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HOW MUCH DO WE PAY for Medicare? You might think that premiums would be fixed, like the prices on a restaurant menu. But instead, the correct answer is “it all depends”—on your income, which isn’t necessarily a good thing in our case.
It’s a fact of life: The more you make, the more you may have to pay for Medicare, the health insurance program for older Americans. Medicare calls its variable pricing system the income-related monthly adjustment amount, or IRMAA for short. The ins and outs of IRMAA remind me of dealing with a crotchety old aunt who’s hard of hearing and slow to respond. Still, my experience may help those approaching age 65 to avoid her or at least minimize her impact.
The income level that affects Medicare premiums is what you earned two years ago. Confusing but true. I knew ahead of time that our income in 2021 would potentially bump me into the Medicare premium stratosphere. That’s because, to simplify our lives in preparation for retirement, my husband and I sold two homes that year.
For a married couple filing jointly, our 2021 income could not be one penny above $194,000 or I’d be on the hook for higher Medicare premiums. Even though the two home sales were a one-time gain, they were still counted as regular income by Aunt IRMAA.
Fortunately, in the same year, my husband and I also both reduced our work hours. Unlike the home sales, a change in job status does allow you to ask for a reduction in IRMAA premium surcharges based on changed circumstances. But as I discovered, the appeal process isn’t always easy.
Our 2021 income was going to escalate my premiums by two levels with Aunt IRMAA—or so I was initially informed. My total Medicare Part B premium for 2023 was set to climb from the standard $164.90 a month to $329.70. Then there was another $31.50 a month extra for Part D drug coverage, although I take no medications. In all, my monthly Medicare premium would potentially be $361.20 a month.
My husband is not yet on Medicare. Still, we’re purposely keeping our income low so he can qualify for a low-cost Washington State health plan until he reaches age 65 and becomes eligible for Medicare—and so, in the future, both of us stay below Aunt IRMAA’s super-premium limits.
The tricky part is you don’t know what the income limits will be in the future because they change every year. It’s terribly confusing and yet important because, if you’re close to the edge of a premium increase and, say, make a Roth conversion, it could make a big difference to your premiums two years from now. All you know for sure is that this year’s income will affect your 2025 premiums—but you don’t know what the IRMAA income thresholds will be.
On the very day I got my notice of increased premium for 2023, I attempted to file an appeal explaining that our work situation had changed—and hence our ongoing income was far lower than it had been in 2021. I knew I was in the right, but it turns out appealing Aunt IRMAA’s ruling is neither easy nor fast. Here’s a timeline of how the process went.
Nov. 26, 2022. Received my Medicare premium notification in the mail on Saturday, informing me I had to pay $361.20 a month in 2023.
Nov. 28. On Monday, after three hours of trying to get through to a representative, I mailed my appeal form to my local Medicare office.
Dec. 5. No update on the Social Security or Medicare site, or even a record of receiving my appeal. I called a Medicare phone number and was given a different number to call at Social Security for appeals. After an hour on hold, I finally hung up.
Dec. 8. Called Social Security again and this time got through. The rep told me that my paperwork had been received but had no comment as to whether it was satisfactory. I was told I must pay the higher premium until I was notified in writing of a problem or acceptance of my appeal.
Jan. 10, 2023. I was given all kinds of confusing information on the phone with Social Security. No information had been updated, except that my appeal had been received. Finally, I was given a direct number to call at my local office.
Feb. 22. After multiple attempts, I got through to the local office. A harried employee stated they’re short-staffed and “it sucks.” She also found my appeal and said it seemed everything was in order, so someday someone would review it.
March 15. Called the local office again and was told by a nice but unknowledgeable staff person that, if I met qualifying circumstances, my Medicare premium would be reduced from $361.20 to $164.90 a month. She had me verify my last year’s taxable income and said she would try to expedite things.
April 3. I talked to Robert at my local Social Security office who said, “Everything looks in order.” He said he would send it to the folks responsible for making a ruling, whom he identified as Jessica and her manager. He said, “It has been too long, call back next week to check on things.” By this time, I was asking for names when I called.
