Medicare is an essential part of healthcare for millions of Americans over 65, providing much-needed coverage for doctor visits, outpatient services, and preventive care. However, Medicare premiums, particularly for Part B, aren't a one-size-fits-all affair. You may be required to pay more based on your income, a system known as Income-Related Monthly Adjustment Amounts (IRMAA).

Understanding how income impacts your Medicare Part B premium can help you plan your budget better and avoid surprises. In this article, we’ll explore how IRMAA works, who it affects, and what you can do if you disagree with your premium.

What is Medicare Part B?

Before diving into income-related adjustments, it’s important to review what Medicare Part B covers. Part B primarily takes care of outpatient medical services. This includes visits to the doctor, preventive screenings, durable medical equipment, and some medications administered in a clinical setting.

Everyone enrolled in Medicare Part B pays a premium, but not everyone pays the same amount. Most people pay a standard premium set by the government each year, but higher-income earners might be subject to an additional charge.

What Is IRMAA?

The Income-Related Monthly Adjustment Amount (IRMAA) is an additional charge applied to your Medicare Part B premium if your income exceeds a certain threshold. This adjustment is based on your Modified Adjusted Gross Income (MAGI), as reported on your tax return from two years prior. For example, the amount you pay in 2024 will be determined by your income from 2022.

The reasoning behind IRMAA is that individuals with higher incomes can afford to contribute more towards the cost of their healthcare. While this ensures Medicare remains affordable for most, it does mean that higher earners shoulder a larger share of the premium costs.

Income Thresholds for IRMAA

For most Medicare beneficiaries, the standard premium is sufficient. However, if your income exceeds specific thresholds, you will be required to pay the additional IRMAA. Here’s how it breaks down:

  • .For 2024, the income thresholds for Medicare's Income-Related Monthly Adjustment Amount (IRMAA) are as follows:
  • Single filers with a modified adjusted gross income (MAGI) above $103,000 will face IRMAA charges.
  • Married couples filing jointly with a combined income above $206,000 will also be subject to these surcharges.

The IRMAA applies on a sliding scale, depending on income. For example:

  • Individuals earning between $103,001 and $129,000 will pay an additional $69.90 for Part B, bringing their total premium to $244.60 per month.
  • Higher-income brackets, such as those earning more than $500,000 (single) or $750,000 (joint), will pay the highest surcharge, with total premiums reaching $594 per month.

This adjustment is automatically applied by Medicare, and you’ll be notified if you owe more than the standard premium.

Appealing IRMAA Decisions

Life circumstances can change, and your income might not always be what it was two years ago. For example, you may have experienced a significant life event such as retirement, divorce, or the death of a spouse, which could drastically reduce your income.

If your income has decreased and you believe your IRMAA determination is no longer accurate, you can appeal the decision. You’ll need to fill out the "Medicare Income-Related Monthly Adjustment Amount – Life-Changing Event" form and provide evidence of your income change. Medicare will review your request and may adjust your premium accordingly.

What Happens If You Don’t Appeal?

If you don’t appeal, the IRMAA charge will remain in effect, and you’ll continue paying the higher premium. It’s important to remember that IRMAA adjustments are not permanent. Medicare reassesses your income every year, and your premium could decrease in the future if your income drops below the threshold.

Planning for IRMAA

If you are approaching retirement or expecting changes in your income, it’s a good idea to familiarize yourself with the IRMAA brackets. Planning ahead can help you avoid unexpected premium increases and better manage your healthcare costs.

It’s also wise to consult a financial advisor who understands Medicare rules. They can help you navigate your financial decisions to minimize IRMAA impacts, such as adjusting withdrawals from retirement accounts or strategically timing your Social Security benefits.

Paying for Medicare Part B can be more complicated if your income exceeds certain thresholds. While the IRMAA adjustment means higher premiums for some, understanding how it works will allow you to plan ahead and appeal if necessary. By knowing what to expect, you can ensure that your healthcare costs remain manageable.

If you’d like to learn more about IRMAA and other aspects of Medicare, consider taking a Medicare class on GetSetUp. Classes are available to help you better understand Medicare and make informed decisions about your healthcare.

Reviewed By: Keith Gilbert