IRMAA Could Have Surprised This Retiree: What You Can Learn From Her Experience
A financial adviser explains how a client could have unwittingly triggered the Medicare surcharge and what others need to know about it.


I’m the resident Medicare adviser here at Beckett Financial Group, which also assists clients with their financial, retirement and investing needs. Earlier this week, I had a phone call with a client who’s moving here to the Midlands of South Carolina from the Chicago area.
The property she is looking to buy needs some work — it’ll take about $100,000 to do everything she wants to do. She asked if I thought it would be a good idea to cash out the 457(b) retirement plan she has in Illinois, which has a value of about $100,000.
I told her I’d strongly advise against her doing so, for a number of reasons, including:

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
- Her 457 plan has grown on a tax-deferred basis, meaning withdrawals from it will be taxed as regular income. Cashing out the entire account would add $100,000 to her taxable income for 2025.
- The additional income would bump her into a higher tax bracket.
- That higher income would mean she wouldn’t be able to contribute to her Roth IRA.
- And she would face IRMAA on her Medicare.
“What’s IRMAA?” she asked.
I explained it in detail, and she said, “Wow, I never would have thought of that.” We decided on a different course of action to get the funds to do the work on her new property.
My client is not alone in her ignorance of IRMAA. Many people are unaware of the impacts it can have on their monthly cash flow. So, let’s dive into it.
What is IRMAA?
The income-related monthly adjustment amount, known as IRMAA, is a surcharge on your Medicare Part B and D premiums. It's supposed to work in a similar fashion to tax brackets — the more you earn, the more you have to pay.
An IRMAA assessment is based upon your modified adjusted gross income (MAGI) from two years prior. People having to pay the IRMAA in 2025 are doing so based on their income in 2023. In my example above, my client would not experience an IRMAA until 2027 if she had totally cashed out her 457 plan in 2025.
How much is IRMAA?
The surcharge on Part B premiums (outpatient coverage) follows these ranges on 2023 income:
File individual tax return | File joint tax return | File married and separate tax return | In 2025, you pay each month |
---|---|---|---|
$106,000 or less | $212,000 or less | $106,000 or less | $185 |
$106,001 up to $133,000 | $212,001 up to $266,000 | Not applicable | $259 |
$133,001 up to $167,000 | $266,001 up to $334,000 | Not applicable | $370 |
$167,001 up to $200,000 | $334,001 up to $400,000 | Not applicable | $480.90 |
$200,001 up to $500,000 | $400,001 up to $750,000 | $106,001 up to $394,000 | $591.90 |
$500,001 and up | $750,001 and up | $394,001 and up | $628.90 |
The surcharge on Part D premiums (drug coverage) follows these ranges on 2023 income:
File individual tax return | File joint tax return | File married and separate tax return | In 2025, you pay each month |
---|---|---|---|
$106,000 or less | $212,000 or less | $106,000 or less | Your plan premium |
$106,001 up to $133,000 | $212,001 up to $266,000 | Not applicable | $13.70 + your plan premium |
$133,001 up to $167,000 | $266,001 up to $334,000 | Not applicable | $35.30 + your plan premium |
$167,001 up to $200,000 | $334,001 up to $400,000 | Not applicable | $57.00 + your plan premium |
$200,001 up to $500,000 | $400,001 up to $750,000 | $106,001 up to $394,000 | $78.60 + your plan premium |
$500,000 or above | $750,001 and up | $394,001 and up | $85.80 + your plan premium |
These figures will change from year to year due to inflation, almost always trickling up across the board.
What kind of income counts?
Adjusted gross income is a line item on your tax return and typically consists of wages, non-Roth IRA withdrawals, CD interest, dividends, capital gains and any taxable portion of your Social Security. To get MAGI for IRMAA purposes, you also have to add in non-taxable interest, which is most commonly that from municipal bonds.
As Roth conversions have been a popular tax-mitigation strategy as of late, it is wise to be mindful of how much you're converting so as to not raise your taxable income above the IRMAA thresholds in conjunction with any "regular" IRA distributions. This is because any amount converted from a traditional IRA to a Roth IRA counts as taxable income for that year.
Conversely, income from life insurance, whether you received a large lump sum from a death benefit or drew an income stream from the cash value of a permanent life policy, generally will not count toward the IRMAA, as by and large it is tax-free income.
