Learn About IRMAA Surcharges on Medicare

What IRMAA Surcharges Are and How They Work

IRMAA stands for Income-Related Monthly Adjustment Amount. It is an additional charge that some Medicare beneficiaries pay on top of their regular Medicare Part B and Part D premiums. The Social Security Administration uses IRMAA to adjust premiums based on how much income a person reports on their tax return.

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Unlike standard Medicare premiums that are the same for most people, IRMAA surcharges increase for individuals and couples with higher incomes. If your modified adjusted gross income (MAGI) exceeds certain thresholds, you will pay more for your Medicare coverage. The surcharge amount depends on how much your income exceeds the threshold for your filing status.

For 2024, the income thresholds are $103,000 for single filers and $206,000 for married couples filing jointly. These thresholds are adjusted each year. If your MAGI is above these amounts, you could face surcharges on both Part B coverage (which covers doctor visits and outpatient care) and Part D coverage (which covers prescription drugs).

IRMAA surcharges apply to approximately 7-8% of all Medicare beneficiaries, according to recent data from the Centers for Medicare & Medicaid Services. However, this percentage has been growing over time as income thresholds remain relatively fixed while many people's incomes increase or stay the same.

The surcharge amount itself is tiered, meaning the cost increases as your income increases. Someone whose income is just slightly above the threshold pays a smaller surcharge than someone whose income is significantly higher. The highest-income beneficiaries can pay surcharges that are triple or more the standard premium amount.

Practical Takeaway: Understanding IRMAA surcharges requires knowing your modified adjusted gross income from your tax return. This is different from your actual salary and includes items like tax-exempt interest, half of self-employment taxes, and certain foreign income. Review your most recent tax return to see if you might be affected by these surcharges.

Income Thresholds and How They're Determined

IRMAA income thresholds change each year based on cost-of-living adjustments. The Social Security Administration announces new thresholds in October for the following calendar year. For 2024, the individual threshold is $103,000 in MAGI, and the married filing jointly threshold is $206,000. These thresholds have remained the same since 2020, though this is subject to change.

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Because thresholds stay relatively fixed while inflation and wages increase, more beneficiaries cross into IRMAA surcharge territory each year. This "bracket creep" means that even without significant income increases, people may eventually find themselves subject to surcharges. For example, a retired couple whose MAGI was $200,000 in 2020 might still be at $200,000 in 2024, but this is now closer to the threshold than it was four years ago.

The income measured for IRMAA purposes is not your current income—it is based on your Modified Adjusted Gross Income from two years prior. This is called the "lookback period." In 2024, Medicare uses your 2022 tax return. This two-year delay means that recent changes in your income situation will not affect your surcharges until two years later.

MAGI is calculated differently than your regular adjusted gross income. It includes several types of income that may not be counted in other calculations. Specifically, MAGI for IRMAA includes: wages, self-employment income, interest (including tax-exempt interest from municipal bonds), dividends, rental income, Social Security benefits (50% of the amount), and other income sources. Deductions such as IRA contributions, student loan interest, and educator expenses are not subtracted when calculating MAGI for IRMAA purposes.

Different income thresholds apply depending on your filing status. There are separate thresholds for single filers, married filing jointly, married filing separately, and head of household. Married couples filing separately face the lowest threshold at only $103,000, which applies to each spouse individually.

Practical Takeaway: If you expect your income to change significantly—whether through retirement, selling investments, or receiving an inheritance—consider the timing. Since IRMAA is based on income from two years ago, changes made in 2024 will not affect your surcharges until 2026. Work with a tax professional to understand how your specific income sources contribute to your MAGI calculation.

IRMAA Surcharge Amounts for 2024 and Beyond

IRMAA surcharges are structured in tiers. The higher your income above the threshold, the more you pay. For Part B in 2024, the standard premium is $164.90 per month. However, beneficiaries subject to IRMAA pay additional amounts on top of this base premium.

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In 2024, there are five income tiers above the threshold that trigger progressively higher surcharges. A single person with MAGI between $103,000 and $129,000 pays an additional $65.90 per month for Part B. The surcharge increases for each higher tier. A single person with MAGI over $499,000 pays an additional $329.70 per month—more than double the standard premium amount.

Part D prescription drug coverage also has IRMAA surcharges that are calculated separately. Part D surcharges in 2024 start at $12.70 per month and can reach $76.20 per month for the highest income earners. The Part D surcharge amount varies based on the specific plan you choose, but the income tiers that trigger surcharges are the same as those for Part B.

For married couples filing jointly, the income tiers are approximately double those for single filers. A couple with MAGI between $206,000 and $258,000 would face Part B surcharges of $65.90 per month per person. This means that for a couple where both are on Medicare, the combined monthly surcharge could be $131.80 just for Part B.

Surcharge amounts are adjusted each year. While the income thresholds have remained fixed since 2020, the surcharge dollar amounts have increased with inflation. For example, the Part B surcharge for the lowest tier increased from $59.40 in 2020 to $65.90 in 2024. This means even beneficiaries already paying surcharges see their costs rise annually.

Practical Takeaway: Calculate your estimated IRMAA surcharge by using the income tiers published by the Social Security Administration. If you believe you will be affected, contact Medicare at 1-800-MEDICARE or visit Medicare.gov to request the specific surcharge amount based on your MAGI. Knowing the exact dollar amount helps with retirement budget planning.

Life Events That May Reduce IRMAA Surcharges

Medicare allows certain life events to trigger a review of your IRMAA surcharges. If your circumstances have changed since the tax return used for your surcharge calculation, you may be able to request that Social Security use more current information. This process is called filing an IRMAA appeal or request for reconsideration.

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Qualifying life events include: retirement that reduced your income, loss of income-producing property, loss of a spouse, divorce, death of a family member, or a significant reduction in business income or earnings. If you experience one of these events, you can contact Social Security to report the change. Social Security will then review your current income to determine if your surcharges should be reduced.

Retirement is one of the most common qualifying events. If you retired during or after the year covered by the tax return that was used for your IRMAA calculation, your income may have dropped significantly. For example, if you stopped working in July 2023 but your 2021 tax return (used for 2023 surcharges) showed full-year income, you could request that Social Security use more current income figures to recalculate your surcharges.

The timing of when you report a life event matters. Social Security should receive notification of a qualifying event as soon as possible after it occurs. If you file an appeal due to a life event, Social Security will review your request and determine whether your surcharges can be adjusted. The adjustment typically takes effect in the following month after