IRMAA 2024: What are the IRMAA Brackets (and How to Avoid It!) (2024)

In this article, I’m sharing everything you need to know about the IRMAA 2024 brackets.

I’m also sharing:

• What is IRMAA
• How IRMAA is calculated
• The 10 best ways to avoid IRMAA

If you want to lower your Medicare premiumsand learn how to reduce IRMAA, you will enjoy this article.

What Is IRMAA for Medicare

IRMAA stands for Income-Related Monthly Adjusted Amount. It represents an increase to Medicare Part B and Part D standard monthly premiums and is determined by the Social Security Administration.

Put simply, IRMAA is a pesky monthly fee (a.k.a. surcharge) that Medicare members must pay if they make too much money.

What income is IRMAA based on?

IRMAA is based on your Modified Adjusted Gross Income (MAGI) from two years ago.

In other words, the 2024IRMAA brackets are based on your MAGI from 2022.

If the 2022 amount is not available, your 2021 MAGI is used.

How is IRMAA calculated?

The IRMAA calculation is based on a Medicare-specific form of MAGI.

(MAGI for IRMAA is different than MAGI for non-healthcare purposes.)

To calculate your MAGI for the 2024 IRMAA brackets, grab your 2022tax return and locate your Adjusted Gross Income (AGI).

Then, add any tax-exempt interest earned or accrued and interest from U.S. Savings Bonds used to pay for higher education.

You must also add earned income while living abroad and income from specific sources not included in your AGI (e.g., Puerto Rico, American Samoa, Gaum, Northern Mariana Islands).

The total amount will represent your 2022MAGI specific to Medicare and IRMAA in 2024.

2023 IRMAA Brackets (If Still Needed!)

Your 2023 IRMAA brackets are based on your Modified Adjusted Gross Income (MAGI) from 2021. Below are the 2023 IRMAA brackets if you still need access to them for your current-year planning. 😊

2024 Medicare Part B and Part D Premiums

For 2024, the Medicare Part B standard monthly premium will jump to $174.70. This is a 5.9% increase from 2023, reminding us that medical costs typically exceed the inflation rate.

The average Medicare Part D monthly premium nationwide will decrease slightly to $55.50 in 2024.

However, Medicare Part D premiums vary by state and plan selection, and your premium may be higher than the standard published rate.

In fact, several states with large retiree populations (California, Texas, New York, Florida, and Pennsylvania) will experience sizeable Part D premium increases in 2024. For “high-end” plans, the average Medicare Part D increase in these five states is 42%.

» Learn about the3 Big Medicare Pitfalls to Avoid

What Are the 2024 IRMAA Brackets

Your 2024 IRMAA bracket depends on your Modified Adjusted Gross Income (MAGI) and tax filing status in 2022 (two years ago).

Here is how the IRMAA 2024 brackets work:

• If an individual or married couple filing separately makes $103,000+; Or
• A married couple filing jointly makes $206,000+…

…the IRMAA surcharge increases the 2024 Medicare Part B and Part D monthly premiums by the amounts below.

IRMAA Case Studies

Below are two hypothetical IRMAA case studies showing how the IRMAA 2024 brackets work in practice.

Case Study#1: Mary (Individual Tax Payer)

• Mary’s MAGI was $102,500 in 2022.
• She will not be subject to IRMAA in 2024 because her income is below the $103,000 threshold.
• Her 2024 Medicare Part B premium will be $174.70/month(no IRMAA surcharge).
• Her 2024 Medicare Part D premium will be based on what her plan charges (no IRMAA surcharge).

Case Study #2: Bill and Barbara (Married Filing Jointly)

• TheirMAGI was $207,000 in 2022.
• They will be subject to IRMAA in 2024 because their income exceededthe $206,000 threshold.
• Their 2024 Medicare Part B total premium will be $244.60 per month (base premium of $174.70 + IRMAA surcharge of $69.90).
• Their 2024 Medicare Part D total premium will be the base policy cost (a.k.a. “Plan Premium”) + a surcharge of $12.90 per month.

The 10 Best Ways to Avoid IRMAA in 2024

The best way to reduce IRMAA (or avoid it) is to lower your Modified Adjusted Gross Income (MAGI).

Here are some little-known tax-saving tips that can knock down your MAGI and help youpotentially escape this surcharge.

1.) Charitable Giving

Charitable giving benefits the non-profit organizations receiving your money. It also benefits you by reducing your MAGI for future IRMAA bracket calculations.

If you are charitably inclined, there are four (4) primary ways to make IRMAA-reducing donations.

