Skip to main content

What is IRMAA - Medicare Income Related Monthly Adjustment Amount

Understanding IRMAA and Its Impact on Medicare Beneficiaries

IRMAA, or Income Related Monthly Adjustment Amount, is a surcharge that affects higher-income Medicare beneficiaries enrolled in Part B and Part D plans.

If your income exceeds $97,000, you might be subject to these additional charges – so it’s essential to stay informed about your eligibility.

How IRMAA Affects Medicare Part B and Part D Premiums

When IRMAA applies to you, it increases your monthly premiums for both Medicare Part B (medical insurance) and Part D (prescription drug coverage premium).

More money is required from you each month due to having a higher income.

Determining Eligibility for IRMAA Charges

To determine if someone is eligible for these extra costs, the government uses their Modified Adjusted Gross Income (MAGI).

MAGI calculation helps ensure that those with larger incomes contribute more towards funding healthcare through increased premium payments.

What Constitutes MAGI?

MAGI is your Adjusted Gross Income (AGI) plus tax-exempt interest income.

It’s a crucial factor in determining if you’ll face those pesky IRMAA charges or not.

Why MAGI Is Used for Determining IRMAA Eligibility

Using the MAGI method, Medicare can identify high-income earners and ensure they contribute more to healthcare funding through increased premiums.

This helps maintain financial stability within the U.S. healthcare system by distributing expenses equitably among enrollees.

Now that we’ve covered the basics of IRMAA, it’s essential to keep an eye on your income levels and any changes that might affect your eligibility – because nobody wants unexpected surprises when it comes to their hard-earned money.


IRMAA Downloadable Reports

Modified Adjusted Gross Income (MAGI) Calculation Method


To understand how IRMAA is calculated, we need to familiarize ourselves with the Modified Adjusted Gross Income (MAGI) method.

This calculation helps determine whether a Medicare beneficiary qualifies for additional charges.

So, what exactly constitutes MAGI?

  • Gross income: This includes wages, salaries, tips, and other forms of compensation before deductions like taxes or retirement contributions.
  • Tax-exempt interest: Interest earned from investments that are not subject to federal income tax. Examples include municipal bonds and certain savings accounts.
  • Social Security benefits: The portion of your Social Security benefits that is taxable at the federal level also contributes to your MAGI calculation.

The reason behind using MAGI for determining IRMAA eligibility lies in its ability to provide an accurate representation of one’s financial status while enrolled in Medicare Parts B and/or D plans. Essentially, it ensures high-income earners contribute more towards funding our healthcare system through increased premium payments – keeping things fair.

Determining Eligibility for IRMAA Charges

If you’re wondering about your own potential IRMAA status – worry not. We’ve got you covered with some key factors used by the government when making their initial determination:

  1. Your most recent tax return: Your adjusted gross income (AGI) plus any untaxed foreign income, non-taxable Social Security benefits, and tax-exempt interest.
  2. Income thresholds: In 2023, IRMAA applies to individuals with incomes exceeding $97,000 or married couples filing jointly with incomes above $194,000.

Remember that your eligibility for IRMAA can change over time due to fluctuations in income levels or life events such as retirement or job loss. It is critical to stay on top of any alterations in order to avoid paying additional fees and preserve your funds.

Looking for a tool that helps financial professionals calculate their clients’ potential IRMAA costs? Check out the Healthcare Retirement Planner.

Key Takeaway: 

The Modified Adjusted Gross Income (MAGI) method is used to determine IRMAA charges for Medicare beneficiaries. MAGI includes gross income, tax-exempt interest, and taxable Social Security benefits. Eligibility for IRMAA charges depends on income thresholds and can change over time due to fluctuations in income levels or life events such as retirement or job loss.

Origins of IRMAA Legislation

Let us review the past to understand how IRMAA legislation came into existence.

IRMAA, or the Income Related Monthly Adjustment Amount, was born out of the 2003 Medicare Modernization Act. This legislation had one key goal in mind: fairness.

Key Components of the 2003 Medicare Modernization Act

The act introduced several essential changes to Medicare. For starters, it created Part D – a prescription drug benefit program for seniors and disabled individuals. But that wasn’t all. The legislation also established income-based adjustments for Parts B and D premiums – hello, IRMAA.

Effects of Introducing Income-Based Adjustments on Healthcare Financing

You might be wondering why this change was necessary? In short: financial stability within the U.S healthcare system. Before 2003, everyone paid similar premium amounts regardless of their income level. With IRMAA, higher-income beneficiaries now contribute more towards funding healthcare through increased premium payments.

It’s important to note that IRMAA applies to individuals with higher incomes. If you’re wondering whether you fall into this category, you can check your IRMAA status by reviewing your most recent Social Security statement. This statement will show your initial IRMAA determination and any changes to your IRMAA status.

It’s also worth noting that you can avoid paying IRMAA charges. One way to do this is by keeping your income below the threshold for IRMAA-based premiums. Another way is to appeal your IRMAA determination if you believe it was calculated incorrectly.

