What Is the Medicare IRMAA for 2024?

Even with Medicare, health care costs can add up fast in retirement. And if your income is above a certain amount, you might have to pay even more for certain types of Medicare coverage, including Medicare Part B and Part D.

This fee, called the income-related monthly adjustment amount (IRMAA), is tacked onto your Medicare premiums and withheld from your Social Security benefit (if you’re receiving it)—and can ultimately impact your monthly retirement income. So, it’s important to understand what IRMAA is and how it works.

What is IRMAA?

When you reach age 65 or older, you’re eligible to enroll in Medicare health insurance. With this federal health insurance program, your health care coverage comes with a subsidy: Your premiums are generally offset by payments made by all the people who are working and paying into Medicare. But, if your modified adjusted gross income (MAGI) exceeds a certain amount, you may no longer be eligible for this subsidy, and you'd be required to pay a bit more toward your premiums. This added charge is an income-related monthly adjustment amount, or IRMAA.

IRMAA only applies to Medicare coverage Part B (medical insurance), Part C (Medicare Advantage, a Medicare-approved plan offered by private companies that typically includes Parts A, B and D and offers additional benefits and lower out-of-pocket cost) and Part D (prescription drug insurance). It does not apply to coverage for Part A (hospital insurance—which most people don’t pay a premium for).

How is IRMAA calculated?

IRMAA isn’t based on your current income. Instead, your MAGI is calculated using your federal tax return from two years earlier. So your IRMA for 2024 is based on information from your 2022 tax return. Your tax-filing status also comes into play. Here’s how IRMAA can impact Medicare costs in 2024, according to medicare.gov:

Does the IRMAA amount change every year?

Yes, the Centers for Medicare and Medicaid Services (CMS) Social Security Administration calculates your IRMAA every year, so while you may be subject to the surcharge one year, you may not be the following year. Typically, the IRMAA income limit increases each year. In 2023, IRMAA applied to single filers whose MAGI exceeded $97,000 or $194,000 in 2021 for married couples filing jointly and in 2024, applied to single filers with a MAGI over $103,000 and married couples with a MAGI over $206,000 in 2022.

How does retirement income impact the cost of Medicare?

Income you receive in retirement will count toward your MAGI, which could change whether IRMAA applies (and how much you’ll be charged) each year. Your retirement income may come from a variety of sources, including:

1. Social Security (only the taxable portion of your benefit will be factored into your MAGI)
2. Retirement accounts like 401(k)s and IRAs
3. Pensions
4. Annuities
5. Cash value from a permanent life insurance policy
6. Passive income from rental properties or other investments

Not all of your income will be included in your MAGI, which is another reason it’s important to be strategic about how you’re generating income. A financial advisor or tax planner can help you understand better what your MAGI is and how it may impact your IRMAA situation.

If your MAGI is high enough, you’ll pay more in monthly premiums for Medicare Part B and Part D coverage. Your IRMAA will also automatically be deducted from your Social Security benefit payment, which could impact the amount you receive from your monthly payments.

This is another reason why it’s so important to approach retirement planning strategically to give yourself options to create tax-efficient retirement income. By strategically drawing from certain sources, you’ll be able to manipulate what your taxable income (and your MAGI) is to stay within a desired range and minimize the impact of taxes. A financial advisor can be a helpful resource as you plan, because they can help you see how all your assets can work together to maximize what you’ve saved.

What happens if IRMAA applies to me?

The Social Security Administration will use IRS data from two years prior to determine whether or not IRMAA will apply to you. If your income level triggers an income-related monthly adjustment amount, they will mail you a predetermination notice with the details.

If you think there’s been an error, you can dispute the decision. You can also request a reduction if you’ve experienced a qualifying life-changing event within the last two years that has impacted your financial situation significantly. Qualifying life-changing events can include:

1. Unemployment or underemployment (including retirement)
2. Loss of an income-producing property
3. Marriage
4. Divorce
5. Death of a spouse

If your IRMAA determination is correct, and you’re already receiving monthly Social Security payments, the amount you owe will be deducted from your benefit. If not, you’ll receive a separate bill for the IRMAA amount.

How do I reduce IRMAA?

Ultimately to reduce your IRMAA, you need to reduce your MAGI. Having a mix of taxable and non-taxable assets to pull from is one great way to reduce your taxable income, and thus, your IRMAA. Strategically buying and selling investments to offset gains and losses, delaying your Social Security benefits or donating to charities are other strategies that can reduce your taxable income in retirement.

Ultimately, carefully planning your retirement income can help you stay within your desired IRMAA threshold in retirement. But, retirement planning isn’t a one-time action. While you’re still working, you’ll need to have a good idea of how you want retirement to look and how you’ll get there. As you near retirement, you’ll need to adjust your plan based on what you’ve saved. And in retirement, you’ll need to manage your assets to make sure you’re getting the most out of them. Thankfully—you don’t need to do this alone. A Northwestern Mutual financial advisor can help with all of these tasks.

An advisor will get to know you and your goals—including your goals in retirement. Together, you and your advisor will create a plan that can help you achieve all you want before and during retirement—accounting for risks (like taxes) that could eat away at what you’ve earned.

Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP^®, CERTIFIED FINANCIAL PLANNER^®, and CFP^® (with plaque design) in the United States to Certified Financial Planner Board of Standards, Inc., which authorizes individuals who successfully complete the organization’s initial and ongoing certification requirements to use the certification marks.