[Updated on July 11, 2024 after the release of the inflation number for June 2024. The next update will be on August 14, 2024.]
Seniors 65 or older can sign up for Medicare. The government calls people who receive Medicare beneficiaries. Medicare beneficiaries must pay a premium for Medicare Part B which covers doctors’ services and Medicare Part D which covers prescription drugs. The premiums paid by Medicare beneficiaries cover about 25% of the program costs for Part B and Part D. The government pays the other 75%.
What Is IRMAA?
Medicare imposes surcharges on higher-income beneficiaries. The theory is that higher-income beneficiaries can afford to pay more for their healthcare. Instead of doing a 25:75 split with the government, they must pay a higher share of the program costs.
The surcharge is called IRMAA, which stands for Income-Related Monthly Adjustment Amount. This applies to both Traditional Medicare (Part B and Part D) and Medicare Advantage plans.
According to the Medicare Trustees Report, 7% of Medicare Part B beneficiaries paid IRMAA. The extra premiums they paid lowered the government’s share of the total Part B and Part D expenses by two percentage points. Big deal?
MAGI
The income used to determine IRMAA is your Modified Adjusted Gross Income (MAGI) — which is your AGI plus tax-exempt interest and dividends from muni bonds — from two years ago. Your 2022 MAGI determines your IRMAA in 2024. Your 2023 MAGI determines your IRMAA in 2025. Your 2024 MAGI determines your IRMAA in 2026.
There are many definitions of MAGI for different purposes. The MAGI for subsidies on health insurance from the ACA marketplace includes untaxed Social Security benefits. The MAGI for IRMAA doesn’t include untaxed Social Security benefits. If you read somewhere else that says that untaxed Social Security benefits are included in MAGI, they’re talking about a different MAGI, not the MAGI for IRMAA.
You can use Calculator: How Much of My Social Security Benefits Is Taxable? to calculate the taxable portion of your Social Security benefits.
As if it’s not complicated enough while not moving the needle much, IRMAA is divided into five income brackets. Depending on the income, higher-income beneficiaries pay 35%, 50%, 65%, 80%, or 85% of the program costs instead of 25%. As a result, they pay 1.4 times, 2.0 times, 2.6 times, 3.2 times, or 3.4 times the standard Medicare premium.
The threshold for each bracket can cause a sudden jump in the monthly premium amount you pay. If your income crosses over to the next bracket by $1, all of a sudden your Medicare premiums can jump by over $1,000/year. If you are married filing a joint tax return and both of you are on Medicare, $1 more in income can make the Medicare premiums jump by over $1,000/year for each of you.
* The last bracket on the far right isn’t displayed in the chart.
So if your income is near a bracket cutoff, see if you can manage to keep it down and make it stay in a lower bracket. Using the income from two years ago makes it more difficult to manage.
2024 IRMAA Brackets
The income on your 2022 IRS tax return (filed in 2023) determines the IRMAA you pay in 2024.
Part B Premium | 2024 Coverage (2022 Income) |
---|---|
Standard | Single: <= $103,000 Married Filing Jointly: <= $206,000 Married Filing Separately <= $103,000 |
1.4x Standard | Single: <= $129,000 Married Filing Jointly: <= $258,000 |
2.0x Standard | Single: <= $161,000 Married Filing Jointly: <= $322,000 |
2.6x Standard | Single: <= $193,000 Married Filing Jointly: <= $386,000 |
3.2x Standard | Single: < $500,000 Married Filing Jointly: < $750,000 Married Filing Separately < $397,000 |
3.4x Standard | Single: >= $500,000 Married Filing Jointly: >= $750,000 Married Filing Separately >= $397,000 |
Source: Medicare Costs, Medicare.gov
The standard Part B premium is $174.70 in 2024. Higher-income Medicare beneficiaries also pay a surcharge for Part D. The income brackets are the same. The Part D IRMAA surcharges are relatively smaller in dollars.