Cash Contributions

The first is cash contributions. If you itemize deductions, a cash contribution to a qualified charitable organization will reduce your total taxable income in the year the contribution is made.

However, a cash contribution will not reduce your MAGI for the year. And that’s because the line for charitable deductions falls below the line for AGI on the tax return.

Cash contributions up to 60% of your Adjusted Gross Income (AGI) can be used as an itemized deduction in the current year to help reduce overall taxable income.

This donation method is great for tax planning but will not impact your MAGI or IRMAA calculation.

Appreciated Assets

Do you have appreciated securities like mutual funds, ETFs, or stocks?

If so, you can donate those appreciated assets directly to charity (as long as they accept gifts in this format).

The gift amount is based on the security’s market value on the contribution date. In some cases, appreciated assets such as art, collectibles, and real estate can also be contributed.

Donating appreciated assets does two things:

1. It avoids capital gains tax that the donor would otherwise pay if they sold the asset
2. It provides a tax deduction for taxpayers who itemize

Only point #1 above will help reduce your MAGI. And that’s because capital gains are included in the MAGI calculation.

In other words, avoiding capital gains on a donated asset can help reduce or avoid IRMAA in the current or future tax year.

On the other hand, if an appreciated asset qualifies for an itemized tax deduction (point #2 above), your overall taxable income would be reduced but not your MAGI. Similar to cash contributions, the line for charitable deductions falls below the AGI line on Form 1040.

Note:there are limits in terms of the percentage of your AGI that also apply here. Any excess amount will be carried over to a subsequent year for deduction purposes.

Qualified Charitable Distributions (QCDs)

If you are 70 ½ or older, you can donate up to $100,000 per year from your Traditional IRA to a qualified non-profit organization. This is known as a Qualified Charitable Contribution or QCD.

If you are charitably inclined and currently subject to Required Minimum Distributions (RMDs), this is a great way to reduce your MAGI for IRMAA purposes in 2023.

Depending on the amount, QCDs can be used as all or part of your RMD. This would directly reduce your IRMAA calculation for that tax year.

There are no taxes on QCDs. For example, if you use QCDs for some or all of your RMD in a given year, that money will not be taxed.

RMDs and the corresponding taxes they trigger are a big reason why Medicare recipients are pushed into a higher IRMAA bracket.

QCDs processed before age 73 — or QCDs above RMD amounts — can help reduce future Required Minimum Distributions. This can, in turn, help reduce your MAGI (and reduce IRMAA!) in future years.

Donor-Advised Fund (DAF)

A donor-advised fund (DAF) is an investment account used for charitable giving purposes only. Many major financial institutions offer DAF giving accounts (e.g., Fidelity Charitable, Schwab Charitable).

You can make lump-sum contributions to a DAF account in the current year, receive a tax deduction for the amount contributed, and then distribute amounts to various charities over time.

Similar to other charitable giving methods mentioned above:

• Contributions to a DAF can be made with cash or appreciated securities
• There are also limits to the percentage of your AGI that can be used as a deduction
• Excess donation amounts can be carried over to subsequent years

A donor-advised fund is a great way to reduce your MAGI and avoid future IRMAA adjustments.

» Learn how a Donor-Advised Fund Can Help You Offset a Year-End Roth Conversion Tax Bill

2.) Tax Deductible Retirement Account Contributions

You can make tax-deductible contributions to a retirement account if you have earned income. Some options include:

• Traditional IRA
• Traditional 401(k), 403(b), or 457 plan
• Solo 401(k)
• SIMPLE or SEP IRA

Making tax-deductible contributions will reduce your MAGI and potentially help keep you in a lower IRMAA bracket in a subsequent year.

3.) Tax-Free Income

When creating your retirement paycheck, you must be mindful of where you withdraw money. Some withdrawals are tax-free, and some are taxable.

By withdrawing money from tax-free sources, you can keep your taxable income low and reduce (or avoid!) IRMAA in 2023.

Here are three (3) examples:

1. Roth IRA: If you’re over age 59 ½ and have satisfied the “five-year rule,” withdrawals from a Roth IRA are tax-free.
2. Reverse Mortgage: Do not get a reverse mortgage just for tax benefits. However, if you have other reasons for securing one, it does provide access to tax-free cash.
3. Permanent Life Insurance: Certain types of permanent life insurance policies allow you to tap into the cash value tax-free. Before taking action, you will want to understand how this process works for your specific policy and any restrictions that might be in place.

4.) Tax-Efficient Investments

You can further minimize taxes using tax-efficient investments in your plan-vanilla brokerage accounts.

