Although the Medicare income-related monthly adjustment amount (IRMAA) projections are not yet available, there are ways to find out approximately how much your premiums will increase or if that will not happen in the year 2025.
What we can do for now is check your 2023 tax return to see if you might be subject to an increase in your premiums for next year. The IRMAA surcharge is paid by those Medicare beneficiaries who have in Part B and Part D, in addition to the standard premiums, in case their taxable income exceeds certain established thresholds.
How is the Medicare IRMAA calculated?
The IRMAA is calculated using a scale of five different income brackets, with a maximum threshold of up to $500,000 for individual returns and up to $750,000 for joint returns of spouses.
The figures for this increase are adjusted annually according to inflation, although the IRMAA calculations are carried out with a delay of two years. That is, the IRMAA for the year 2025 will be calculated based on the 2023 tax return.
How much will the payment for Medicare Part B and Part D increase according to the IRMAA?
We have made a review of authorized sources and obtained substantiated projections for the IRMAA thresholds and the surcharge amounts corresponding to the year 2025. It should be noted that these are only projections or estimates made by financial professionals specializing in Medicare planning and issues related to the IRMAA, and should not be considered definitive values, since those will be announced towards the end of 2024.
IRMAA Evaluation and Appeal
The IRMAA is determined based on modified adjusted gross income (MAGI). The Social Security Administration (SSA) issues a notice to inform if a beneficiary is responsible for the IRMAA surcharge. In the event of a change in the beneficiary’s financial situation, the beneficiary has the right to appeal the assessment. For example, if an amended tax return is filed that alters the income accounted for to determine the IRMAA, it is necessary to inform the SSA, providing a copy of such a return and the corresponding acknowledgement of receipt from the IRS.
Annual Calculation of the MAGI and Fluctuations of the IRMAA
The amount of the MAGI is recalculated annually, which can lead to variations in the IRMAA, and even its elimination, depending on how the beneficiary’s income fluctuates. The obligation to pay the IRMAA in 2025 will be determined based on the 2023 MAGI. Similarly, eligibility for the IRMAA in 2024 was based on the 2022 MAGI.
There are multiple definitions of the MAGI for various purposes; however, determining the specific MAGI for Medicare is not a complex task. The beneficiary must locate the adjusted gross income (AGI) on line 11 of IRS Form 1040. The AGI represents the sum of all taxable income, including IRA withdrawals, capital gains, dividends, CD interest, and the taxable portion of Social Security. To this amount must be added the tax-exempt interest income, found on line 2a of the IRS Form 1040.
| Single | Married filing joint return | Part B IRMAA | Part D IRMAA |
|---|---|---|---|
| Less than or equal to $105,000 | Less than or equal to $210,000 | $0.00 | $0.00 |
| Greater than $105,000 and less than or equal to $131,000 | Greater than $210,000 and less than or equal to $262,000 | $74.00 | $13.70 |
| Greater than $131,000 and less than or equal to $163,000 | Greater than $262,000 and less than or equal to $326,000 | $184.00 | $35.30 |
| Greater than $163,000 and less than or equal to $196,000 | Greater than $326,000 and less than or equal to $392,000 | $295.80 | $57.00 |
| Greater than $196,000 and less than or equal to $500,000 | Greater than $392,000 and less than or equal to $750,000 | $406.90 | $78.60 |
| Greater than or equal to $500,000 | Greater than or equal to $750,000 | $443.90 | $85.80 |
