Navigating the complexities of Medicare can be a formidable task, especially when it comes to understanding and potentially avoiding the Income-Related Monthly Adjustment Amount (IRMAA). IRMAA is an additional charge that Medicare beneficiaries may have to pay on top of their Part B (medical insurance) and Part D (prescription drug coverage) premiums if their annual income exceeds certain thresholds. As financial planning for retirement becomes increasingly important, understanding how to manage your income to avoid or minimize IRMAA charges can lead to significant savings. This article will guide you through understanding IRMAA, the IRMAA brackets for 2024, and strategies to avoid or reduce these extra charges.

Understanding IRMAA

IRMAA is a means-tested premium surcharge that the Social Security Administration (SSA) determines based on your tax return from two years prior. For example, your 2024 IRMAA will be based on your 2022 income. It’s designed to have higher-income Medicare beneficiaries contribute more towards their Part B and Part D premiums.

IRMAA Brackets for 2024

The IRMAA brackets are adjusted annually for inflation. For 2024, the brackets are expected to shift upwards slightly, although the exact figures are typically announced towards the end of the year. Here’s an estimated overview based on historical trends and inflation adjustments:

 

 

Medicare Part B	Medicare IRMAA Brackets for 2026 (2024 Income – Filed 2025) 0% Inflation*		Medicare IRMAA Brackets for 2026 (2024 Income – Filed 2025) 3% Inflation*
	Single	Married filing jointly	Single	Married filing jointly
Standard	Less than or equal to $105,000	Less than or equal to $210,000	Less than or equal to $109,000	Less than or equal to $218,000
1.4 x Standard	Greater than $105,000 and less than or equal to $132,000	Greater than $210,000 and less than or equal to $264,000	Greater than $109,000 and less than or equal to $137,000	Greater than $218,000 and less than or equal to $274,000
2.0 x Standard	Greater than $132,000 and less than or equal to $165,000	Greater than $264,000 and less than or equal to $330,000	Greater than $137,000 and less than or equal to $171,000	Greater than $274,000 and less than or equal to $342,000
2.6 X Standard	Greater than $165,000 and less than or equal to $198,000	Greater than $330,000 and less than or equal to $396,000	Greater than $171,000 and less than or equal to $1205,000	Greater than $332,000 and less than or equal to $410,000
3.2 x Standard	Greater than $198,000 and less than or equal to $500,000	Greater than $396,000 and less than or equal to $750,000	Greater than $205,000 and less than or equal to $500,000	Greater than $410,000 and less than or equal to $750,000
3.40 x Standard	Greater than or equal to $500,000	Greater than or equal to $750,000	Greater than or equal to $500,000	Greater than or equal to $750,000
If annualized inflation from February 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

Medicare Part B	Medicare IRMAA Brackets for 2025 (2023 Income – Filed 2024) 0% Inflation*		Medicare IRMAA Brackets for 2025 (2023 Income – Filed 2024) 3% Inflation*
	Single	Married filing jointly	Single	Married filing jointly
Standard	Less than or equal to $105,000	Less than or equal to $210,000	Less than or equal to $105,000	Less than or equal to $212,000
1.4 x Standard	Greater than $105,000 and less than or equal to $132,000	Greater than $210,000 and less than or equal to $264,000	Greater than $105,000 and less than or equal to $132,000	Greater than $212,000 and less than or equal to $266,000
2.0 x Standard	Greater than $132,000 and less than or equal to $165,000	Greater than $264,000 and less than or equal to $330,000	Greater than $132,000 and less than or equal to $165,000	Greater than $266,000 and less than or equal to $332,000
2.6 X Standard	Greater than $165,000 and less than or equal to $198,000	Greater than $330,000 and less than or equal to $396,000	Greater than $165,000 and less than or equal to $198,000	Greater than $332,000 and less than or equal to $398,000
3.2 x Standard	Greater than $198,000 and less than or equal to $500,000	Greater than $396,000 and less than or equal to $750,000	Greater than $205,000 and less than or equal to $500,000	Greater than $398,000 and less than or equal to $750,000
3.40 x Standard	Greater than or equal to $500,000	Greater than or equal to $750,000	Greater than or equal to $500,000	Greater than or equal to $750,000
If annualized inflation from February 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

