IRMAA — the Income-Related Monthly Adjustment Amount — can add thousands of dollars per year to your Medicare costs. Understanding how it works, what triggers it, and how to manage your Modified Adjusted Gross Income is essential for every Michigan retiree.
What Is IRMAA?
IRMAA stands for Income-Related Monthly Adjustment Amount. It is a surcharge added to your Medicare Part B (medical insurance) and Part D (prescription drug) premiums if your income exceeds certain thresholds. IRMAA is not a penalty — it is simply a higher premium tier that applies to higher-income Medicare beneficiaries.
The key thing most retirees don't realize: IRMAA is calculated based on your Modified Adjusted Gross Income (MAGI) from two years prior. So your 2024 Medicare premiums are based on your 2022 tax return. This two-year lookback means that a large income event — a Roth conversion, a business sale, or a large RMD — can affect your Medicare costs for two full years.
The 2024 IRMAA Tiers
For 2024, the standard Medicare Part B premium is $174.70 per month. But if your income exceeds the thresholds, surcharges apply:
Married Filing Jointly: - $206,000 or less: Standard premium ($174.70/month) - $206,001–$258,000: +$69.90/month per person - $258,001–$322,000: +$174.70/month per person - $322,001–$386,000: +$279.50/month per person - $386,001–$750,000: +$384.30/month per person - Above $750,000: +$419.30/month per person
For a married couple, crossing from the standard tier to the first IRMAA tier costs an additional $1,677.60 per year. Crossing into the highest tier costs an additional $10,063.20 per year — on top of the standard premium. Part D surcharges add further costs on top of these figures.
What Triggers IRMAA?
Any event that increases your Modified Adjusted Gross Income can trigger or worsen an IRMAA surcharge. The most common triggers for Michigan retirees include:
Roth Conversions: Converting a large amount from a traditional IRA to a Roth IRA adds the full converted amount to your MAGI in the year of conversion.
Required Minimum Distributions (RMDs): Beginning at age 73, RMDs from traditional IRAs and 401(k)s are fully taxable and count toward your MAGI.
Business or Real Estate Sales: The capital gain from selling a business or investment property can spike your MAGI dramatically in the year of the sale.
Social Security Taxation: Up to 85% of Social Security benefits are taxable, and they count toward your MAGI for IRMAA purposes.
Inherited IRA Distributions: If you inherit a traditional IRA, distributions are taxable income and count toward your MAGI.
How to Manage IRMAA: The Coordinated Approach
The most effective defense against IRMAA is proactive, year-round income management — which requires your tax advisor, financial advisor, and (in some cases) your estate attorney to work together.
Strategies include:
Bracket Management: Carefully sizing Roth conversions, capital gain realizations, and other income events to stay below IRMAA thresholds.
Qualified Charitable Distributions (QCDs): IRA owners over 70½ can donate up to $105,000 directly from their IRA to charity, satisfying their RMD without the income hitting their MAGI.
Tax-Loss Harvesting: Realizing capital losses to offset gains can reduce MAGI in years when other income events are unavoidable.
Timing of Asset Sales: Coordinating the timing of business sales, real estate sales, and other large income events with your overall IRMAA exposure can save thousands.
Appealing an IRMAA Determination
If your income has decreased significantly since the tax year used to calculate your IRMAA — due to retirement, divorce, death of a spouse, or other qualifying life-changing events — you can appeal your IRMAA determination using SSA Form SSA-44. This can result in an immediate reduction in your Medicare premiums based on your current, lower income.
The Michigan Society for Financial Education covers IRMAA management in depth in our 'Medicare & IRMAA: Managing Your Costs in Retirement' webinar and our Retirement Financial Mastery Program. Understanding IRMAA is one of the most valuable things a Michigan retiree can learn.