Key Takeaways
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Even a small increase in your income can push you into a higher IRMAA bracket and substantially raise your Medicare Part B and D premiums.
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Income thresholds for IRMAA are based on your Modified Adjusted Gross Income (MAGI) from two years prior, making proactive planning essential in 2025.
Understanding the IRMAA System in 2025
Medicare premiums in 2025 are not one-size-fits-all. If your income exceeds certain limits, you will pay more for Medicare Part B and Part D due to something called the Income-Related Monthly Adjustment Amount (IRMAA). The Social Security Administration (SSA) uses your tax return from two years ago to determine your premiums, meaning your 2023 income dictates your 2025 IRMAA bracket.
This system is designed to ensure that higher-income individuals contribute more to their healthcare costs. However, it also means that a slight increase in income—whether from a one-time event like selling property or taking a large retirement withdrawal—can push you into a higher bracket and cause your Medicare premiums to double or more.
The 2025 IRMAA Income Brackets
For 2025, the IRMAA brackets for individuals and joint filers are:
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Individuals:
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Up to $106,000: No IRMAA
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$106,001 – $133,000: First bracket
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$133,001 – $167,000: Second bracket
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$167,001 – $200,000: Third bracket
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$200,001 – $500,000: Fourth bracket
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Above $500,000: Fifth bracket
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Married Couples Filing Jointly:
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Up to $212,000: No IRMAA
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$212,001 – $266,000: First bracket
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$266,001 – $334,000: Second bracket
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$334,001 – $400,000: Third bracket
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$400,001 – $750,000: Fourth bracket
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Above $750,000: Fifth bracket
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Each bracket corresponds to a higher premium for both Part B and Part D. In some cases, crossing a bracket can add hundreds of dollars to your monthly costs.
How a Small Income Increase Can Have a Big Impact
The IRMAA system is a “cliff” rather than a gradual slope. This means that if your income exceeds the threshold by even $1, you will pay the higher premium associated with that bracket. The change isn’t proportional—it’s categorical.
For example, a one-time $500 capital gain or a required minimum distribution (RMD) could tip your MAGI into the next IRMAA level. Once that happens, your Medicare premiums increase for the entire year, even if your income only exceeded the threshold briefly.
Why the Two-Year Look-Back Matters
One of the most overlooked details is the two-year lag in income evaluation. If you’re enrolling in Medicare or already enrolled in 2025, your 2023 income is the one that counts.
This time delay complicates planning, especially if your income has since dropped. Fortunately, there are ways to appeal your IRMAA decision if you’ve experienced a life-changing event, such as:
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Retirement
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Divorce
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Death of a spouse
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Loss of pension income
The SSA allows appeals using Form SSA-44, but the burden is on you to prove that your current income is lower and the reason qualifies as a permitted event.
Common Triggers That Push You Into a Higher Bracket
Several events can cause an unexpected bump in MAGI:
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Converting traditional IRAs to Roth IRAs
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Selling stocks, bonds, or real estate
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Large withdrawals from tax-deferred retirement accounts
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Receiving deferred compensation or a bonus
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Cashing in savings bonds
These income sources are fully included in your MAGI and can cause a significant jump in your premiums. Many of them are one-time events, which makes the jump even more frustrating for retirees.
Strategies to Manage Your Income
To avoid sudden increases in your Medicare premiums, consider these income management strategies:
1. Time Your Withdrawals Carefully
Spread withdrawals over multiple years instead of taking large sums all at once. If you’re planning a Roth conversion or large RMD, consider how it affects not just your tax bill, but your Medicare costs two years later.
2. Use Qualified Charitable Distributions (QCDs)
If you’re over 70½, you can make a Qualified Charitable Distribution directly from your IRA. This satisfies your RMD and does not count as income on your tax return, helping keep your MAGI lower.
3. Harvest Losses to Offset Gains
If you’ve realized capital gains, look at your portfolio for losses that could offset them. This tax strategy can help manage your MAGI while maintaining long-term financial health.
4. Defer Income Strategically
If you’re still working part-time or consulting, consider deferring some of your income into retirement accounts where possible. This won’t work for everyone, but it may reduce your MAGI for the year that matters.
5. File Appeals When Appropriate
If your income has decreased due to a life-changing event, don’t hesitate to file an appeal with SSA. You must act promptly and submit the right documentation, but this can be a valuable tool in keeping your premiums fair.
IRMAA and Medicare Part D in 2025
The IRMAA surcharge doesn’t just apply to Part B. You’ll also pay more for your prescription drug coverage under Part D if you’re in a higher income bracket.
In 2025, changes to Part D include a $2,000 cap on out-of-pocket prescription drug costs and the elimination of the coverage gap (formerly known as the “donut hole”). While this is a win for many, higher-income enrollees still face surcharges through IRMAA.
As with Part B, these IRMAA surcharges are tiered based on your MAGI. If you cross a bracket, you’ll face higher costs—not just for medical care, but also for prescriptions.
IRMAA Brackets Are Adjusted Annually
The good news is that IRMAA brackets are indexed for inflation. Each year, they are adjusted to reflect economic changes. That means someone close to the threshold this year may remain under it next year without any changes in income.
However, these adjustments are modest. They usually only move the brackets by a few thousand dollars. You can’t count on inflation alone to protect you from higher premiums.
What You Should Do Right Now in 2025
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Review your 2023 tax return. This is the basis for your 2025 Medicare premiums.
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Estimate your current MAGI. Understand where you stand within the 2025 IRMAA brackets.
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Map out future income events. Identify whether any actions—like a sale or retirement account withdrawal—could push you into a higher bracket.
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Consider professional advice. A tax professional or financial advisor can help you time income in a way that avoids unnecessary IRMAA surcharges.
Stay Ahead of the Premium Cliff
Medicare IRMAA surcharges are often overlooked until it’s too late. Yet they can have a substantial financial impact—especially if you’re living on a fixed income. By planning ahead and monitoring your income proactively, you can potentially save thousands over time.
If you’re unsure how IRMAA might affect your situation or how to reduce your exposure, get in touch with a licensed agent listed on this website. They can help you understand your options, appeal when necessary, and build a Medicare strategy that protects your finances.
