Key Takeaways

• In 2025, Medicare beneficiaries with higher incomes are paying significantly more for their premiums due to IRMAA, with tiers that adjust annually based on income thresholds.

• Understanding how IRMAA works, when it applies, and how to possibly appeal or plan around it can save you thousands of dollars over your retirement.

What Is IRMAA and Why It Matters Now

The Income-Related Monthly Adjustment Amount (IRMAA) is a surcharge added to your Medicare Part B and Part D premiums if your income exceeds certain thresholds. While it affects only a portion of beneficiaries, the financial impact can be significant—especially if you’re not expecting it.

In 2025, IRMAA continues to apply based on your Modified Adjusted Gross Income (MAGI) from two years prior, meaning your 2023 tax return determines your current IRMAA bracket. This delay catches many retirees off guard, particularly if you had a high income in 2023 but have since retired.

IRMAA is structured in income brackets that increase in steps. If your income crosses even slightly into a higher bracket, your premiums can increase sharply.

2025 Income Brackets for IRMAA

The income thresholds for IRMAA in 2025 are:

• Individuals: Begins at $106,000

• Married couples filing jointly: Begins at $212,000

As your income increases beyond these thresholds, you pay higher premiums in set tiers. There are typically five IRMAA brackets, and each results in progressively higher surcharges.

How IRMAA Affects Part B and Part D Premiums

You already pay the standard monthly premium for Medicare Part B. In 2025, this amount is $185. But if you’re subject to IRMAA, your Part B premium increases based on your income tier. Similarly, IRMAA applies to your Medicare Part D (prescription drug) coverage, adding a separate surcharge.

These IRMAA surcharges are paid directly to Medicare—even if you’re enrolled in a plan through a private provider. That means the surcharge is added on top of whatever your plan premium is.

Here’s what IRMAA does not affect:

• Your eligibility for Medicare

• Your ability to switch plans during enrollment periods

However, the financial pressure from IRMAA can make long-term budgeting more complicated, especially for those living on fixed incomes.

Planning Ahead to Avoid IRMAA Surprises

One of the biggest challenges with IRMAA is the delay between income and billing. Because your 2023 income affects your 2025 premiums, your recent retirement or income drop may not be reflected yet.

To avoid this surprise, consider these planning tips:

• Manage taxable income carefully: Distributions from retirement accounts, capital gains, and even Social Security income can all push you over an IRMAA threshold.

• Consider Roth conversions strategically: While converting traditional retirement savings to Roth IRAs can reduce taxable income later, large conversions can cause temporary spikes.

• Plan timing of asset sales or withdrawals: If you’re selling investments or taking large distributions, think about how they’ll affect your MAGI two years later.

Working with a tax advisor or financial planner familiar with Medicare can be especially helpful when making these decisions.

Life-Changing Events and How to Appeal IRMAA

If you had a high income in 2023 but have since experienced a qualifying life event, you may be able to reduce or eliminate your IRMAA surcharge. Medicare allows you to file a reconsideration request based on events such as:

• Retirement

• Death of a spouse

• Divorce

• Work reduction

• Loss of income-producing property

You must file Form SSA-44 with supporting documentation to request a reduction. While not guaranteed, appeals are often successful when clear evidence of a permanent income change is provided.

Keep in mind:

• The appeal affects IRMAA prospectively, not retroactively.

• You may need to repeat the appeal process if your income situation continues to evolve.

IRMAA and Your Retirement Timeline

Because IRMAA is based on a two-year look-back, it often affects new retirees most severely in their early Medicare years. For example:

• If you retire at age 65 in 2025 but had a high income in 2023, you’ll likely face IRMAA.

• By 2027, your MAGI from 2025 may reflect your lower retirement income, potentially lowering or eliminating the surcharge.

This means IRMAA can cause a financial “hangover” from your working years, even if you’re no longer earning that income.

Budgeting for the True Cost of Medicare

When planning for retirement healthcare expenses, it’s easy to underestimate the impact of IRMAA. You might plan for standard Medicare premiums, only to face significantly higher costs.

Here’s what to factor into your retirement health budget:

• Standard Part B premium ($185 in 2025)

• IRMAA surcharges (can add hundreds more)

• Part D premiums plus IRMAA

• Supplementary plan costs (if any)

• Out-of-pocket costs like deductibles and copays

If you fall into an IRMAA bracket, your combined monthly premium costs could be double—or more—than what you initially expected. Building this into your budget early helps avoid unpleasant surprises later.

IRMAA Bracket Management for Couples

Joint filers face a wider income threshold, but also more complexity. Couples often find themselves bumping into IRMAA because of combined income sources like:

• Two Social Security checks

• Required minimum distributions (RMDs)

• Pensions or annuities

A few strategies for managing as a couple:

• Split income strategically: If only one spouse is over 65, consider deferring distributions for the younger spouse.

• Coordinate Roth conversions: Don’t stack conversions in one year.

• Reassess income every year: What was a good strategy in 2023 may not apply in 2025.

This annual planning becomes part of your overall retirement tax strategy.

IRMAA Notifications and What to Watch For

If you’re subject to IRMAA, you’ll receive a notice from the Social Security Administration (SSA). This letter explains:

• The income figures used to calculate IRMAA

• Your adjusted premium amounts

• Appeal rights if you believe the decision is incorrect

Review this letter carefully. Errors do happen, especially if your tax return had unusual or one-time items like:

• Large capital gains

• Severance packages

• Business sales

If you disagree with the calculation, request a review immediately. The sooner you act, the sooner your premium can be adjusted.

What Happens If You Ignore IRMAA

IRMAA is not optional. If you don’t pay the full adjusted premium (standard premium + IRMAA surcharge), your Medicare coverage can be interrupted.

Here’s what to avoid:

• Ignoring SSA notices

• Failing to appeal during the allowed window

• Assuming IRMAA won’t apply just because you’re retired

If your surcharge is incorrect, use the appeals process. But if it’s accurate, make sure you budget for the adjusted premiums.

IRMAA Can Follow You Into the Future

Even one high-income year can cause multiple years of elevated premiums. For example, a large Roth conversion or business sale in 2023 could impact your premiums in both 2025 and 2026 if it inflates your MAGI substantially.

In some cases, ongoing events—like rental income or capital gains from investments—can keep pushing you back into IRMAA territory. It’s not just a one-time hit but potentially a recurring issue without proper planning.

Regular income reviews, paired with forecasting two years ahead, are essential tools for minimizing IRMAA’s long-term effects.

The Bigger Picture for Medicare Planning

IRMAA is just one part of the Medicare cost landscape, but it’s one of the most overlooked. Because it’s tied to income rather than healthcare use, many assume it won’t apply once they’re no longer working. But without proactive tax planning, even a modest retirement strategy can push you into higher IRMAA tiers.

Think of IRMAA as the tax you didn’t expect—one that shows up when you least want it. The good news is, with the right planning and regular reviews, it’s possible to minimize its impact.

Help Is Available If You’re Facing IRMAA Now

If you’re approaching Medicare enrollment, dealing with an unexpected IRMAA surcharge, or trying to plan for future income fluctuations, speak with a licensed agent listed on this website. They can help you understand your current exposure and review your Medicare options with IRMAA in mind.

Making informed decisions now can lead to significant savings over time.