I also have the tax brackets for 2024. Please read 2024 Tax Brackets, Standard Deduction, Capital Gains, etc. if you’re interested.
2025 IRMAA Brackets
We have 10 data points out of 12 right now for the IRMAA brackets in 2025 (based on 2023 income). However, you can make some estimates and give yourself some margin to stay clear of the cutoff points.
If annualized inflation from July 2024 through August 2024 is 0% (prices staying flat at the latest level) or 3% (approximately a 0.25% increase every month), these will be the 2025 numbers:
Part B Premium | 2025 Coverage (2023 Income) 0% Inflation | 2025 Coverage (2023 Income) 3% Inflation |
---|---|---|
Standard | Single: <= $106,000 Married Filing Jointly: <= $212,000 Married Filing Separately <= $106,000 | Single: <= $106,000 Married Filing Jointly: <= $212,000 Married Filing Separately <= $106,000 |
1.4x Standard | Single: <= $133,000 Married Filing Jointly: <= $266,000 | Single: <= $134,000 Married Filing Jointly: <= $268,000 |
2.0x Standard | Single: <= $166,000 Married Filing Jointly: <= $332,000 | Single: <= $167,000 Married Filing Jointly: <= $334,000 |
2.6x Standard | Single: <= $200,000 Married Filing Jointly: <= $400,000 | Single: <= $200,000 Married Filing Jointly: <= $400,000 |
3.2x Standard | Single: < $500,000 Married Filing Jointly: < $750,000 Married Filing Separately < $394,000 | Single: < $500,000 Married Filing Jointly: < $750,000 Married Filing Separately < $394,000 |
3.4x Standard | Single: >= $500,000 Married Filing Jointly: >= $750,000 Married Filing Separately >= $394,000 | Single: >= $500,000 Married Filing Jointly: >= $750,000 Married Filing Separately >= $394,000 |
Because the formula compares the average of 12 monthly CPI numbers over the average of 12 monthly CPI numbers in a base period, even if prices stay the same in the following months, the average of the next 12 months will still be higher than the average in the previous 12 months.
To use exaggerated numbers, suppose gas prices went up from $3/gallon to $3.50/gallon over the last 12 months. The average gas price in the last 12 numbers was maybe $3.20/gallon. When gas price inflation becomes 0%, it means it stays at the current price of $3.50/gallon. The average for the next 12 months is $3.50/gallon. Brackets based on an average gas price of $3.50/gallon in the next 12 months will be higher than brackets based on an average gas price of $3.20/gallon in the previous 12 months.
If you really want to get into the weeds of the methodology for these calculations, please read this reply on comment page 2 and this other comment on page 4.
2026 IRMAA Brackets
We have no data right now for the IRMAA brackets in 2026 (based on 2024 income). We can only make some preliminary estimates and plan for some margin to stay clear of the cutoff points.
If annualized inflation from July 2024 through August 2025 is 0% (prices staying flat at the latest level) or 3% (approximately a 0.25% increase every month), these will be the 2026 numbers:
Part B Premium | 2026 Coverage (2024 Income) 0% Inflation | 2026 Coverage (2024 Income) 3% Inflation |
---|---|---|
Standard | Single: <= $107,000 Married Filing Jointly: <= $214,000 Married Filing Separately <= $107,000 | Single: <= $109,000 Married Filing Jointly: <= $218,000 Married Filing Separately <= $109,000 |
1.4x Standard | Single: <= $135,000 Married Filing Jointly: <= $270,000 | Single: <= $138,000 Married Filing Jointly: <= $276,000 |
2.0x Standard | Single: <= $168,000 Married Filing Jointly: <= $336,000 | Single: <= $172,000 Married Filing Jointly: <= $344,000 |
2.6x Standard | Single: <= $202,000 Married Filing Jointly: <= $404,000 | Single: <= $206,000 Married Filing Jointly: <= $412,000 |
3.2x Standard | Single: < $500,000 Married Filing Jointly: < $750,000 Married Filing Separately < $393,000 | Single: < $500,000 Married Filing Jointly: < $750,000 Married Filing Separately < $391,000 |
3.4x Standard | Single: >= $500,000 Married Filing Jointly: >= $750,000 Married Filing Separately >= $393,000 | Single: >= $500,000 Married Filing Jointly: >= $750,000 Married Filing Separately >= $391,000 |
Roth Conversion Tools
When you manage your income by doing Roth conversions, you must watch your MAGI carefully to avoid accidentally crossing one of these IRMAA thresholds by a small amount and triggering higher Medicare premiums.
