IRMAA, or the income related monthly adjustment amount, is a surcharge to your monthly Medicare premium that is based on your income.
Understanding the type of income that counts towards the IRMAA calculation is important, because avoiding IRMAA can save you hundreds of dollars per month on each spouse’s monthly Medicare bill.
IRMAA is based off of what is called your Modified Adjusted Gross Income, or MAGI.
This can be confusing to calculate or find because it is not a specific line item on your tax return.
MAGI is the sum of all your income that is subject to tax – the most common sources for this for retirees is IRA withdrawals, capital gains, dividends, interest from CDs, and the taxable portion of your social security. This total is also known as your Adjusted Gross Income, or AGI and is a line item on your annual tax return.
Then add in the total of your non-taxable interest – This is usually any municipal bond income. The total of your AGI, plus non-taxable interest, is your MAGI.
Just as important for retirees who are trying to avoid the IRMAA surcharge is understanding what types of income does not contribute to IRMAA.
The big one is withdrawals from Roth IRAs. Regardless of how much you take out from Roth IRAs, it is not taxable.
If you are like most Americans and a significant portion of your savings is in pre-tax retirement accounts like 401(k)s and traditional IRAs. Developing a plan to convert some of those assets to Roth accounts early in retirement can have huge benefits and help you avoid IRMAA in the future.
We help our clients develop Roth conversion plans, and tax efficient withdrawal plans in retirement to help insure their income in retirement does not unnecessarily trigger IRMAA, or any other added tax burdens in retirement.
While this applies to just about anyone. We find that those with $700,000 or more in pre-tax retirement accounts in particular can save a significant amount on taxes in their retirement with a proper plan.
If you’d like to see how we can help you create a plan to save on taxes in your retirement, please reach out.

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If you are enrolled in Medicare Part B, you may be familiar with the Income-Related Monthly Adjustment Amount (IRMAA), also known as the Medicare surcharge. IRMAA is an additional premium that higher-income Medicare beneficiaries must pay on top of their standard Part B premium.

The amount of IRMAA you owe is based on your modified adjusted gross income (MAGI) from two years ago. This means that your income from 2021 will determine your IRMAA for 2023. The Social Security Administration uses the information from your tax return to calculate your IRMAA.

There are five income brackets used to determine IRMAA, with corresponding surcharge amounts. The brackets for individuals and couples filing jointly in 2021 are as follows:

– $88,001 to $111,000 (individual) or $176,001 to $222,000 (couple): $1,470.50 surcharge per year
– $111,001 to $138,000 (individual) or $222,001 to $276,000 (couple): $2,047.80 surcharge per year
– $138,001 to $165,000 (individual) or $276,001 to $330,000 (couple): $2,625.10 surcharge per year
– $165,001 to $500,000 (individual) or $330,001 to $750,000 (couple): $3,202.40 surcharge per year
– More than $500,000 (individual) or more than $750,000 (couple): $3,569.50 surcharge per year

If you fall into one of these income brackets, you can take steps to avoid the Medicare surcharge. Here are some strategies to consider:

1. Delay taking Social Security benefits: Your MAGI includes income from Social Security, so delaying your benefits can lower your income and potentially reduce your IRMAA.

2. Convert traditional retirement accounts to Roth IRAs: Roth IRA distributions do not count towards your MAGI, so converting traditional retirement funds to a Roth IRA can lower your income for IRMAA purposes.

3. Time your income: If possible, try to spread out your income over several years to avoid crossing into a higher IRMAA bracket.

4. Make charitable contributions: Charitable deductions can lower your MAGI and reduce your IRMAA.

5. Utilize tax planning strategies: Consult with a financial advisor or tax professional to explore other strategies for reducing your income and minimizing your IRMAA.

By taking proactive steps to manage your income, you can potentially avoid or reduce the Medicare surcharge and keep more of your hard-earned money in your pocket. It’s important to plan ahead and stay informed about the rules and regulations surrounding IRMAA to make the most of your Medicare benefits.