The 2025 IRMAA Brackets for Medicare
Jan 12, 2025
If your income surpasses certain thresholds, you may face additional charges known as the Income-Related Monthly Adjustment Amount (IRMAA). This surcharge applies to Medicare Part B and Part D premiums, increasing costs for higher-income beneficiaries. Here’s a guide to understanding the 2025 IRMAA brackets and how they might affect you.
What Are the 2025 IRMAA Brackets?
The IRMAA for Medicare Part B and Part D is based on your income. Medicare assesses your modified adjusted gross income (MAGI), reported on your tax return from two years prior, to determine if these additional charges apply.
How Is MAGI Calculated for IRMAA?
Understanding how your Modified Adjusted Gross Income (MAGI) is calculated is essential for determining whether IRMAA applies. MAGI is calculated as follows:
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Start with Adjusted Gross Income (AGI): Your AGI is the figure reported on line 11 of IRS Form 1040. It includes your total income from wages, investments, retirement distributions, and other taxable sources, minus specific adjustments like contributions to certain retirement accounts or health savings accounts.
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Add Tax-Exempt Interest Income: Include tax-exempt interest, such as income from municipal bonds. This is reported on line 2a of IRS Form 1040.
Important Note: Despite search results provided by AI, non-taxable Social Security benefits are not included in the MAGI calculation for IRMAA purposes.
Formula for MAGI:
Example: If your AGI is $100,000 and you received $5,000 in tax-exempt municipal bond interest, your MAGI would be $105,000.
Which Tax Year is Used for IRMAA Calculations?
The MAGI used to determine your IRMAA is based on the most recent tax information available from the IRS, typically from two years prior to the year your Medicare premiums are being set. For example, your 2025 IRMAA will generally be calculated using income data from your 2023 tax return. In some cases, if the IRS cannot provide your 2023 tax information, data from your 2022 return may be used, but not data older than three years.
The Challenge of IRMAA Tax Thresholds in Retirement Planning
One of the complexities of planning around IRMAA is that the income thresholds used to determine your surcharge are based on your tax return from two years prior. This delay creates uncertainty when implementing strategies like Roth conversions, capital gains harvesting, or other retirement income planning techniques. Since the thresholds for a given year aren’t finalized until much later, you won’t know if you’ve exceeded the limit until two years after the fact.
To navigate this uncertainty, we recommend using the current year's thresholds as a guideline, with the understanding that inflation adjustments will likely increase these limits in future years. However, it’s essential to account for potential surprises, such as unexpected income from bonuses, capital gain distributions, or other income items that could push your income higher than anticipated.
Medicare Part B IRMAA
Medicare Part B premiums are designed to cover 25% of program costs, with the remainder funded by taxpayers. However, beneficiaries with higher incomes may shoulder a larger share—up to 85% of the program’s costs. For 2025, the standard monthly premium for Part B is $185. Individuals with a 2023 income exceeding $106,000 (or $212,000 for couples filing jointly) will see premiums ranging from $259 to $628.90, depending on their income level (see chart below).
Medicare Part D IRMAA
Part D premiums, set by private insurers, also include an IRMAA surcharge for higher-income beneficiaries. In 2025, individuals with 2023 incomes over $106,000 (or $212,000 for couples) will pay an additional charge between $13.70 and $85.80, on top of their insurer’s premium.
Note: These income brackets typically adjust annually based on inflation.
Does Medicare Advantage Include IRMAA?
Some people mistakenly think that choosing Medicare Advantage exempts them from IRMAA. However, this surcharge applies universally to all Medicare beneficiaries who exceed income thresholds. Even with Medicare Advantage, you’ll still pay the Part B premium of $185 for 2025, plus any applicable IRMAA charges. If your Advantage plan includes prescription drug coverage, the Part D surcharge will also apply.
How to Determine If You Owe IRMAA in 2025
You don’t need to inquire with Medicare to determine if you owe IRMAA. The Social Security Administration (SSA) will notify you. Here’s how the process works:
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Initial Enrollment: Everyone starts with the standard premiums for Part B and D.
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Pre-Determination Notice: If your income exceeds the thresholds, SSA will send a letter explaining your IRMAA charges. You’ll have 10 days to contest the information if it seems incorrect.
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Final Determination Notice: After the pre-determination phase, SSA issues a formal notice that includes details on how to appeal if necessary.
How to Appeal an IRMAA Decision
If you believe the IRMAA calculation is wrong, you have the right to appeal. Contact SSA to request a review of the decision by calling 800-772-1213 or submitting Form SSA-44.
To support your appeal, you’ll need to demonstrate that:
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The tax data used was outdated or inaccurate.
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Your income has significantly declined due to one of these life-changing events:
- Loss of a spouse
- Marriage or divorce
- Job loss or reduction in hours
- Loss of property income
- Reduction in certain pension benefits
Paying the 2025 IRMAA Surcharge
If you receive Social Security benefits, the IRMAA surcharge will automatically be deducted from your monthly payment. For those who don’t have their premiums deducted, Medicare will send a bill for the Part B and D surcharges.
Additional Resources for IRMAA Guidance
If you’d like to learn more about IRMAA and Medicare premiums, here are some helpful links:
- Higher-Income Medicare Premiums Overview
- SSA Guidelines on IRMAA
- Appealing an IRMAA Determination with Form SSA-44
Planning ahead can help you anticipate and manage IRMAA costs, ensuring you’re prepared for any premium adjustments tied to your income.