I use two tools to help with calculating how much to convert to Roth. I wrote about these tools in Roth Conversion with TurboTax What-If Worksheet and Roth Conversion with Social Security and Medicare IRMAA.
Nickel and Dime
The standard Medicare Part B premium is $174.70/month in 2024. A 40% surcharge on the Medicare Part B premium is about $840/year per person or about $1,700/year for a married couple both on Medicare.
In the grand scheme, when a couple on Medicare has over $206,000 in income, they’re already paying a large amount in taxes. Does making them pay another $1,700 make that much difference? It’s less than 1% of their income but nickel-and-diming just makes people mad. People caught by surprise when their income crosses over to a higher bracket by just a small amount are angry at the government. Rolling it all into the income tax would be much more effective.
Oh well, if you are on Medicare, watch your income and don’t accidentally cross a line for IRMAA.
IRMAA Appeal
If your income two years ago was higher because you were working at that time and now your income is significantly lower because you retired (“work reduction” or “work stoppage”), you can appeal the IRMAA initial determination. The “life-changing events” that make you eligible for an appeal include:
- Death of spouse
- Marriage
- Divorce or annulment
- Work reduction
- Work stoppage
- Loss of income from income producing property
- Loss or reduction of certain kinds of pension income
You file an appeal with the Social Security Administration by filling out the form SSA-44 to show that although your income was higher two years ago, you had a reduction in income now due to one of the life-changing events above. For more information on the appeal, see Medicare Part B Premium Appeals.
Not Penalized For Life
If your income two years ago was higher and you don’t have a life-changing event that makes you qualify for an appeal, you will pay the higher Medicare premiums for one year. IRMAA is re-evaluated every year as your income changes. If your higher income two years ago was due to a one-time event, such as realizing capital gains or taking a large withdrawal from your IRA, when your income comes down in the following year, your IRMAA will also come down automatically. It’s not the end of the world to pay IRMAA for one year.
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Jeff Enders says
As a long time Turbo Tax user myself, there is nothing special or unique about the answer to your question. Simply enter the 1099 you receive as you normally would.
Turbo Tax will ask you what you did with the money and that is where you will respond that some went to satisfy QCDs and then the dollar amount.
There is no tax reporting requirement to confirm that you satisfied the RMD prior to doing a Roth Conversion. In fact, if both come from the same Trad IRA account, there may not even be separate 1099s as both transactions are taxable events.
Further, I would suggest that since this is a IRMAA Community Board that questions about tax reporting be posted on the Turbo Tax community board – I suspect you’ll get better responses from tax experts that way.
https://ttlc.intuit.com/community/home/misc/03/en-us
Gary says
Jeff, that’s the way I understand the 1099 reporting too. I did some research with my brokers, because 2025 will be my first RMD year. It appears that the only enforcement of the RMD before Roth Conversion requirement, is your conscience and your next IRS audit. There is no reporting to the IRS of the dates of these events, only their published 1099s.
Ros says
I have done Roth conversion since 2012 except for last year. It is mentioned in a 1099 as a distribution and taxable amount. You have a choice of them paying the tax or not. You have a choice with your RMD if you want taxes withheld also when you start that.
Jeff Enders says
Gary, that would be correct- it is your conscience and if the IRS audits you.
Because you may have IRAs at different firms, all an IRA Trustee can do is a) remind the client that RMDs must be satisfied prior to doing a Roth Conversion each year and b) ask their client whether they have satisfied the RMD prior to executing any Roth Conversion request.
