When I turned 65-years-old, I anticipated my healthcare insurance costs would go down as I went on Medicare. After all, I had been paying into Medicare in the way of payroll taxes for decades. But my annual health insurance premiums (medical, vision, and dental) instead went up from $5,736 per year to $6,924 per year. The reason was IRMAA, the Income-Related Monthly Adjustment Amount rule used by Medicare to calculate monthly Part B and Part D premiums.
Understanding the basics of Medicare
To understand IRMAA and how it affects Medicare recipients, we first need to understand the basics of the various Medicare Parts:
- Part A – this covers inpatient hospital care, skilled nursing facilities, hospice, and some home health services. It is free for all Americans over age 65-years-old who have paid payroll taxes for at least 10 years. However, Medicare enrollees are responsible for the cost of various co-pays and deductibles.
- Part B – this covers outpatient care, physician charges, and medical supplies. It is partially paid for by payroll taxes but Medicare enrollees must also pay a monthly premium.
- Part C – also called “Medicare Advantage Plans”, seniors eligible for Medicare can opt to enroll in Part C instead of Parts A & B. These plans are administered by commercial health insurance companies that contract with Medicare to cover everything that Medicare Parts A & B cover, with additional coverage for medications and often for dental care, vision care, or fitness centers. They also have deductibles and co-pays but these are typically less than the deductibles and co-pays of traditional Medicare. Think of Part C plans as a bundle of Parts A, B, and D plus a Medigap plan. The downside of these plans is that they have stricter prior authorization requirements for medical services, greater denial of coverage for services, and limit coverage to in-network physicians and hospitals.
- Part D – these are Medicare drug plans that are administered by commercial health insurance companies. They charge monthly premiums that vary in amount based on the extent of coverage of medications. Part C Medicare Advantage Plans usually incorporate Part D coverage in the plans.
- Medigap – this is “Medicare supplemental insurance” sold by commercial health insurance companies to help cover the deductibles and co-pays of Parts A & B. They will generally also help cover healthcare costs if hospitalization or skilled nursing facility stays exceed the limit of days covered by Medicare. They can also cover foreign healthcare costs when traveling outside of the U.S. since these costs are not covered by Medicare Parts A & B.
IRMAA adds additional costs
Medicare premiums are complex. Part A is free and has no premiums associated with it but it does come with an annual $1,736 deductible for inpatient hospital care for 2026. Part B has a base monthly premium of $202.90 and has an annual deductible of $283. Part D plan premiums vary among the various commercial insurance companies that offer these plans with each of these plans providing different degrees of coverage for specific medications and different co-pays for medications. Part D plan monthly premiums range from $0 to $123.40 with annual deductibles ranging from $0 to $615. Medigap plan monthly premiums vary among the commercial insurance companies sponsoring Medigap policies and range from $36 to $798 based on age, gender, and health status.
But the base premiums for Medicare Part B and Part D only apply to Medicare enrollees with low annual incomes. The cost of the premiums goes up as enrollee income increases and these additional costs are the Income-Related Monthly Adjustment Amount, or IRMAA. Medicare uses the “modified adjusted gross income” calculated from federal income tax returns to determine the amount of IRMAA. The modified adjusted gross income is calculated by:
- First, determine your total annal taxable income, found on line 9 of the 1040 income tax form.
- Next, subtract all of your annual adjustments (deductibles), found on line 10 of the 1040 income tax form.
- The result is your adjusted gross income, found on line 11 of the 1040 income tax form.
- Next, calculate the modified adjusted gross income by adding back amounts of certain types of deductions, non-taxable income, and tax credits including:
- Child tax credit
- Lifetime learning tax credit
- American opportunity tax credit
- Student loan interest deduction
- Employer-provided adoption benefits
- Foreign earned income
- Foreign housing deduction
- Tax-exempt interest income
- Non-taxable Social Security benefits
- IRA contribution deduction
- U.S. Savings Bond interest
The modified adjusted gross income (MAGI) does not appear on the IRS 1040 income tax form and has to be calculated separately. However, each year, Social Security will calculate your modified adjusted gross income for you, based on your income tax returns from two years previously. Seniors get a letter from Social Security in late November each year notifying them of their modified adjusted gross income. So, letters were sent out this week reporting the 2024 modified adjusted gross income and from that determining the 2026 IRMAA amounts for every Medicare enrollee. The tables below show how IRMA affects monthly premiums for Medicare Part B and Part D.