Can anything be done once an IRMAA is assessed?
You can appeal the IRMAA using Form SSA-44, titled Medicare Income-Related Monthly Adjusted Amount - Life Changing Event.
There can be many reasons an IRMAA assessment could be potentially waived. Considering IRMAA is based upon income from two years prior, many Medicare beneficiaries no longer have the same level of income due to them retiring during those two years.
Looking for expert tips to grow and preserve your wealth? Sign up for Building Wealth, our free, twice-weekly newsletter.
Perhaps they sold a rental property, which not only would reduce their income, but could also be a "one-off" source of income.
Perhaps a spouse passed away, or there was a divorce in the past two years that led to a loss of spousal income.
It's also important to remember that an IRMAA is not necessarily permanent. If someone had a windfall in a given year but not the following year, the IRMAA could go away or be reduced.
How is IRMAA paid?
IRMAAs for Part B and Part D are paid separately. Part B's surcharge is automatically added to your monthly premium, and Part D's is paid directly to Medicare.
It’s important to note that this charge is not paid to the drug plan. Part D must be paid by the Medicare beneficiary even if a third party typically pays their Part D premium. Medicare will send a bill each month for Part D IRMAA, which can be paid via any of the same methods as Part B premiums are paid, such as being deducted from your Social Security payment.
If you are delaying your Social Security benefits while receiving Medicare, Medicare would send you a bill for the IRMAA each month.
In summary, if you are a higher-income earner, have a lot of investment income and/or come into possession of a large sum of taxable money as a “one-off” in a given year, be prepared for the possibility of your Medicare insurance premiums to rise in the future.
Working with a financial adviser when planning for retirement can help you be prepared for IRMAA, allowing you to put strategies in place to avoid any surprises.
Update: Some details in the "How is IRMAA paid?" section have been updated.
Related Content
- You Can Appeal the IRMAA for Medicare Parts B and D
- Three Medicare Changes on the Horizon for 2025
- What You’ll Pay for Medicare in 2025
- How a Roth Conversion Can Spare You From Medicare’s IRMAA and Taxes
- Health Care Costs in Retirement: Budgeting for a Healthy Future
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Brandon has 17 years in the insurance industry, with a focus on Medicare, Affordable Care Act and under-65 life insurance, group benefits, life, long-term care and annuities. In addition to being an independent agent and Senior Advisor, Brandon also works in compliance, case design and administration with Beckett Financial Group.
-
Stock Market Today: Stocks Rise on Less Deadly Concerns
Markets are forward-looking mechanisms, and it's good when price action shows there's a future to look forward to.
-
How the Federal Reserve Affects Mortgage Rates — and What It Means for Homebuyers in 2025
Mortgage rates are still fluctuating in 2025 as the Fed holds steady — for now. Learn how interest rate changes affect your monthly payments and what buyers should watch for this year.
-
Stock Market Today: Stocks Rise on Less Deadly Concerns
Markets are forward-looking mechanisms, and it's good when price action shows there's a future to look forward to.
-
Who Will Replace Jerome Powell as Fed Chair?
Even if President Trump doesn't make good on threats to fire Chair Powell, the Fed leader's term ends in 2026.
-
The Hidden Cost That's Ruining Vacation Home Dreams
Are rising HOA fees derailing your second home dreams? Annual dues, insurance premiums, and taxes are rising, boosting total ownership costs. Here's what you can do.
-
If You're Ignoring Private Markets, You're Missing Most of the Action
Private markets are becoming increasingly essential for all investors, not just institutions, and they are now more easily accessible thanks to innovative investment structures.
-
Three Ways Women Can Keep Caregiving From Draining Them Financially
Many women care for older relatives. While commendable, it could put their retirement at risk … unless they find a way to prioritize themselves.
-
Retire in Malaysia for Affordable Luxury
Many expats retire in Malaysia, a Southeast Asian country with a world-class city. Come for the affordable living, stay for the top-notch health care and cuisine.
-
How Our Favorite ETFs Are Performing Amid Market Volatility
A roller-coaster year for the stock market has weighed on several of our favorite ETFs, but one equities fund is faring better than others. Here's why.
-
I'm a Financial Professional: This Is the Roth Conversion Mistake Too Many People Make
Converting your traditional IRA to a Roth can be a fantastic tax-saving move, but you've got to be smart about two things: how much and when.