Here are four examples:

1. Avoid high turnover funds. A high turnover fund frequently buys and sells securities on your behalf. This creates unnecessary short-term and long-term capital gains that are passed down to you, the investor.
2. Avoid dividend stocks and dividend funds. While dividends sound nice, they spike your tax bill. High dividend funds are also expensive, which is a big reason why, historically, they have not been a good investment. If you want to earn a higher rate of return AND keep taxes low, stay away from high-dividend stocks and funds.
3. Choose ETFs over mutual funds. Mutual funds pass capital gains down to the investors. Even if you don’t trade your mutual fund, you can still be on the hook for unwanted capital gains taxes due to activity inside the fund by the investment manager. In most cases, ETFs avoid this problem and give you control over your capital gains, making them more tax-efficient.
4. Consider asset location. If you have investments in both taxable and tax-advantaged retirement accounts, asset location can help minimize taxes. For example, bonds might be better suited for tax-advantaged retirement accounts because they generate regular taxable income. Growth-oriented or broad-based market funds (e.g., S&P 500 ETF) are often a better fit for taxable accounts. And funds with the highest future return potential (e.g., small-cap value) usually belong in a Roth IRA.

5.) Tax-Efficient Withdrawal Strategies

In retirement, it’s critical to have a withdrawal strategy that generates reliable, tax-efficient income. Here are three (3) things to keep in mind:

1. Avoid withdrawing money without a systematic process in place. Take the time to create a rules-based withdrawal plan documenting where these funds will come from and when. At a minimum, review your plan annually. If implemented correctly, you will mitigate taxes, maximize your retirement paycheck, and help ensure you don’t run out of money.
2. Adopt a withdrawal strategy backed by academic research. For example, The 4% Rule, Floor and Ceiling, Guyton’s Guardrails, and Total Return Investing. These are all evidence-based approaches supported by peer-reviewed academic research. Guardrails, in particular, is what’s known as a dynamic withdrawal strategy.
3. Commit to one single approach. Perfect is the enemy of good. While the grass might look greener in a few months (or years), staying committed to your chosen withdrawal plan will put you in the best position for success. Changing withdrawal strategies and chasing shiny objects will typically result in excess fees, more taxes, and lower returns.

6.) Strategic + Informed Tax Decisions

Unlike the direction of the stock market, you can control your tax bill.

By taking control of your tax bill and making informed decisions, you can strategically avoid (or reduce) IRMAA surcharges.

For example, before you blindly sell real estate, review the tax implications of the sale.

In some cases, it might make sense to defer the capital tax into a subsequent year for IRMAA purposes. Or, there might be an opportunity to exchange the property and avoid paying taxes entirely.

7.) Medicare Savings Accounts (MSAs)

MSAs have two components:

1. Medicare Advantage Plan (Part C). This includes a high deductible health plan and only kicks in to pay eligible expenses once the deductible is met.
2. Medical Savings Account (MSA). This is a savings account established at a bank selected by the plan. Medicare contributes a set amount to the account at the beginning of each year. The funds can cover out-of-pocket medical expenses, including those not covered by Medicare.

Like an HSA account, any money not used at the end of the year can be carried over to the next year.

Also, the money contributed to the MSA by Medicare is not taxable.

Best of all, withdrawals are tax-free if the money is used for qualified medical expenses.

8.) Roth Conversions

At age 73 (or 75), the IRS forces you to begin withdrawing money from your Traditional IRA/401(k) accounts.

These withdrawals are known as Required Minimum Distributions (RMDs), and every dollar distributed is taxed as ordinary income.

RMDs can be hundreds of thousands of dollars per year, causing unwanted IRMAA surcharges.

To reduce your future RMDs (and your future taxable income!), consider doing Roth conversions during your “gap” years.

A Roth conversion is the process of withdrawing money from your Traditional IRA, paying taxes on the withdrawal, and immediately transferring the dollars to a Roth IRA.

Your gap years begin when you retire and at age 73 or 75 (when RMDs begin).

For most retirement savers, income is the lowest during this period of time, allowing them to get money out of their Traditional IRAs at a favorable tax rate via Roth conversions.

9.) Tax Gain Harvesting

Tax gain harvesting is a little-known strategy that can be effective during your retirement gap years.

Long-term capital gains have their own tax bracket. And depending on your income, you can sell investments with long-term capital gains at a 0% tax rate. (i.e., You don’t pay ANY taxes on the profits.)

