What is the Medicare IRMAA 2024 Schedule?

 Many years ago, I was still new to the Medicare insurance business. I had a few hundred clients but no high-income earners. I knew what Medicare IRMAA was, but I had never met someone subject to the IRMAA tax before Doug. He was an improbable candidate. After many years and thousands of clients later, I am very familiar with IRMAA, and I can tell you what the Medicare IRMAA 2024 schedule is all about.

Don’t Judge A Book by Its Cover

Doug drove up to my office on a loud Harley Davidson hog, his long hair waving in the wind. He was a big dude, and his leathers made him even bigger. I was a little nervous, but we sat down and took care ofMedicare business.

A few months later, when Doug’s Medicare started, I got a distressed phone call. “You said my Medicare premium was going to be this amount. It’s three times that!”

I was befuddled. I got my calculator out but couldn’t figure out why it was so high. Finally, I said, “Your income would have to be unusually high to be charged that much.”

Doug got quiet.  “How high?” he asked. The first IRMAA bracket was $85,000 for a single person at the time. Doug guffawed and said, “Hell, my income is way more than that.”

Turns out Doug was not only a retired municipal employee with a pension and Social Security. He was also retired from the military with 20 years of service and a pension. On top of that, he had built up a stock portfolio that kicked out around $30,000 in dividend income a year.

I should have taken the adage, ‘Don’t judge a book by its cover’ more seriously.

Since then, I have always brought up income in my introductory meetings and how income affects Medicare Part B premiums. Zip code or fashion choices are no guarantee of what someone’s income may be.  

What Is Medicare IRMAA?

IRMAA stands for income-related monthly adjustment amount. The government loves acronyms. Medicare IRMAA is a surcharge that high-earners pay for their Medicare Part B monthly premium.

Everyone pays a tax for Medicare during their working years. The Medicare tax is included in the FICA (Federal Insurance Contribution Act) you pay and is recorded on your pay stubs. Your Medicare tax is currently 1.45%. It is graduated up for higher earners.

In 1966 when the Medicare program began, the cost to workers was $3 per person per month, which is approximately $30 in today’s dollars. The baby boomers are leaving the workforce in huge numbers currently, so fewer workers are paying the Medicare tax. Medicare tax revenue is dropping like a stone in relation to the number of people collecting.

As Baby Boomers leave the workforce, they enter Medicare. The number of workers paying into Medicare is contracting, and the number taking out of the program is ballooning. Medical expenses are climbing. The current demographics are crushing Medicare’s ability to provide the same level of service as in the past because expenses are outpacing tax revenue.

Medicare Prescription Drug Improvement & Modernization Act

In 2003 Congress passed the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA). In the legislation, Congress addressed the coming shortfall in Medicare revenue. Congress’s answer was to raise taxes. The top 7 percent of earners were required to pay more into the program. There are currently 65 million Medicare beneficiaries. The IRMAA tax will affect approximately 4.6 million people out of the 65 million. If you are a politician, it is better to keep 60.4 million voters happy, even at the expense of making 4.6 million unhappy.  

A little-known fact is Medicare beneficiaries pay less than 25 percent of the actual Medicare cost. The current Part B premium is only $174.70. That premium covers about a fifth of the actual cost. In the MMA, Congress increased the Part B premium based upon your income. The IRMAA increases the percentage that upper-income Medicare beneficiaries actually pay for their Medicare. Instead of paying only 25 percent of the Medicare cost, IRMAA payors pay for 35, 50, 65, 80, or 85 percent of the actual Medicare cost. The additional revenue the IRMAA tax brings in is allocated to offset Medicare’s budget shortfall.

How Does the Medicare IRMAA 2024 Schedule Work?

Medicare IRMAA is a different calculation from the progress income tax rates the IRS uses for federal income tax brackets.

You do not pay a federal income tax rate on everything you make. The federal government divides your taxable income into chunks — also known as tax brackets — and each chunk gets taxed at a progressively higher rate. The beauty of this is that no matter which bracket you’re in, you won’t pay the highest tax rate on your entire income! Only the “chunk” in that bracket. For example, you pay 10% on the first $40,000 of income, 25% on the next $20,000 of income (total of $60,000), and 35% on the next $15,000 of income (total of $75,000).  

Medicare IRMAA 2024 schedule utilizes a “cliff” style of assessment instead. That means if you are just $1 over the cut-off for the next tier of IRMAA, you will pay the higher amount. There are no brackets for each chuck of income like federal income tax and no graduation or progression in the amount you pay. The Medicare 2024 Part B IRMAA premium brackets change when you earn one dollar more above the line.

