By Brent Matthew
Many Americans planning for retirement have lofty expectations about Medicare. They believe the program offers transparent, relatively affordable healthcare coverage. While this is true in many cases, individuals with higher incomes may encounter larger charges than expected due to Medicare IRMAA, or the income-related monthly adjustment amount.
Medicare IRMAA could substantially raise your premium payments. In this post, I outline how it works, who it applies to, and how you can plan your finances to work around it—or at least mitigate some of the side effects.
What Is Medicare IRMAA?
Medicare IRMAA applies to retirees whose income surpasses a certain threshold. It’s a surcharge applied to your Medicare Part B (outpatient treatment) and Part D (prescriptions) premiums.
The Social Security Administration (SSA) determines your IRMAA based on your modified adjusted gross income (MAGI) from two years prior. This means your 2025 IRMAA is calculated based on your 2023 tax return.
The more money you make, the more you’ll pay due to Medicare IRMAA. The income threshold changes annually to account for inflation. In 2025, a single filer who earns more than $106,000 triggers IRMAA. A married couple who files jointly and earns a combined $212,000 in MAGI also faces the surcharge.
How Is IRMAA Calculated?
Medicare IRMAA is calculated based on income brackets. As the covered party’s income rises, Medicare incrementally applies the charge to their monthly premium.
For example, the base monthly premium for Part B in 2025 is estimated at $185. However, someone in a higher income tier may have to pay over $500 every month for the same coverage in Part B. Part D premiums see surcharge hikes that can range from $12 to $80 a month.
The SSA relies on tax information from the IRS to determine who must pay Medicare IRMAA charges. After one is determined to owe the charges, they’ll get a letter explaining how the additional charges are to be applied. With a few limited exceptions, IRMAA fees are non-negotiable.
Can I Appeal Medicare IRMAA?
If you retire, lose a spouse to death or divorce, or experience a significant income reduction, you may be eligible to appeal your IRMAA designation using Form SSA-44. If approved, the SSA may calculate your IRMAA assessment based on your current financial status instead of your taxes from two years ago.
You may also be able to appeal IRMAA if the SSA makes an error in your financial exposure. You and your financial advisor can look through your records to determine whether the SSA made a mistake evaluating your income or relied on outdated information.
Planning Around Medicare IRMAA
Even if you have no grounds for appealing Medicare IRMAA, you can take some steps to lessen its impact. A financial advisor can help you manage your income sources and set up a schedule for taking strategic distributions from your funds. You might also be able to convert your traditional IRA into a tax-efficient Roth plan or defer capital gains to soften the impact of IRMAA.
It’s wise to review your potential IRMAA liability before going on Medicare. Keep in mind that major events, like selling property or cashing out an investment, could push you into a higher income bracket.
Get to the Bottom of Your Medicare IRMAA Exposure
Medicare IRMAA is more than just a bureaucratic annoyance. It can add thousands of dollars to your annual medical expenses. Even worse, it can arise unexpectedly, as the SSA reviews your taxes without warning and can automatically impose IRMAA.
The Scottsdale Wealth Advisory team can help you assess your finances and account for the changes that Medicare IRMAA can impose. To schedule your complimentary financial coaching session, call (480) 247-9090, email info@SWAFirm.com, or book directly at calendly.com/BrentMatthew.
About Brent
Brent Matthew is the founder and CEO of Scottsdale Wealth Advisory, a full-service fiduciary retirement planning firm serving pre-retirees and retirees across Arizona and multiple states. With a strong commitment to always putting clients first, Brent leads the firm in developing comprehensive, tax-efficient financial plans tailored to each family’s unique goals. He is responsible for researching investment, annuity, and life insurance strategies and building smart asset allocations that reflect both long-term growth and risk management.
Brent is driven by a core belief: “The success of this firm will be measured by the success of the families it represents.” That client-first approach has guided his work since the beginning. He is currently enrolled at the College for Financial Planning and is on track to earn his CERTIFIED FINANCIAL PLANNER® designation. He also holds his Series 65 license and Arizona Life and Health Insurance Producers License.
Outside the office, Brent embraces the Arizona outdoors with “lil B” and their two pomskies, Heimo and Kota. Whether he’s hiking, fishing, dirt biking, skiing, golfing, kayaking, or skeet shooting, Brent finds balance and joy in staying active. He’s also a fan of CrossFit, brunching, and cruising the Phoenix canal system on his beach cruiser—usually with classic tunes from the Marshall Tucker Band, Gordon Lightfoot, or Crosby, Stills & Nash playing in the background. To learn more about Brent, connect with him on LinkedIn.
