Key Takeaways
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Your Medicare premiums in 2025 are based on your income from your 2023 tax return, which means a two-year delay in how earnings affect costs.
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If your income was unusually high in 2023 due to a one-time event, you may be able to request a lower premium through an IRMAA appeal.
Why Medicare Costs Can Suddenly Jump
If you’re enrolled in Medicare and notice that your premiums have suddenly gone up, you’re not alone—and you’re not imagining things. In 2025, many Medicare beneficiaries are facing higher-than-expected monthly charges for Part B and Part D coverage. But here’s the catch: these increases are often based on income from two years ago, not your current financial situation.
This pricing mechanism is known as IRMAA—the Income-Related Monthly Adjustment Amount. And understanding how it works can make a significant difference in how much you pay and whether you have any recourse.
What Is IRMAA?
IRMAA is an additional charge that gets added to your standard Medicare Part B and Part D premiums if your income exceeds certain thresholds. The Social Security Administration (SSA) determines whether you owe IRMAA based on your modified adjusted gross income (MAGI) from two years prior.
So in 2025, SSA uses your 2023 income to determine whether you owe IRMAA—and how much.
Current 2025 Income Thresholds
For 2025, you may be charged IRMAA if your 2023 MAGI was:
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More than $103,000 if you file individually
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More than $206,000 if you’re married and file jointly
These thresholds have been adjusted upward from 2024 to account for inflation. The higher your income above these amounts, the more you may owe each month in surcharges.
How the Two-Year Lookback Affects You
The two-year lag can feel unfair—especially if your financial situation has changed since then. You might have sold property, received a bonus, cashed out retirement savings, or even worked a final high-income year before retiring in 2023. But in 2025, you’re now retired and living on a fixed income—yet still stuck with high Medicare premiums based on that past income.
This built-in delay is part of the system. It’s designed to use finalized IRS data, which is typically only available after the close of a tax year.
Monthly Impact of IRMAA in 2025
While standard premiums apply to most enrollees, those who fall into IRMAA brackets will pay more. These surcharges apply monthly and can add significantly to your costs, especially if you’re in one of the higher brackets. Though exact surcharge amounts vary by tier, they apply to both:
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Medicare Part B (Medical Insurance)
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Medicare Part D (Prescription Drug Coverage)
Because these are deducted directly from your Social Security check (if you receive benefits), the impact can be easy to overlook—until your deposit seems smaller than expected.
Can You Avoid IRMAA?
You can’t avoid IRMAA if your income is above the threshold. But you may be able to reduce or eliminate it in future years by managing your income strategically. Options might include:
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Delaying withdrawals from tax-deferred retirement accounts
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Spreading out large asset sales over multiple years
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Working with a tax professional to control your MAGI
However, if the high income was a one-time event, like a home sale or retirement payout, there’s another option: requesting a reconsideration.
When and How to Appeal IRMAA
If your income has gone down due to certain qualifying life events, you can request an IRMAA reconsideration from SSA. Common qualifying events include:
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Retirement
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Death of a spouse
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Divorce or annulment
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Work reduction
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Loss of income-producing property
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Loss of pension
To file an appeal, submit SSA Form SSA-44, along with supporting documentation. You can submit this at your local SSA office or by mail. If approved, your Medicare premiums may be adjusted to reflect your current, lower income.
How to Know If You’re Paying IRMAA
Each year, you receive a letter from SSA called the Initial IRMAA Determination Notice. This outlines:
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Your 2023 tax year income (used for 2025 premiums)
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The specific amount of your monthly IRMAA charges for Part B and Part D
Review this notice carefully. If the income figure is incorrect—or if your financial circumstances have changed—you may be eligible to appeal.
Strategies for Lowering IRMAA in Future Years
While you may not be able to change what happened in 2023, you can plan ahead for 2026 and beyond. Here are some ways to help minimize future IRMAA charges:
1. Monitor Your MAGI Closely
Your modified adjusted gross income includes wages, interest, dividends, capital gains, and tax-deferred distributions (like those from traditional IRAs and 401(k)s). Keeping your MAGI below the IRMAA thresholds can help you avoid surcharges.
2. Use Roth Conversions Strategically
If you convert a traditional IRA to a Roth IRA, the conversion amount is counted as income in that year. While this can temporarily push you into an IRMAA bracket, doing small conversions each year may help you lower long-term taxable income in retirement.
3. Consider Tax-Free Income Sources
Income from Roth IRAs, Health Savings Accounts (HSAs), and municipal bonds does not count toward your MAGI. These sources can help you supplement retirement income without triggering IRMAA.
4. Time Your Asset Sales
If you’re selling investments or property, try to time the sale so that it doesn’t push you over the threshold in a given year. This might mean spreading out capital gains over multiple tax years.
5. File Taxes Correctly
Sometimes filing status makes a difference. If you’re eligible to file jointly, it can help you stay under higher combined thresholds. Filing separately may reduce some deductions and expose you to higher IRMAA tiers.
Understanding the SSA Review Timeline
After you file for an IRMAA reconsideration, SSA will review your request and notify you in writing. The review process can take several weeks or even a couple of months. If approved, your new premium rate will be applied going forward, and in some cases, you may receive a refund for previous months.
If your appeal is denied, you have the right to request a hearing before an administrative law judge. This next step must be taken within 60 days of receiving SSA’s denial letter.
The Long-Term Outlook for IRMAA
As healthcare costs rise and more high-income retirees enter Medicare, IRMAA will likely continue to affect a growing share of enrollees. The thresholds are adjusted annually, but they don’t always keep pace with inflation or earnings trends, especially for retirees who had higher incomes before retirement.
In 2025, roughly 8% of Medicare beneficiaries are estimated to pay IRMAA. That percentage is expected to grow over the next decade.
Staying informed—and taking action where possible—can protect your finances and give you more control over your healthcare costs.
Staying Ahead of Income-Based Medicare Costs
Income-related surcharges are a reality for many Medicare enrollees, but they don’t have to catch you off guard. By understanding how the system works, monitoring your income, and appealing when justified, you can potentially save hundreds—or even thousands—on your premiums.
If you’re uncertain whether IRMAA applies to you or want help with an appeal or future planning, reach out to a licensed agent listed on this website for advice tailored to your situation.