Gary says
Jeff, that’s the way my brokers described it too. In fact, their form for requesting a Roth conversion will have a check box for you to sign, designating that you have already met you RMDs. 😀
Ros says
If they took the taxes out that amount will be in the box.
Ros says
Best not to have the taxes take out of the conversion. Pay they separately and put of the conversion in the Roth. Use TAXABLE FUNDS IF YOU CAN. Don’t defeat your purpose.
Paula says
Well, my IRA trustee won’t let me do an Roth conversion before I take my RMD. I suspect this is common.
ros says
Before you do a conversion or move your traditional IRA to another place you have to take
the RMD.
I take my RMD in the 2nd week of Dec and the next day or week I do the conversion. They put the conversion into a Roth Savings and the first week of the year I put it in a existing Roth CD if the interest rate is good with the them that they allow in Jan otherwise I shop for a better rate. I am in my 80’s, and doing it for the kids who are in their 60’s.
Nick says
Harry, I always look forward to your monthly updates. Timely and accurate.
The only suggestion I would have is to add a decimal to the data once 8-9 data points are in
This might provide a clearer picture of where the average might fall after 12 data points.
for example, is 200 for the 2.6X standard really 199.5 or 200.4 ? Just to see where the margin is at on the plus or negative side of 200
Thanks
Nick
Jeff Enders says
Nick – I am just curious…. why would it matter? 2023 MAGI is “locked in”. So whether the final 12 month number for 2025 is $199,000 or $200,000, what action can individual take to change the 2025 IRMAA tier they land in? I don’t think there is one.
again, I am just curious what one would do with that additional information.
The Wizard says
Jeff,
Correct about 2023 income and 2025, so we’re not looking at that. We’re looking at 2024 MAGI and how it will impact IRMAA in 2026…
Jeff Enders says
The Wizard, the $200k that Nick asked about is the 2023 income / 2025 tranche for 2.6x…..where there are 10 actual datapoints.
we have no “locked in” 2024 MAGI and no datapoints for 2026 IRMAA … so that isn’t the 9-10 actual datapoints Nick is asking about.
At the 2.6x tranche for filing Single, Harry currently projects $200k / $200k for 2025 IRMAA (10 actual datapoints) and projects $202k / $206k for 2026 IRMAA (-0- actual datapoints).
Nick says
To Jeff, you are correct about 2023 income being locked in but, the 2025 IRMAA is not.
So I use the 2025 IRMAA estimate at 10 data points to best gage how much room I have now (lets say Q3) rather than wait till the Oct/Nov final official release from Medicare. For example, might prefer to do another Roth conversion now rather than wait till October, since my stocks or bonds might trade at a higher value in 3-4 months
So knowing whether Harry’s number (estimate) is 199.5 or 200.4, that is $900 of ‘spread’, and could be useful to know now.
The other reason is Medicare rounds off to the nearest $1000. Lets say it was $200.3, and Medicare rounded to $200. Knowing it was 200.3 vs 199.5 gives me greater certainty for the following year’s IRMAA estimates, if I just assume a 3% increase on both values for the next year ( 200.3 gives 206.3, whereas 199.5 gives 205.485 which in Medicare’s eyes would yield 206 rounded, or 205 rounded. (assumes Medicare’s starting point is decimal based and not rounded, that I do not know !).. I know, a little picky, but am borderline at the 200 level, so try to maximize my Roth conversions, and maintain income at < 200K
The Wizard says
Nick,
It seems like you might not understand how your MAGI for various years impacts your IRMAA for various years.
While it’s true that we have just ten of twelve monthly inflation numbers as of today for 2025’s IRMAA adjustments, there’s nothing actionable that you can do at this time to tweak your 2023 MAGI; that ship sailed a while ago.
You mention doing Roth conversions in the next few months. That’s fine but that will impact your 2024 MAGI and eventually determine your 2026 IRMAA tier.
