Medicare is a health insurance program for those aged 65 and older and those with certain disabilities. It provides coverage for hospital and medical fees, as well as prescription drug coverage. Medicare recipients may also be subject to a means-tested “Income-Related Monthly Adjustment Amount” (IRMAA). The IRMAA is a surcharge that is added to Medicare Part B and Part D premiums, and is based on a person’s income as reported in their federal tax return for two years prior. For those with higher incomes, this can lead to a significant increase in premiums. For 2023, the thresholds for the IRMAA brackets have been released by the Centers for Medicare and Medicaid Services (CMS).
IRMAA Premium Brackets for 2023
The IRMAA premium brackets for 2023 are based on modified adjusted gross income (MAGI) as reported in the federal tax return for two years prior. For example, for 2023 premiums, the MAGI reported on the 2019 federal tax return will be used. The brackets for the IRMAA premiums are as follows:
IRMAA Brackets for Medicare Part B in 2023
For single filers, the IRMAA bracket is as follows:
- $88,000 or less – no IRMAA premium
- $88,001 – $111,000 – IRMAA of $54.20
- $111,001 – $138,000 – IRMAA of $151.90
- $138,001 – $165,000 – IRMAA of $249.60
- $165,001 – $500,000 – IRMAA of $347.30
- Greater than $500,000 – IRMAA of $460.50
For married couples filing jointly, the IRMAA bracket is as follows:
- $176,000 or less – no IRMAA premium
- $176,001 – $222,000 – IRMAA of $54.20
- $222,001 – $276,000 – IRMAA of $151.90
- $276,001 – $330,000 – IRMAA of $249.60
- $330,001 – $750,000 – IRMAA of $347.30
- Greater than $750,000 – IRMAA of $460.50
IRMAA Brackets for Medicare Part D in 2023
For single filers, the IRMAA bracket is as follows:
- $88,000 or less – no IRMAA premium
- $88,001 – $111,000 – IRMAA of $11.60
- $111,001 – $138,000 – IRMAA of $71.20
- $138,001 – $165,000 – IRMAA of $130.80
- $165,001 – $500,000 – IRMAA of $190.40
- Greater than $500,000 – IRMAA of $253.00
For married couples filing jointly, the IRMAA bracket is as follows:
- $176,000 or less – no IRMAA premium
- $176,001 – $222,000 – IRMAA of $11.60
- $222,001 – $276,000 – IRMAA of $71.20
- $276,001 – $330,000 – IRMAA of $130.80
- $330,001 – $750,000 – IRMAA of $190.40
- Greater than $750,000 – IRMAA of $253.00
What is IRMAA?
The Income-Related Monthly Adjustment Amount (IRMAA) is a means-tested surcharge that is added to Medicare Part B and Part D premiums for those with higher incomes. The amount of the surcharge is based on a person’s income as reported in their federal tax return for two years prior. The idea behind the surcharge is to make sure that those with higher incomes pay a larger share of their health care costs. Those with lower incomes are not subject to the IRMAA surcharge.
Tips to Lower IRMAA
For those who are subject to the IRMAA surcharge, there are a few tips to help reduce or eliminate the amount. First, it’s important to make sure that the income reported on the federal tax return is accurate. If income is overestimated, then the IRMAA surcharge could be higher than it should be. It’s also important to make sure that the income reported on the tax return is the same as the income that is reported to Medicare. If the income reported to Medicare is higher than the income reported on the tax return, then the IRMAA surcharge could be higher than it should be.
Another tip to help reduce the IRMAA surcharge is to maximize deductions. This can include deductions for charitable contributions, medical expenses, and state and local taxes. Taking full advantage of these deductions can help lower the taxable income, which in turn can help reduce the IRMAA surcharge.
Conclusion
The Income-Related Monthly Adjustment Amount (IRMAA) is a means-tested surcharge that is added to Medicare Part B and Part D premiums for those with higher incomes. The amount of the surcharge is based on income as reported in the federal tax return for two years prior. For 2023, the thresholds for the IRMAA brackets have been released by CMS. For those who are subject to the IRMAA surcharge, there are a few tips to help reduce or eliminate the amount, such as making sure the income reported on the tax return is accurate and taking full advantage of deductions.