April 11. I called my local office back—repeatedly. Finally, someone named Irina answered, and she was the angel who helped me. She was the first person who knew what to do and took care of it in minutes. Irina said I would get a letter in the mail confirming that I qualified for the baseline Medicare premium of $164.90 a month. She also said I would get a refund of $785.20 for the four months I’d been paying excessive premiums to Aunt IRMAA.
April 17. I received a letter adjusting my payment to $164.90. No word on my refund. An interaction with the Medicare site’s chat function said I wouldn’t get a refund. Instead, my overpayments would be applied against my future premiums and I wouldn’t be billed again until I owed Medicare more than $10.
May 7. The Medicare site still shows I owe a premium for May of $361.20
May 22. The Medicare site finally shows I owe the standard premium of $164.90 a month. I was done. Meanwhile, my neighbor, who faxed her IRMMA appeal in January and did nothing else, received an actual refund.
Just for fun, I kept track of the time I spent trying to resolve this issue. It was at least eight-and-a-half hours. Here’s hoping you spend less time with crotchety old Aunt IRMAA.
Marla McCune is a registered nurse with a career spanning 45 years. She also loves journaling and outdoor activities, including swimming, photography and gardening. Marla’s previous articles were What Do You Want and Finally in Charge.
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It is time to get rid of IRMAA. My wife and I receive civil service annuities. We were advised to join the TSP to supplement our pensions. The TSP RMDS is causing a significant rise in our Medicare premiums. We worked hard to receive those pensions. IRMMA is nothing but an unfair reduction in our retirement income that should be abolished.
I have filed the appeal twice successfully. The first time was before COVID and I filled out the appeal and took it with my current tax return that I just filed showing my income had gone back down to below penalty level and went to my local Soc. Sec. office and gave it to the employee and he took it from there. Took about 2 months to get new non-penalty premium. Second time was during COVID shutdown so I mailed it in to the same office. Took about 2 months again. Try Cert. Mail instead of telephone, or just show up at open time, sign in with reason for visit, then get seen within 30 min.
Another wrinkle to IRMAA. I am under Railroad Retirement as I had 70 months of railroad service. My Medicare is processed through the Railroad Retirement Board based on information provided from Social Security. I pay my premiums and IRMAA to RRB as I have not taken Railroad Retirement. I have been on Medicare for 18 months and currently have multiple appeals outstanding. The process is even more convoluted with two bureaucracies involved. Social Security affirms an appeal and then transmits the info to RRB. RRB is late in changing my billing. In the meantime, I shortpay them and send them the SS decision document. Around and around we go. When I first started on Medicare I tried phone calls to RRB. They only work 9-3 and the wait time can be over 3 hours. I’ve also tried calls to SS. Similar wait times. I have found mailing appeals more effective.
We have been paying IRMAA for the last two years. We paid approximately $14,000 (for me and my wife) for IRMMA and prescription drug plans each year. Our taxable income was high because we converted traditional IRA to Roth. My wife is an Anesthesiologist and she could contribute more for her defined benefit and defined contribution pension plans because she was incorporated and we rolled over the pension to traditional IRA. That is the reason we had more money in the traditional IRA.
I did not know IRMAA was tax deductible until I read Dick Quinn’s comments below. We have been taking standard deduction for income tax purposes. We might have benefitted slightly if we had itemized the deductions. We might have been better off if all of the conversion was done in a single year because we wouldn’t have to pay IRMAA for two years. Because we live in Florida our deductions are limited mainly to Real estate taxes and IRMAA.
I do not like IRMAA, but feel happy that I have a higher income!
I don’t like it either, I too am happy I have the necessary income. I don’t care if I receive no additional benefits. Actually, I would be very happy not ever again to need to use Medicare.
Marla, if you view those 8+ hours as work hours, you did great. You saved yourself about $200/month, which over five years adds up to $12,000. So you just earned around $1400 an hour. Not bad.
But doesn’t the IRMAA surcharge go away after a year if your income falls below $194,000 again? In this case the IRMAA surcharge was triggered by a one-time event, selling two houses. In that case the actual savings would be $2400.