What I do is wait until mid December once we have the first three monthly inflation data points for the next IRMAA adjustment cycle. I then have a good handle on my income for the year and then do a modest Roth conversion to get my MAGI up close to but not over Harry’s 0% projection.
This is the best that we can do under the circumstances…
Jeff Elders says
The Wizard – exactly my point. Thx for articulating so clearly!
Chris says
IF you are needing to know whether the number is 199.5 or 200.5 you are just playing with fire and will get burned eventually. Spend your time on something more productive and just stay under the 0% estimate.
Nancy Memmel says
I guess it depends on just how critical it is to you to remain below that threshold. We, too, are strategizing to convert but are targeting for an income that is a couple thousand below where we think inflation is going to take the tier values. If we turn out to be wrong when the the values a re announced in fall, it isn’t a disaster, being for 1 year, and we may just increase conversions to fill more of that tier. (If you land in a tier, you may as well be near the top of the tier as just a dollar over the threshold!) More important to get the conversions done than avoid all IRMAA, though ideally we’d like to do both, and this is the project of only a couple of years more, not something we’ll have to work at for decades.
The Wizard says
In reply to Nancy:
When the new IRMAA tiers are announced this October, they are the tiers for 2025 based on your MAGI in 2023. So if you were $10 over a tier threshold, you can’t just go back to 2023 and do additional Roth conversions to get up close to the next threshold.
Instead, you’ll need use Harry’s estimates this December to get your 2024 MAGI up to where you want it based on reasonable projections of where 2026 IRMAA tiers might be…
Nancy Memmel says
My strategizing is for 2025 conversions, using the soon to be announced 2025 tiers as proxies for eventual 2027 tiers, assuming minimal inflation, and allowing for a couple thousand in surprise LT capital gains distributions.
Nancy Memmel says
I do see your point.
My “filling up the tiers” comment was for 2025 , assuming the 2025 thresholds announced are lower than we had anticipated at the beginning of 2024; then 2026 & 2027 thresholds would also be lower than we expected at the beginning of 2024 (when inflation was really roaring ) and assuming minimal inflation past 2025. Since we want to get the conversions done through 2027, we may bite the bullet and get more moved in 2025 , even incurring some IRMAA, since we would be in a better position to pay the extra taxes from converting from cashflow before an expected retirement. The retirement itself would be a basis for an appeal, in which case it would be really handy to have that 2027 appeal income at ongoing retirement levels, below the IRMAA threshold.
Gary says
My approach is somewhat conservative. I do a partial Roth conversion earlier in the year, saving the remainder of my planned conversions for December. At that point, I have a little better handle on future IRMAA brackets as well as current year tax income. I then execute my last Roth conversion leaving myself a buffer for additional surprises. With rate of inflation decreasing, I use a $8K buffer so I sleep well at nights. Your buffer and sleep selections may vary. 🙂
James A says
To amplify what Chris said on 14 July, Don’t play with fire, remember the big picture.
Yes the tax on the increment is important, but look at your overall rate on the total Income to. Anything Below 15-16% on the total is ok in the big picture.
Jeff Enders says
and the way I look at the ‘big picture’ is to determine the highest tax bracket I am willing to absorb. I think of IRMAA as an additional 1-2% to that marginal tax bracket. That 1-2% is small potatoes to the larger strategy of doing Roth conversions.
I determine the ordinary income that gets me to the top end of the tax bracket I am willing to pay taxes on, and then let the IRMAA charges fall where they may.
Something to ponder :-).
JoeTaxpayer says
The real issue is that Irma and the marginal tax brackets don’t quite line up, unfortunately. It’s possible to top off your marginal rate but only be in the next Irma bracket by a couple thousand dollars with a phantom tax can be over 50% or even over 100% depending how much she went over. If an extra dollar in taxable income cost you over $1000 a year in Medicare expenses. Something went wrong.
Nancy Memmel says
The IRMAA levels were frozen for a number of years, (2018-2020, I think) while the marginal rates continued to adjust for inflation. IRMAAs are increasing with inflation again ,now.