Medicare IRMAA Brackets for 2024 (2022 Income)
Single	Married filing jointly	Part B Income-Related Monthly Adjustment Amount	Part D Income-Related Monthly Adjustment Amount
Less than or equal to $103,000	Less than or equal to $206,000	$0.00	$0.00
Greater than $103,000 and less than or equal to $129,000	Greater than $206,000 and less than or equal to $258,000	$69.90	$12.90
Greater than $129,000 and less than or equal to $161,000	Greater than $258,000 and less than or equal to $322,000	$174.70	$33.30
Greater than $161,000 and less than or equal to $193,000	Greater than $322,000 and less than or equal to $386,000	$279.50	$53.80
Greater than $193,000 and less than or equal to $500,000	Greater than $386,000 and less than or equal to $750,000	$384,30	$74.20
Greater than or equal to $500,000	Greater than or equal to $750,000	$419.30	$81.00

Strategies to Avoid or Reduce IRMAA

1. Income Planning: One of the most effective strategies is careful income planning. This involves managing your income sources in retirement to keep your MAGI below the IRMAA thresholds. Consider diversifying your income sources to include both taxable and tax-free income.
2. Roth Conversions:Converting traditional IRA funds to a Roth IRA can be a calculated move. Although the conversion will increase your taxable income in the year of the conversion, withdrawals from your Roth IRA are tax-free and do not count towards your MAGI in retirement.
3. Timing of Withdrawals:Plan the timing of withdrawals from retirement accounts carefully. For example, you might choose to delay taking Social Security benefits or making withdrawals from taxable accounts in years when other income sources are lower.
4. Investment in HSA/FSA:Contributing to a Health Savings Account (HSA) or Flexible Spending Account (FSA) can reduce your taxable income. HSA contributions, in particular, are tax-deductible and grow tax-free, and distributions for qualified medical expenditures are also tax-free.
5. Charitable Contributions:Making charitable donations through a Qualified Charitable Distribution (QCD) from your IRA can satisfy required minimum distributions (RMDs) without increasing your taxable income.
6. Tax-Loss Harvesting:This involves selling investments at a loss to offset capital gains in your portfolio. It’s a useful strategy for managing your taxable income and staying below the IRMAA thresholds.
7. Life Insurance Products:Certain types of life insurance products can provide income that isn’t included in your MAGI. For example, cash value withdrawals from life insurance policies are tax-free up to the amount of premiums paid.
8. Appeal Process:If you experience a life-changing event that significantly reduces your income (such as retirement, divorce, or the death of a spouse), you can appeal the IRMAA determination. The Social Security Administration allows for a reconsideration request if you can prove that your income has decreased.

Conclusion

Avoiding or minimizing IRMAA surcharges requires careful planning and strategic management of your income and assets. By understanding how IRMAA works and the brackets for the upcoming year, you can better prepare and implement strategies to reduce your overall Medicare costs. Whether it’s through income planning, strategic withdrawals, or utilizing tax-advantaged accounts, there are several approaches to keep your income within favorable thresholds.

Remember, the objective is not just to lower taxes in the present but also to ensure a stable and efficient income stream for your retirement years. Adjusting your financial strategies to account for IRMAA can make a significant variance in your retirement savings and expenses. It’s about finding the right balance between managing your taxable income and maintaining the lifestyle you desire in retirement.

Moreover, staying informed about changes to the IRMAA brackets and Medicare policies is crucial. These figures and policies can change annually, impacting your planning and strategies. Being aware of these changes allows you to adjust your financial planning proactively rather than reactively.

Finally, consider consulting with a qualified financial advisor or tax professional who can give personalized advice based on your financial situation. They can help direct you through the complexities of Medicare costs, including IRMAA, and develop a comprehensive plan that aligns with your retirement goals. With the right planning and strategies, you can minimize the impact of IRMAA on your Medicare premiums and preserve more of your hard-earned retirement savings for the years ahead.