How to Avoid the IRMAA Medicare Surcharge

The Income-Related Monthly Adjustment Amount (IRMAA) is an additional charge that high-income beneficiaries pay for their Medicare Part B and Part D coverage. The Social Security Administration (SSA) determines this surcharge based on income from previous tax years. This article explains how IRMAA is calculated and explores proactive financial planning and the formal reconsideration process for reducing or eliminating it.

How IRMAA is Determined

The foundation of the IRMAA calculation is a two-year look-back period. This means your Medicare premiums for the current year are based on the income reported on your IRS tax return from two years prior. For example, your 2025 IRMAA is determined by the income on your 2023 tax return, which the IRS provides to the Social Security Administration. This process is repeated annually.

The specific income figure used is your Modified Adjusted Gross Income (MAGI). For IRMAA purposes, MAGI is calculated by taking your Adjusted Gross Income (AGI) from your tax return and adding back certain tax-exempt interest. Common sources of income that contribute to your AGI include wages, self-employment income, dividends, capital gains, and distributions from retirement accounts like traditional IRAs and 401(k)s.

The SSA uses this MAGI figure to place you into one of several income tiers, each with a corresponding monthly surcharge for both Part B and Part D. These income thresholds are adjusted annually for inflation. If your income exceeds the base threshold, you will receive a notice from the SSA detailing your higher premium amount.

Below are the 2025 IRMAA brackets based on 2023 tax returns:

| 2023 Individual MAGI | 2023 Joint MAGI | 2025 Part B Monthly Adjustment | 2025 Part D Monthly Adjustment |
| :— | :— | :— | :— |
| $106,000 or less | $212,000 or less | $0 | $0 |
| Above $106,000 up to $133,000 | Above $212,000 up to $266,000 | $74.00 | $13.70 |
| Above $133,000 up to $167,000 | Above $266,000 up to $334,000 | $185.00 | $35.30 |
| Above $167,000 up to $200,000 | Above $334,000 up to $400,000 | $295.90 | $57.00 |
| Above $200,000 up to $500,000 | Above $400,000 up to $750,000 | $406.90 | $78.60 |
| $500,000 or above | $750,000 or above | $443.90 | $85.80 |

Financial Planning to Lower MAGI

Proactive financial planning can help manage your future MAGI and potentially avoid the IRMAA surcharge. These strategies are most effective when implemented years before you enroll in Medicare. By managing income sources, you can aim to keep your MAGI below the established thresholds.

Roth Conversions

One strategy involves Roth IRA conversions. Converting funds from a traditional IRA or 401(k) to a Roth IRA is a taxable event, adding the converted amount to your income for that year. Executing these conversions in the years before age 63 allows you to pay the income tax upfront, which enables tax-free withdrawals in retirement that do not count toward your MAGI.

Qualified Charitable Distributions (QCDs)

For individuals over age 70½, Qualified Charitable Distributions (QCDs) offer a direct way to reduce MAGI. A QCD allows you to donate up to $108,000 for 2025 directly from your traditional IRA to a qualified charity. The amount of the QCD is excluded from your AGI, which lowers your MAGI and can satisfy all or part of your Required Minimum Distribution (RMD).

Tax-Efficient Withdrawals and Investments

A tax-efficient withdrawal strategy involves choosing which accounts to draw from each year. In a year with higher expenses, you could draw from a Roth IRA, as these distributions are tax-free and do not increase your MAGI. In lower-income years, you might draw from taxable or tax-deferred accounts.

Managing investment income also helps control MAGI. Tax-loss harvesting involves selling investments at a loss to offset capital gains. Another tactic is to donate appreciated securities directly to charity to avoid realizing the capital gain.

While interest from municipal bonds is exempt from federal income tax, this income is included when calculating your MAGI. Utilizing tax-deferred growth vehicles like non-qualified annuities can also help manage income timing, as the growth is not taxed until it is withdrawn.

Qualifying Life-Changing Events for Reconsideration

Even with careful planning, you may face an IRMAA surcharge due to an income level from two years prior that no longer reflects your current financial situation. The Social Security Administration recognizes specific circumstances, known as Life-Changing Events (LCEs), that can qualify you for a redetermination of your premium based on your more recent, lower income. These events provide a formal path to request that the SSA use a more current income figure.

The SSA has a defined list of eight qualifying LCEs:

• Work stoppage or retirement
• Work reduction, where your hours and income have been significantly reduced
• Marriage
• Divorce or annulment
• Death of a spouse
• Loss of income-producing property due to circumstances beyond your control
• Loss or reduction of pension income, such as from a plan termination
• Cessation of regular payments received from an employer settlement

Each of these events can substantially alter a household’s income and tax filing status, justifying a new IRMAA calculation. For example, after a divorce or the death of a spouse, your income threshold will be based on an individual filing status, while marriage allows you to use the higher income thresholds for joint filers.

The IRMAA Reconsideration Process

If you have experienced a qualifying Life-Changing Event, you can formally request that the Social Security Administration recalculate your IRMAA. This process begins with completing Form SSA-44, “Medicare Income-Related Monthly Adjustment Amount – Life-Changing Event.” This form can be downloaded from the SSA website.

You must gather specific documentation as proof of the LCE, such as a death certificate or a letter from a former employer confirming your retirement. You also need to provide evidence supporting your estimate of a lower income for the current year. This can include recent pay stubs or a signed copy of your most recent federal tax return if it reflects your new income.

The SSA-44 form asks you to identify which LCE you experienced, the date it occurred, and to provide your estimated MAGI for the year of the event. You will use the documents you gathered to substantiate these figures, breaking down your estimated income into AGI and any tax-exempt interest.

Once the form is complete with attached copies of your supporting documents, you can submit it to the SSA. After submission, the SSA will review your request and send a written notification of their decision. If approved, your Medicare premiums will be adjusted, and any excess IRMAA amounts you paid will be refunded or credited to your account.