What Is Medicare IRMAA Based Upon in 2024?

The IRS and Social Security work with Medicare. Medicare determines your income based on your most recent tax filing. So, for example, you are going on Medicare in 2023. The most recent tax filing was in 2022 for 2021. Usually, IRMAA is based on a two-year lag in your income.

How Is Medicare IRMAA Calculated?

Your adjusted gross income (AGI) determines where you fall in the Medicare IRMAA 2024 schedule. The AGI, however, differs from the MAGI (Modified Adjusted Gross Income) you usually think of when doing your taxes. AGI for IRMAA is a Medicare-specific form of MAGI. It is your AGI with tax-exempt bonds–-both earned and accrued interest–-added back into your income. Interest from U.S. Savings bonds used for higher education is added back. Earned income from working abroad that was not added to gross income is included.  MAGI (Modified Adjusted Gross Income) for Medicare differs from what MAGI usually means for non-healthcare-related purposes.

You will be sent your Medicare IRMAA Initial Determination Notice soon after you enroll in Medicare Part B. Confirm the income amounts the IRS uses are correct–they make mistakes, too.

Medicare Financial Planning

Examine the Medicare IRMAA 2024 schedule to see if you are close to any of the limits.  

What are your plans for the future? Will you withdraw from retirement savings this year or in future years? A home sale can spike your income when your intention is only to downsize and move to a one-story home. Capital gains from a stock and property sale or other appreciated assets may come back to visit you as an unexpected IRMAA tax.

Any of these actions may increase your income substantially enough to move you into and/or up the IRMAA brackets, requiring you to pay more. Knowing and planning for these events, you can move assets in smaller amounts over time to avoid large spikes in income and, consequently, increases in your income tax and IRMAA Part B premium.

How Do I Reduce Medicare IRMAA?

Charitable donations of cash, appreciated assets, and appreciated stock can reduce your taxable and IRMAA surcharge, as well as contributions to 401ks, IRAs, and other qualified programs. Some minor adjustments may drop you down a bracket and save you some money.

What Is the Medicare IRMAA 2024 Schedule?

Since 2007, some Medicare beneficiaries’ Part B monthly premiums included a surcharge based on income. The Medicare IRMAA for 2024 is in the table below.

Individual	Couple	IRMAA Tax	Part B Total Monthly Premium
Less than $103,000	Less than $206,000	$0.00	$174.70
$103,000 < $129,000	$206,000 < $258,000	$69.90	$244.60
$129,000 < $161,000	$258,000 < $322,000	$174.70	$349.40
$161,000 < $193,000	$322,000 < $386,000	$279.50	$454.20
$193,000 < $500,000	$386,000 < $750,000	$384.30	$559.00
$500,000 < Greater	$750,000 < Greater	$419.30	$594.00

Since 2011, higher-income Medicare beneficiaries have paid a surcharge on top of their Medicare Part D premium. The Medicare IRMAA for 2023 prescription drug plans is in the table below. This does not include premiums for specific Medicare Part D plans, Medicare supplements, or Medicare Part C/Medicare Advantage plans. The totals only reflect Part B premiums and Medicare IRMAA 2023 surcharges.  

These IRMAA surcharges for Part D have nothing to do with the Part D Gap (or Donut Hole).

Individual	Couple	IRMAA Tax Part D	Total Monthly  Part B & Part D
Less than $103,000	Less than $206,000	$00.00	$174.70
$103,000 < $129,000	$206,000 < $258,000	$12.90	$257.50
$129,000 < $161,000	$258,000 < $322,000	$33.30	$382.70
$161,000 < $193,000	$322,000 < $386,000	$53.80	$580.00
$193,000 < $500,000	$386,000 < $750,000	$74.20	$633.20
$500,000 < Greater	$750,000 < Greater	$81.00	$675.00

The Bottom Line For Medicare IRMAA in 2024

Medicare has rules. Lots of rules, including how much you pay if you are successful in our country. We are about helping you navigate the rules, and in the case of Medicare IRMAA for 2024, make sure you do not

pay one penny more than is required.

If you fall into one of the Medicare IRMAA brackets, talk with your financial planner and tax consultant about minimizing the damage. Get started positioning assets well before 65 and have a plan to move yourself down the Medicare IRMAA 2024 schedule.

We are licensed and experienced insurance professionals. This may be your first Medicare IRMAA rodeo in 2024. It is not ours at Omaha Insurance Solutions. Give us a call and speak with an experienced  & licensed insurance agent professional at 402-614-3389.