Single, Head of Household, or Qualifying Surviving Spouse:
| 2024 MAGI | 2026 monthly Part B IRMAA | 2026 monthly Part B premium | 2026 monthly Part D IRMAA |
| < $109,000 | $0 | $202.90 | $0 |
| $109,000 – $137,000 | $81.20 | $284.10 | $14.50 |
| $137,000 – $171,000 | $202.90 | $405.80 | $37.50 |
| $171,000 – $205,000 | $324.60 | $527.50 | $60.40 |
| $205,000 – $500,000 | $446.30 | $649.20 | $83.30 |
| > $500,000 | $487.00 | $689.90 | $91.00 |
Married filing jointly:
| 2024 MAGI | 2026 monthly Part B IRMAA | 2026 monthly Part B premium | 2026 monthly Part D IRMAA |
| < $218,000 | $0 | $202.90 | $0 |
| $218,000 – $274,000 | $81.20 | $284.10 | $14.50 |
| $274,000 – $342,000 | $202.90 | $405.80 | $37.50 |
| $342,000 – $410,000 | $324.60 | $527.50 | $60.40 |
| $410,000 – $750,000 | $446.30 | $649.20 | $83.30 |
| > $750,000 | $487.00 | $689.90 | $91.00 |
Married filing separately:
| 2024 MAGI | 2026 monthly Part B IRMAA | 2026 monthly Part B premium | 2026 monthly Part D IRMAA |
| < $109,000 | $0 | $202.90 | $0 |
| $109,000 – $391,000 | $446.30 | $649.20 | $83.30 |
| > $391,000 | $487.00 | $689.90 | $91.00 |
Because the Medicare Part D premiums vary depending on which Part D plan each Medicare enrollee choses, the total monthly Part D premium will be the base price of the specific Part D plan plus the amount of the Part D IRMAA. Because Medicare Advantage Plans include drug coverage, Medicare recipients who elect to enroll in Medicare Part C will also pay the Part D IRMAA amounts.
IRMAA is not paid to the various commercial insurance companies that sponsor Part D and Part C plans, instead, IRMAA is paid directly to Medicare, along with the usual monthly Medicare Part B premium.
The total amount that any given Medicare enrollee pays for healthcare insurance per year will thus vary based on their annual income, whether or not they purchase a Medigap plan coupled with traditional Medicare, whether they opt for a Part C plan instead of traditional Medicare, and whether they opt for a Part D plan. The least amount paid would be for an individual with a modified adjusted gross income of less than $109,000 who chooses a $0 monthly premium Part D plan and no Medigap plan who would pay $2,435 per year. The highest amount would be for an individual with a modified adjusted gross income of more than $500,000 who opts for the most expensive Part D plan plus the most expensive Medigap plan who would pay $20,428 per year.
Approximately 18% of Medicare enrollees also receive Medicaid and Medicaid will cover some or all of the costs of Part B premiums, Medicare co-pays, Medicare deductibles, and medications. Other government programs that help low-income individuals pay for Medicare premiums, co-pays, deductibles, and medications include the Supplemental Security Income program, Medicare Savings Programs, and the Extra Help program.
Healthcare is expensive for seniors
Healthcare costs in the United States are the highest in the world and those costs increase as Americans get older. CMS estimates that the total annual cost of healthcare for Americans over age 65-years-old was $22,356 per person in 2020. Because of inflation, those costs have increased to approximately $28,000 today. Even with the IRMAA increases to Medicare premiums, American seniors pay less for their healthcare than they actually spend for health insurance, deductibles, and co-pays after age 65 – all because they are supplemented by workers who are currently paying payroll taxes today.
The additional monthly IRMAA costs that are added to monthly Medicare Part B and Part D premiums often come at a surprise to retirees. For a married couple, this can be many thousands of dollars a year that they had not budgeted to spend in their retirement. As physicians, it is important that we understand IRMAA and educate our patients about its costs before our patients retire in order to avoid unexpected health insurance bills that could jeopardize their retirement plans.
November 24, 2025