It’s essential to be aware that IRMAA may shift in the future. In fact, the IRMAA thresholds are adjusted annually based on inflation. For example, the IRMAA calculated for 2023 will likely be different from the IRMAA calculated for 2023.

Need assistance with calculating IRMAA costs in retirement plans? Contact Healthcare Retirement Planner today.

FAQs in Relation to What is Irmaa:

What is IRMAA?

IRMAA, or Income-Related Monthly Adjustment Amount, is an additional charge added to Medicare Part B and Part D premiums for beneficiaries with higher incomes. It’s based on the Modified Adjusted Gross Income (MAGI) reported on tax returns from two years prior. The purpose of IRMAA is to help cover the costs of healthcare services for all Medicare beneficiaries.

What are the current IRMAA brackets?

The following are the brackets for 2023

Individual MAGICouple MAGIPart BPart D (per/mo)
< $97,000< $194,000$164.90Premium (varies)
$97,000 - $123,000
$194,000 - $246,000$230.80Premium + $12.40
$123,000 - $153,000$246,000 - $306,000$329.70Premium + $32.10
$153,000 - $183,000$306,000 - $366,000$428.60Premium + $51.70
$183,000 - $500000$366,000 - $750,000$527.50Premium + $71.30
>$500,000 >$750,000$560.50Premium + $77.90

Do both spouses have to pay IRMAA?

Yes, if both spouses are enrolled in Medicare and their combined income exceeds the specified threshold, they may each be subject to individual IRMAA charges. This applies even if they file joint tax returns since Medicare premiums are determined separately per beneficiary.

Why was IRMAA enacted?

IRMAA was enacted as part of the Medicare Modernization Act in 2003. Its primary goal is ensuring financial sustainability within the Medicare program by requiring higher-income beneficiaries to contribute more towards their healthcare costs, thus helping to maintain the quality and accessibility of services for all Medicare participants.

It’s important to note that IRMAA applies to Medicare beneficiaries who have an initial IRMAA determination or a change in their IRMAA status. If you want to avoid paying IRMAA charges, it’s essential to understand how IRMAA is calculated and take steps to avoid it.

Overall, IRMAA is an important consideration for financial professionals who work with clients approaching retirement age. By understanding how IRMAA is based on income and how it applies to Medicare premiums, you can help your clients plan for their healthcare costs in retirement.

How Medicare Defines Income for IRMAA:

Not all types of income are taken into consideration, however Medicare defines income for IRMAA to be “your adjusted gross income plus any tax-exempt interest you may have” or everything on lines 2a and 8b or the IRS form 1040 in tax-year 2020. Some examples of IRMAA income are:

Social Security BenefitsDistributions From:
WagesTraditional 401(k)
Pensions and Rental IncomeTraditional IRA
InterestTraditional 403(b)
Capital GainsTraditional Sep-IRA
DividendsQualified Investments and Annuities

Author: Mark Annese

Mark Has been working in the Medicare and IRMAA space for the past 8+ years. He is the architect of the leading Social Security and Medicare IRMAA software. He is also the Co-Founder of IRMAA Certified Planner and Healthcare Retirement Planner.


IRMAA Downloadable Reports

Streamlining the Medicare Surcharge Calculation Process.

Our Healthcare Retirement Planner software is designed to streamline the retirement planning process for financial professionals. By providing an efficient way to calculate IRMAA costs, our tool helps you save time and focus on other aspects of your clients’ retirement plans.

  • Faster calculations: Our software quickly calculates IRMAA costs based on your client’s income and tax filing status, eliminating manual calculations and potential errors.
  • User-friendly interface: The intuitive design of our platform makes it easy for financial professionals to input data and generate results with minimal effort.
  • Data integration: Seamlessly integrate our calculator into your existing financial planning tools or CRM systems for a more streamlined workflow.
  • Easy to Understand Reports: Export reports to easily share with your clients
  • Tax and Surcharge Modeling: see how different types of income affects both taxes and your surcharges.

In addition to simplifying the calculation process, using our Healthcare Retirement Planner can also help improve communication between you and your clients. With clear visuals that illustrate how IRMAA costs impact their overall retirement plan, you can effectively convey complex information in an easily digestible format. This enables clients to make informed decisions about their healthcare expenses during retirement while ensuring they are prepared for any potential changes in Medicare premiums due to income fluctuations. To learn more about how our software can benefit both you as a financial professional and your clients’ retirement planning experience, visit the features page. Streamlining retirement planning processes can help financial professionals save time and resources, allowing them to focus on other areas of their clients’ needs. Automated calculation of IRMAA costs is the next step in streamlining this process even further.

  • Ability to Run multiple comparison reports
  • Easy to Understand Overview
  • Quick IRMAA Indicator
  • SimpleTax and Surcharge Display
  • Detailed year by year reporting of income and expenses