Yes, that’s a good way to look at it!
I have paid IRMAA every year since I signed up for Medicare. If you did well as an investor, it goes with the territory.
Yup, I will be facing IRMAA charges for the rest of my life when I have to start taking RMDs from my IRA. I may do a Roth conversion to avoid this.
I’m sorry that happened to you but in my experience and that of others I know, the appeal process was simple and it didn’t take very long . Online is the way to go.
Although there is the online form to fill out it still needs to be mailed or faxed in. I wanted to know my form was received and filled out correctly, hence all my attempts to get some answers.
One year I filed an IRMAA appeal using the online process. It’s been about 5 years but if I recall correctly I filled out a form and submitted it and some supporting documents online. Initially, I tried phone calls and appointments, but that was frustrating and ineffective. But when I simply followed the online process it was quite painless and worked well.
About the only element I can control is limiting my 2023 income to avoid exceeding the nearest IRMAA cliff in 2025. The Finance Buff website offers projected 2025 income limits for each tier, based on regularly updated data and various inflation scenarios. The most recent update was June 13.
2023 2024 2025 Medicare Part B IRMAA Premium MAGI Brackets (thefinancebuff.com)
I think those are a little high. I am using a $160K for singles number for a more conservative approach in taking 2023 income.
I’m willing to risk some red negatives on this comment because I’m fascinated by the obsession many of us seniors have with the Medicare income based premiums which we have been over before on HD.
‘’Yeah, higher income people pay more. Isn’t that what we all want? Isn’t much of America obsessed with the wealthy paying their fair share? I read often the criticism of the wealthy manipulating earnings and so called tax loopholes to avoid paying more.
While IRMAA is not a tax and the premiums are tax deductible if you itemize, don’t the strategies to avoid them follow the same in concept as Bezos or Musk might employ to avoid tax?
The fact income used is delayed is quite logical because our 2023 income is not known in time to set 2024 premiums, hence a delay.
For a couple to pay IRMAA their income (not even counting Roth) must be $194,000 which is four times the median household income of families age 65 and older. What they pay equals and extra $790.80 a year + Part D.
Let’s keep a perspective, only about 7% of Medicare beneficiaries pay IRMAA premiums.
‘The bureaucracy illustrated is no doubt real, but hardly a surprise when dealing with government agencies – try appealing a Medicare claim denial.
I suggest what we pay today for our benefits will look like a bargain in a few years given the state of the Medicare and Social Security trusts.
AMEN Richard,
Thanks for reviewing what I have written before about this. If you are in the top 7% of income earners in retirement feel blessed and instead of spending hours of your time trying to save a few buck spend it enjoying your wealth!
I haven’t gone back, but I think you posted the EXACT same thing a few weeks back. Do you have your comments bookmarked so you can just cut/paste?
I give you downvotes just because its pretty much the same comments over and over….
Probably posted similar, if not same info before only because the same issue has come up again. Facts don’t change much.
Uh-huh. And didn’t you just post the same comment twice in three minutes in the same response thread?
My rich friend who has been retired for 18 years told me he had just signed a joint return for $641,000 in AGI. He pays about $220K a year in various taxes, leaving just $420K to live on. What does he do? He just smiles and pays.
It is a tax. Merriam Webster: “a charge usually of money imposed by authority on persons or property for public purposes”
Investopedia: “Taxes are mandatory contributions levied on individuals or corporations by a government entity”
My ancient Concise OED: “Contribution levied on persons, property or business, for support of government”
As I pointed out last time this came up, your 7% figure is too low. Also, I am not wealthy, my net worth is average for my age and education, but thanks to RMDs I am a couple of rungs up the IRMAA ladder.
But this article was about the torturous journey required to get an exception. A journey that would be easier if there were more people staffing the relevant offices, which requires actually wealthy people (and corporations) to pay more taxes.
Here’s another fact. In those years when the SS COLA is insufficient to cover the Parts B and D premium increases and there is a hold harmless on premiums for most beneficiaries, not only does the hold harmless not apply to IRMAA, but those not covered by the hold harmless pay an additional premium to make up the lost revenue to Medicare.
