Yes, the IRMAA is calculated each year, based on your income thresholds and your tax returns. Your Medicare premiums (specifically parts B and D). Your Medicare premiums (specifically parts B and D) feel this impact directly. The Social Security Administration plays a crucial role in this equation, as it examines your adjusted gross income from two years earlier to determine if an IRMAA surcharge applies.
The income used to determine IRMAA comes from sources often used by many retirees, including taxable distributions from traditional IRAs, 401 (k), s, 403 (b) plans, and Social Security benefits. The IRMAA is an “exaggerated surcharge”. This means that if your modified adjusted gross income exceeds the threshold by just one dollar, you'll have to pay higher premiums. You should consider the risk of a one-time increase in your income that could trigger IRMAA, for example, with profits from selling a home or converting your traditional IRA to a Roth IRA.
To avoid this risk, make sure you convert to Roth at the right time, so you can avoid IRMAA when accepting tax-free distributions. Learn more about strategies, such as how to reduce taxes on required minimum distributions that could otherwise result in the surcharge. Here's how homeowners can challenge their home valuation and potentially lower their property taxes with a short history lesson. From procrastination to artificial intelligence, these five obstacles to estate planning could mean that your heirs are left with bureaucratic problems or a reduced inheritance. This means that if your income is higher or lower year over year, your IRMAA status may change.
If the SSA determines that you must pay for an IRMAA, you will receive a notification with the new premium amount and the reason for your determination. If the SSA determines that you must pay a higher premium, it will use a sliding scale based on your modified adjusted gross income (MAGI) to determine how much more you'll pay. The MAGI is your total adjusted gross income plus any tax-free interest income you received in a tax year. The SSA calculates its IRMAA every year.
So, while you may be subject to the surcharge one year, you may not be subject to the surcharge the following year. If the SSA applies the IRMAA surcharge, they will let you know the amount in writing. You can also appeal the SSA decision if there was a change in your income that doesn't necessarily constitute an event in your life. For example, if the IRS accepted a modified tax return for the year that the SSA uses to calculate your IRMAA, you may be able to make the SSA change its decision.
If the SSA receives misinformation about you from the IRS, this can also be a reason to appeal. The IRMAA is a surcharge that people with incomes above a certain amount must pay in addition to the premiums for Medicare Parts B and D. The first four tranches of the IRMAA are adjusted to account for inflation each year, so you might be lucky if you had slightly exceeded the IRMAA threshold for 2025. In that case, the Centers for Medicare and Medicaid Services (CMS) will send you a bill for the outstanding IRMAA balance.
