Medicare increases the monthly premiums for Part B and Part D coverage if your income is higher than certain limits. To avoid these surcharges, you can reduce your modified adjusted gross income.
If you’re a Medicare beneficiary with an income that’s higher than average, the Social Security Administration (SSA) could tack an extra charge onto the Medicare premiums you pay each month.
These extra fees are called an income-related monthly adjustment amount (IRMAA). Certain strategies, both before and after receiving an IRMAA, can reduce or eliminate this surcharge.
IRMAA is an income-related monthly adjustment amount.
It is an extra charge added to your monthly premiums for Medicare Part B (outpatient medical insurance) and Medicare Part D prescription drug plans. It’s based on the taxable income stated on your tax returns from 2 years ago.
The income surcharge doesn’t apply to Medicare Part A (inpatient hospital insurance) or Medicare Advantage (Part C), also known as Medicare Advantage.
IRMAA charges are based on your income. The SSA calculates the IRMAA amount using your modified adjusted gross income (MAGI) according to your tax returns from 2 years ago.
Your Medicare Part B premium rises as your income increases.
In 2025, if your income 2 years ago was $106,000 or less as an individual taxpayer or $212,000 or less as a married couple filing jointly, you’ll pay the standard Medicare Part B premium, which is $185 per month. You’ll also pay the standard Part D premium as set by your plan provider.
If your taxable income is above this amount, you’ll pay a higher Part B premium and a surcharge will be added to your Part D premium, as follows:
| Individual taxpayer income | Joint taxpayer income | Married filing individually | Part B premium | Part D surcharge |
|---|---|---|---|---|
| above $106,000 up to $133,000 | $212,000 to $266,000 | n/a | $259 | Part D premium + $13.70 |
| above $133,000 up to $167,000 | $266,000 to $334,000 | n/a | $370 | Part D premium + $35.30 |
| above $167,000 up to $200,000 | $334,000 to $400,000 | n/a | $480.90 | Part D premium + $57 |
| above $200,000 up to $500,000 | $400,000 to $750,000 | $106,000 to $394,000 | $591.90 | Part D premium + $78.60 |
| $500,000 or more | $750,000 or more | $394,000 or more | $628.90 | Part D premium + $85.80 |
Since the IRMAA is based on your income, many strategies for reducing it involve lowering your annual income. You can also take some other steps to avoid paying a higher IRMAA than you need to.
Here are some ideas to consider:
Inform Medicare if you’ve had a life changing event that affected your income
Your IRMAA is based on tax returns from 2 years ago. If your circumstances have changed over those 2 years, you can file a form to let Medicare know about the reduction in your income.
The following events qualify as life changing for purposes of calculating an IRMAA:
- marriage
- divorce or annulment
- spouse’s death
- reduced hours or loss of your job
- loss of income-generating property
- reduction or loss of your pension
- a settlement from an employer
It’s important to know that some income-altering events won’t qualify for a reduction of your IRMAA.
The SSA does not consider the following events life changing, even though they all affect the amount of money in your bank account:
- loss of alimony or child support
- voluntary sale of real estate
- higher healthcare costs
To inform Medicare of a qualifying change, you’ll need to complete the Medicare Income-Related Monthly Adjustment Amount Life Changing Event form and either mail it or take it in person to your local SSA office.
Avoid certain income-boosting changes to your annual income
Some financial decisions can affect your taxable income and your IRMAA amount. The following actions all raise your annual income:
- selling real estate
- taking required minimum distributions from retirement accounts
- carrying out transactions that net a large capital gain
- converting all the funds in a traditional individual retirement account (IRA) to a Roth IRA in one transaction
It’s important to talk with a financial planner, CPA, or tax adviser to help you plan these transactions to reduce the effect on your Medicare premiums.
For example, you may want to begin converting traditional IRAs into Roth IRAs in your early 60s to avoid a one-time income increase that could trigger an IRMAA penalty.
Use Medicare savings accounts
Contributions to a Medicare medical savings account (MSA) are tax-exempt. If you contribute to an MSA, the withdrawals are tax-free, provided you spend the money on qualifying healthcare expenses.
These accounts can lower your taxable income while giving you a way to pay for some of your out-of-pocket medical expenses.
Consider a qualified charitable distribution
If you’re age 73 years or over and have retirement accounts, the IRS requires you to take a minimum distribution from the account each year.
If you don’t need this money to live on, you may want to donate the distribution to a 501(c)(3) charitable organization. This way, it won’t count as income when IRMAA is calculated.
It’s a good idea to work with a CPA or financial adviser to make sure you’re following IRS guidelines for making the donation. For example, you can have the check made out directly to the organization to ensure the IRS doesn’t count it as part of your income.
You can search for a charitable, tax-exempt organization using the IRS online tool.
Explore tax-free income streams
Many people need income but may be concerned about the effects of taking distributions from retirement accounts to pay for living expenses. However, there are many different retirement plan types that could work well for you.
For some, a home equity conversion mortgage, also called a reverse mortgage, might be a way to cover your monthly expenses without increasing your taxable income every year.
A reverse mortgage is where you can use the equity in your own home to pay for living expenses.
A qualified longevity annuity contract might also help. The IRS allows you to use traditional IRA, 401(k), 403(b), and 457(b) funds to purchase an annuity that provides regular income to you but reduces the amount of your required minimum distribution.
Reverse mortgages and qualified longevity annuity contracts aren’t a good idea for everyone, so talk with a financial adviser about how these income-lowering strategies might work in your situation before deciding.
If you think the SSA or IRS has made an error in calculating your IRMAA, you can appeal the decision by contacting the SSA directly.
You can use form SSA-44 to lodge an appeal or schedule an interview at your local SSA office by calling 800-722-1213 (TTY 800-325-0778).
Medicare may charge you an increased amount, called an IRMAA, for your Part B and Part D premiums if your income is higher than the set limits.
Because an IRMAA is based on the income reported in your income tax records, most ways of avoiding an IRMAA involve lowering your taxable income, known as MAGI.
If certain life changes affect your income, you may be able to reduce or eliminate your IRMAA. Life changing events that could affect these premium increases and surcharges include marriage or divorce, the death of a spouse, or the loss of a job or a pension.
If you’re facing an IRMAA that you believe has been calculated in error, you can appeal Medicare’s decision.
No matter how you decide to approach an increase in your premium based on your income, it’s a good idea to talk with an accountant or financial adviser about the best approach for you based on your total financial picture.