For 2024, the 0% bracket for long-term capital gains extends to income up to $44,625 for single filers and $89,250 for married filing jointly.

This strategy can help minimize capital gains that need to be realized in later years when your income includes Social Security and RMDs.

10.) Life-Changing Event

If you’ve experienced a life-changing event (as defined by the Social Security Administration) AND are subject to IRMAA in 2024, you can request to have your IRMAA surcharge reconsidered.

If you are impacted by one or more of these life-changing events, you can start the reconsideration process by calling the Social Security Administration at 800-772-1213 and/or completing Form SSA-44.

IRMAA Appeal Form and How to Appeal in 2024

Form SSA-44 is the form for IRMAA appeals in 2024.

In addition to the life-changing events listed in the prior section, you can appeal your IRMAA adjustment if you think incorrect data was used to calculate the surcharge.

For example, an amended tax return that was filed and not taken into account for IRMAA purposes by mistake.

The IRMAA appeal process can be started by any one of the following three actions:

1. Requesting a new “initial determination” from Social Security
2. Submitting form SSA-44
3. Calling the Social Security Administration at (800) 772-1213

If your IRMAA appeal is denied, don’t panic. Several levels of the appeal process provide additional opportunities to make your case.

Lastly, there are important deadlines for IRMAA appeals. For example:

• You’re only given 60 days to request an appeal.
• The 60-day clock begins when you receive your Part D IRMAA letter.
• The Social Security Administration assumes you will receive your letter five days after it’s time-stamped.

If you are ever in the position to appeal your IRMAA surcharge, read and understand the entire process upfront so you don’t miss a key deadline.

History of IRMAA

While origin stories are interesting, learning the history of IRMAA can also help us make educated decisions about future adjustments (e.g., 2025 IRMAA brackets and beyond).

When did IRMAA start?

IRMAA was initially enacted in 2003 as a part of the Medicare Modernization Act.

Initially, IRMAA only applied to Medicare enrollees with higher incomes.

The IRMAA brackets were first implemented in 2007.

What changes have been made to IRMAA brackets since 2007?

There have been two big changes to IRMAA since the brackets were first implemented:

1. In 2011, the Affordable Care Act (ACA) expanded IRMAA to include higher-income enrollees in Medicare Part D.
2. In 2018, the Bi-Partisan Budget Act created a 5th IRMAA bracket. The stipulation was that this new bracket would not be increased for inflation until at least 2028.

For the last 14 years (2007-2021), IRMAA surcharges have grown steadily. The various IRMAA brackets have increased from 4.73% to 8.02%.

2025 IRMAA Brackets (Projected)

While we don’t have a crystal ball, estimating the projected 2025 IRMAA brackets is relatively simple.

To start, below is an estimate of the 2025 IRMAA brackets assuming 0% inflation.

If inflation exceeds 0%, the 2025 IRMAA brackets will likely be higher.

And, if inflation is less than 0% (unlikely!), the 2025 IRMAA brackets will likely be lower.

We will know the official IRMAA brackets for 2025 when they are announced in the fall of 2024.

Remember, IRMAA is based on your income from two years ago. So, your 2023Modified Adjusted Gross Income (MAGI) will determine your IRMAA adjustments for 2025.

Note: In 2020, the Medicare Board of Trustees announced projections for future IRMAA adjustments (2021-2028). The adjustments implied a 6.20% inflation rate for Part B and a 6.58% inflation rate for Part D. Of course, things can change significantly between now and the year 2028.

Summary of IRMAA 2024

IRMAA increases Medicare Part B and Part D premiums for high earners. Thankfully, you can employ several strategies to reduce your MAGI and, in turn, your IRMAA adjustments.

If you only take one thing from this article, it’s that your income this year will directly impact your IRMAA bracket two years from now.

Beyond managing your income appropriately, understanding the basics of Medicare and periodically reviewing your Part D plan (or Medicare Advantage Plan) can also help you save money on your premiums and future out-of-pocket costs.

Additional Medicare IRMAA Resources

• IRMAA Fees in Retirement and How To Avoid Them (Peter Lazaroff, Retirement Podcast Network Member)
• What You Need to Know About Medicare With Ashby Daniels (Stay Wealthy)
• Will I Avoid IRMAA Surcharges (PDF Flowchart)
• What to Know About Medicare Surcharges (Fortune)

While IRMAA surcharges are pesky, understanding if and when they might apply to you can put you in a significantly better financial position.

At the end of the day, it might be worth accepting IRMAA for a few years in exchange for reducing your long-term tax bill by six or seven figures via other planning strategies.