IRMAA: Why You Could Pay More in Medicare Premiums

Ken Weingarten |

Medicare beneficiaries of Parts B and D may be confused when their monthly premium costs are higher than they had anticipated, which may be due to the Income-Related Medicare Adjustment Amount or IRMAA. Below we will go over how this additional premium is calculated and what can be done to minimize how much you pay in IRMAA-based premiums.

How IRMAA is Calculated

The additional premiums one pays due to IRMAA is based one’s Modified Adjusted Gross Income (MAGI). One’s monthly IRMAA payment is calculated by determining one’s MAGI from two years prior, i.e. 2020’s IRMAA payments are determined from 2018’s MAGI.

While one’s AGI is used to determine one’s tax bracket, for the purposes of calculating income, certain deductions are added back to arrive at one’s MAGI, such as:

  • Tax-Exempt Income
  • Taxable Social Security benefits
  • Rental Losses
  • Passive Income or Losses
  • IRA Contributions


Once MAGI is calculated, depending on what on the figure comes out to, one may fall into one of the following tiers for Plan B premiums.

Below is another chart illustrating what one may pay in additional Part D premiums:


One should keep in mind that the IRMAA additional premium is per person so married couples will end up paying double these amounts.

How to Minimize MAGI for IRMAA

Minimizing MAGI basically comes down to income control. While the following is just a general list of possible MAGI minimization strategies, it is highly recommended that one speaks to a financial and tax advisor as each individual’s situation will vary.

  • Skip or minimize the amount Roth conversions.
  • Minimize the amount of realized capital gains.
  • Invest in tax-efficient mutual funds in taxable accounts.
  • Consider drawing down Roth money (Roth IRAs or Roth 401(k)s) as it is tax-free income and not included in the MAGI calculation.
  • If one is taking Required Minimum Distributions and is charitably inclined, consider a Qualified Charitable Distribution. Doing so will exclude income from the MAGI calculation.


Minimizing additional Medicare costs requires some in-depth planning, which is not just limited to income tax planning. One should remain cognizant of this cost as no one wants to pay more for healthcare than the necessary amount. Seek professional advice when planning for this can go a long way.

Weingarten Associates is an independent, fee-only Registered Investment Advisor in Lawrenceville, New Jersey serving Princeton, NJ as well as the Greater Mercer County/Bucks County region. We make a difference in the lives of our clients by providing them with exceptional financial planning, investment management, and tax advice.