $166,000 | Greater than $265,000 and less than or equal to $332,000 | $179.90 | $34.30 |
| Greater than $166,000 and less than or equal to $199,000 | Greater than $332,000 and less than or equal to $398,000 | $287.80 | $55.40 |
| Greater than $199,000 and less than or equal to $500,000 | Greater than $398,000 and less than or equal to $750,000 | $396.00 | $76.50 |
| Greater than or equal to $500,000 | Greater than or equal to $750,000 | $432.00 | $83.50 |
Projections for 2025, published on IRMAA.com, rely on data from the 2024 Medicare Trustees’ report and the Consumer Price Index (CPI) updates through July 2024. These numbers, revised on August 14, 2024, show anticipated adjustments based on CPI data and inflation trends. Historically, IRMAA brackets rise by about 2.55% annually, but this year’s Medicare costs, including surcharges, may see a nearly 6% increase.
For those who file separately, the IRMAA surcharge is higher, with only two income brackets. Beneficiaries with income over $103,000 but under $397,000 will pay a Part B surcharge of $396.00 and a Part D surcharge of $76.50. Income over $403,000 raises these to $432.00 for Part B and $83.50 for Part D.
IRMAA for 2024
| Single | Married filing jointly | Part B Income-Related Monthly Adjustment Amount | Part D Income-Related Monthly Adjustment Amount |
| Less than or equal to $103,000 | Less than or equal to $206,000 | $0.00 | $0.00 |
| Greater than $103,000 and less than or equal to $129,000 | Greater than $206,000 and less than or equal to $258,000 | $69.90 | $12.90 |
| Greater than $129,000 and less than or equal to $161,000 | Greater than $258,000 and less than or equal to $322,000 | $174.70 | $33.30 |
| Greater than $161,000 and less than or equal to $193,000 | Greater than $322,000 and less than or equal to $386,000 | $279.50 | $53.80 |
| Greater than $193,000 and less than $500,000 | Greater than $386,000 and less than $750,000 | $384.30 | $74.20 |
| Greater than or equal to $500,000 | Greater than or equal to $750,000 | $419.30 | $81.00 |
The appeals process
In some cases, such as after a “life-changing event,” you can appeal an increase in your Medicare premium. If you’re planning to retire in 2025 and expect a significant drop in income, it may be time to consider the appeals process.
For example, retirement is a valid reason for the Social Security Administration to consider lowering your premium if your income decreases significantly post-retirement. While retirement is the most common life event that could result in a surcharge reduction, other life changes like reduced work hours, marriage, divorce, or the death of a spouse may also support an appeal.
However, if your income increases due to a one-time event rather than a life change, an appeal may not succeed. Situations unlikely to qualify for a premium reduction include high capital gains from a property sale, deferred IRA withdrawals, or a Roth IRA conversion.
It’s important to know how these one-time events could affect your premium so you can weigh the financial impact. Planning may help you avoid crossing into a higher premium range. Remember that for the one-time events, the higher income will impact your premium for only one year, beginning two years after the income spike.
If you believe you have a case for appealing a higher Medicare premium, you can request a review by completing Form SSA-44 and providing supporting documents; these can be faxed or mailed to the Social Security Administration office. If you would like to speak with a Social Security representative, you can find the phone, fax, and address information for local offices here.
Paying your IRMAA
IRMAA payments for Medicare Parts B and D are automatically deducted from your Social Security check, unless you’ve deferred benefits or your Social Security check doesn’t cover the full IRMAA amount, in which case CMS will send a bill. You can pay your IRMAA charges online through your MyMedicare account or your bank’s bill pay service. MyMedicare is secure and fee-free, but you’ll need your Medicare number and Part A start date from your Medicare card to set up an account.
Planning ahead to minimize IRMAA risk
Since income from retirement savings like IRAs, 401(k)s, and Social Security count toward IRMAA thresholds, even a slight increase in MAGI could trigger the surcharge. To avoid IRMAA-related costs, carefully consider timing any Roth conversions or major withdrawals. Strategies like managing required minimum distributions (RMDs) can help reduce income that might otherwise push you over the IRMAA threshold. For more information, speak with your advisor.
Medicare guidance for clients of Mercer Advisors
At Mercer Advisors, we prioritize improving financial outcomes and holistic well-being. That’s why we’ve partnered with Chapter, a Medicare advisor, to offer our clients age 64 and older free access to a dedicated Medicare team for personalized plan assessments. With over 24,000 coverage options, Chapter’s Medicare experts can help guide you in choosing the best plan for your health and financial needs. Contact your advisor to connect with Chapter’s team and make informed Medicare choices with ease. If you are not a client and would like to learn more, let’s talk.