Then the non IRMAA premium is also a tax which it is not. All Medicare premiums including IRMAA are tax deductible as a medical expense. Did you ever hear of a federal tax deductible on federal taxes?
The 7% comes from several different sources so if you can find another source with a high percentage let’s see it, but in any case it will be very low.
No matter what it’s called or the source of one’s income, how can anyone argue that those with incomes double or more most people should not pay more?
Nothing to do with anyone’s net worth, but RMDs which most people actually need to live on are income. Does it really matter that, as I do, that you reinvest them because they are not needed as income?
When I read something like “purposely keeping our income low so he can qualify for a low-cost Washington State health plan until he reaches age 65 and becomes eligible for Medicare—and so, in the future, both of us stay below Aunt IRMAA’s super-premium limits” I have a laugh. How many retirees can actually do that and pay their bills?
IRMAA and Medicare premiums are deductible as a medical expense but only if they exceed 7.5% of AGI so probably not very helpful unless have major medical expenses.
I posted my source the last time this came up, I don’t have time to find it again right now. Aside from RMDs my income, like my net worth, is average for my age and education.
Medicare premiums are an exchange for a service. IRMAA payments are not. I don’t get more medical services because I pay them.
You can’t same, “aside from my RMDs my income…”. Your RMDs are part of your income.
Because you put the money into the account BEFORE taxes, those $ along with the investment returns are taxed when you take your RMDs.
Eventually you have to pay taxes on your income and investment returns. Pay now or pay later, either way you have to pay the tax person.
Quinn is a broken record. He must save his reponse to every IRMAA post and just cuts & pastes into the next….
“It is a tax…”
Nope. No one is forcing you or anyone else to go on Medicare. If you think you can find a better deal in health insurance, from wherever, you are free to do so. And never pay a Part B, D, or IRMAA premium ever again. So no, IRMAA is not a tax, merely a higher payment for a *voluntary* government program.
Actually unless you have employer group coverage, you can’t get other insurance.
I guess I could have made clearer, the alternatives don’t have to be other insurance, although as OldITGuy points out below there are some of those around too. Plenty of my ancestors never paid a nickel in Medicare premiums, and lots of people go back to work or move to another country specifically for health insurance, for example.Then, there are those who go without, those who do health-share “ministries”, bartering, and on and on. And I never claimed these were necessarily better than having Medicare. My original point was that the claim that Medicare Part B premiums and related surcharges are a tax is simply false. If I don’t pay my income taxes, I can go to jail; if I don’t pay my Medicare Part B premium, nothing happens. I’m just responsible for paying for my own healthcare, however I can manage that.
Like you, I’m amazed at the disproportionate level of hand-wringing and ink-spilling, over what would be maybe amount to about 800 bucks a year for a single tax filer with over $100k of income. I’d love to have that “problem”, but alas, it’s not to be. And by golly, I’m willing to make this promise: If it ever is a “problem” for me, I’ll gladly pay it, and know that I’ll be happier (and wiser!) for it. Enough said.
There’s quite a few folks that simply rely on their VA health care. Then there’s some groups who get to stay on their (previous) employer group coverage even in retirement (including about 40% of retired federal employees who decline medicare). I agree it’s not huge numbers, but it is happening. So I think his point stands that some folks don’t choose to be on medicare so it’s not a tax.
You don’t pay capital gains taxes unless you choose to sell property for a capital gain. That doesn’t mean it isn’t a tax.
I didn’t say that paying capital gains taxes were not taxes. They are. What I did say was that paying IRMAA surcharges, or Medicare Part B or D premiums, is completely voluntary. And are therefore not taxes.
Capital gains taxes are also voluntary. A lot of people never incur them.
This whole voluntary vs involuntary distinction is a red herring. Re-read the definitions of a tax. But also consider customs duties, which were the first form of taxation. They are 100% voluntary. I have done a lot of foreign travel, but I have yet to pay one red cent in customs duties.
Do you mean voluntary to the extent what was purchased did not exceed the allowable limit for a person? If that’s it, I never paid a customs tax either.
You’ll get no negative from me. I agree with you 100%.