For most Medicare beneficiaries, the Part B premium is a standard flat rate. But for higher earners, Medicare charges more — sometimes significantly more. This income-based adjustment is called IRMAA, and it's something anyone with moderate-to-high retirement income should understand before they turn 65.
What Is IRMAA?
IRMAA stands for Income Related Monthly Adjustment Amount. It's an additional surcharge added to your Medicare Part B and Part D premiums if your income exceeds certain thresholds. It's not a penalty for doing something wrong — it's simply a higher premium tier for higher earners.
How Does Social Security Determine Your Premium?
Social Security uses a two-year lookback period, assessing your Modified Adjusted Gross Income (MAGI) from two years prior to determine your current premium. For example, your 2024 Medicare premiums are based on your 2022 tax return.
This lag can create surprises. If you had an unusually high-income year two years ago — from selling a business, receiving a severance package, selling a home, or taking a large retirement distribution — you may find your Medicare premium is significantly higher than your neighbors', even if your current income is much lower.
What Are the Income Brackets?
IRMAA is applied in tiers. The standard Part B premium applies to individuals with income at or below approximately $103,000 (2024 figures; thresholds adjust annually). Above that, premiums increase at each income bracket, with the highest tier for incomes above $500,000 carrying a premium roughly three times the standard rate. Part D also adds a fixed IRMAA surcharge on top of your plan's premium.
Can You Appeal an IRMAA Determination?
Yes — and this matters for the situation described above. If your income has dropped significantly since the year Social Security used to calculate your premium, you can file for a Life-Changing Event (LCE) review. Qualifying life events include:
- Marriage, divorce, or death of a spouse
- Retirement or reduced work hours
- Loss of income-producing property
- Receipt of an employer settlement
The appeal is submitted after you receive the IRMAA notice — not preemptively. If approved, Social Security recalculates your premium using your more recent income.
What About Lower-Income Beneficiaries?
The income adjustment works in both directions. Low-income Medicare beneficiaries may qualify for assistance programs that reduce or eliminate their Part B premium entirely:
- Medicare Savings Programs — State-run programs that help pay Part B premiums, deductibles, and cost-sharing for eligible beneficiaries
- Extra Help (Low Income Subsidy) — A federal program that reduces Part D drug costs for those who qualify
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