Medicare Part B Premium Calculator : Avoid Overpaying

Medicare Part B Premium Calculator

Tax Filing Status (from 2023 return): What was your Modified Adjusted Gross Income (MAGI) on your 2023 tax return?:

FAQs We Get About Medicare Part B Premiums

What is IRMAA and how does that apply to Medicare Part B?

IRMAA stands for Income-Related Monthly Adjustment Amount. Think of it as an extra charge that some people have to pay in addition to their standard monthly premiums for Medicare Part B (which covers doctor visits and outpatient care) and Medicare Part D (which covers prescription drugs).

It’s basically the government saying that if your income is above a certain level, you need to contribute a bit more towards your Medicare costs. It’s not a penalty, just a way the cost is adjusted based on income.

Want to know how you may be able to save more on your Medicare? Contact us for more details.

How does IRMAA work?

It works like this:

The Social Security Administration (SSA) gets income information from your federal tax return filed two years ago. For example, the IRMAA you might pay in 2025 is based on the income reported on your 2023 tax return.
They look at your Modified Adjusted Gross Income (MAGI). This is basically your Adjusted Gross Income (AGI) from your tax form plus some other tax-exempt income sources, like tax-exempt interest.
They compare your MAGI from two years ago to the income brackets set for the current year.
If your MAGI is above the starting threshold, you will be notified by SSA that you owe IRMAA.
There are several income tiers or brackets. The higher your income was two years ago, the higher your IRMAA amount will be for both Part B and Part D. This extra amount is added directly to your monthly premium bills.

Need help sorting out how this may impact you or how you may be able to save more? Reach out to us for a customized quote.

How Do I Find My Modified Adjusted Gross Income (MAGI) Amount?

You need to calculate it based on your federal tax return from the relevant year. Crucially, for this year’s Medicare premiums (IRMAA), they look at your tax return from two years prior.

Here’s how to find your MAGI relevant for Medicare costs:

Get Your Federal Tax Return From Two Years Ago: You’ll need your completed Form 1040 for that year.
Find Your Adjusted Gross Income (AGI): Look for the line labeled “Adjusted Gross Income” on your Form 1040. Note the amount on that line.
Identify Items to Add Back: Review your tax return and any related schedules to see if you had any of the specific income types listed above that need to be added back. The most common one to look for is tax-exempt interest (check Line 2a of your Form 1040 or your Schedule B if you filed one). Also check if you excluded foreign earned income or had the other less common items mentioned.
Calculate:
- Start with your AGI (from Step 2).
- Add the total amount of any tax-exempt interest you found (from Step 3).
- Add any other specific excluded income amounts identified in Step 3.
- The result is your MAGI, which is the figure used to determine your 2025 Medicare IRMAA.

If you are unsure, especially if your tax situation is complex, reach out to us and we’ll be happy to help.

Which Medicare costs besides Part B does IRMAA affect?

IRMAA specifically increases the monthly premiums for two parts of Medicare:

Medicare Part B: This is the part that covers things like doctor visits, outpatient procedures, lab tests, and durable medical equipment. Everyone pays a standard Part B premium, but if IRMAA applies to you, you’ll pay the standard amount plus the IRMAA surcharge.

Medicare Part D: This is the part that covers prescription drugs. If you have a Part D plan and your income triggers IRMAA, you will pay your plan’s regular monthly premium plus a separate Part D IRMAA amount. This Part D IRMAA is a fixed extra amount based on your income tier, regardless of which specific Part D plan you have.

IRMAA does not directly affect costs for Medicare Part A (hospital insurance) premiums (though most people don’t pay a Part A premium anyway) or costs for Medicare Supplement (Medigap) plans.

Wondering how IRMAA could impact your total Medicare spending? Get a free customized quote to see the potential costs.

How have Medicare Part B Premiums changed over the years?

Understanding Medicare Part B Premium Changes

Thank you for asking about Medicare Part B premium changes over the years. I understand this is an important topic for seniors who need to budget for healthcare costs. I’ll explain the historical trends, reasons for changes, and what to expect.

Historical Premium Changes

Looking at the information provided, Medicare Part B premiums have generally followed an upward trend over the years, though with some interesting fluctuations:

In 2012, there was actually good news when Medicare Part B premiums decreased by $15.50 to $99.90 per month from their 2011 levels of $115.40.

From 2013-2015, premiums first rose to $104.90 per month and then remained stable at that level for three years.

In 2016, there was a significant jump of $16.90, increasing premiums to $121.80 per month, though many beneficiaries were protected from this increase.

From 2017-2018, premiums rose again to $134.00 per month (about a 10% increase).

In 2019, there was a minimal $1.50 increase to $135.50 per month.

For 2020, premiums increased by $9.10 (about 6%) to $144.60 per month.

In 2021, the increase moderated to $3.90, bringing rates to $148.50 monthly, but 2022 saw one of the largest increases of about $21.60, raising the premium to $170.10 per month for most enrollees.

Why Do Premiums Change?

Several factors influence these premium changes:

The Hold Harmless Provision: This important protection prevents Medicare premium increases from reducing a beneficiary’s Social Security check when the premium increase would exceed their Social Security cost-of-living adjustment (COLA). However, this provision doesn’t apply to those newly enrolling in Medicare, who must pay the current year’s rate.
Income-Based Adjustments: Higher-income beneficiaries pay significantly more than the standard premium. This applies to single filers with adjusted gross incomes above $91,000 or joint filers above $182,000.
New Treatments: One major factor in the large 2022 premium increase was anticipation of covering a new Alzheimer’s treatment that was initially expected to cost around $56,000 per patient. This single factor accounted for about 50% of the premium increase. When the drug manufacturer later reduced the price to around $28,000 and questions arose about the treatment’s effectiveness, it created a situation where premiums had been unnecessarily increased.
Inflation and Healthcare Costs: General increases in healthcare costs and overall inflation also drive premium changes.

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Why is understanding IRMAA important for seniors?

Understanding IRMAA is crucial for seniors, especially when planning for retirement finances. Healthcare is already a significant expense in retirement, and IRMAA can add hundreds or even thousands of dollars per year per person to your Medicare costs if your income is above the thresholds.

Knowing about IRMAA helps you:

Budget accurately: You can anticipate potential extra costs and plan your retirement spending accordingly.
Make informed decisions: Understanding how withdrawals from retirement accounts (like traditional IRAs or 401(k)s) impact your MAGI can help you plan distributions more strategically to potentially manage or avoid IRMAA in future years.
Take action if your situation changes: Knowing about the life-changing events’ appeal process empowers you to lower your premiums if your income drops significantly after retirement.

Ignoring IRMAA can lead to unexpected and potentially stressful increases in your healthcare expenses during retirement.

Don’t end up overpaying by not planning. Contact us and we’ll help you find the best plan for you.