Beware of IRMAA

November 16, 2023


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Beware of IRMAA

Hi, this is Chris Beale with New England Capital Financial Advisors, LLC with our latest video blog. I’m going to continue with the Social Security series of blogs that Ann Ocone started when she discussed the Social Security cost-of-living adjustment of 3.2% for 2024. Then Chris Lee’s blog talked about common questions concerning Social Security.

My blog will discuss IRMAA. I’m not talking about my lovely 95-year-old neighbor, but IRMAA as in Income Related Monthly Adjustment Amount.

By way of background, know that Medicare Part A typically covers hospital costs, Medicare Part B typically covers 80% of your doctor costs and Part D covers drug prescriptions. IRMAA is the Government’s way to reduce their cost of Medicare Part B –doctor costs, and after the Affordable Care Act or Obamacare was passed, IRMAA also applies to Medicare Part D that covers your drug prescriptions. My discussion will generally apply not to Medicare Advantage Plans, but only to traditional Medicare plans. 

Most individuals will pay $174.70 per month for Part B (doctor cost) premiums in 2024. But as you can see in the table, high income earners can pay as much as $594 per month per person and premiums for Part D prescriptions can range from zero to $81 per month.


Normally, you will be notified of the premium costs when you enroll initially or leave your employment. Then you will be notified annually in November thereafter. IRMAA premiums are based upon your prior two years of income on your tax returns.

So, here’s where our planning comes into play. If you’ve worked the prior two years before enrolling in Medicare, but are now retired you can appeal IRMAA, and have your premiums reduced to reflect your current income.

There are typically eight life-changing events that are grounds for IRMAA appeals.

  • Marriage
  • Divorce
  • Death of a spouse
  • Work stoppage
  • Work reduction
  • Loss of an income producing property
  • Loss of pension income
  • Employer settlement payment.

IRMAA is also why we need to take Roth conversions into consideration and why we look for ways to keep capital gains low by our tax loss harvesting strategies, as Roth conversions and capital gains will increase income and possibly increase IRMAA premiums. Larger required minimum distributions can cause higher premiums, especially in the later years of our lives.

Finally, as an inflation reminder, as if you need another reminder, when President Lyndon Johnson signed the Medicare bill into law in 1965, the part B premium was three dollars a month. If you are only paying $174.70 per month that’s an annual increase of over 6% per year or twice the current inflation rate!

Call our offices if you have any questions and thank you very much.


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