1. What is IRMAA?

IRMAA (Income-Related Monthly Adjustment Amount) is a surcharge added to your Medicare Part B and Part D premiums if your Modified Adjusted Gross Income (MAGI) exceeds certain thresholds. It's based on your tax return from two years prior.

2. How is IRMAA Calculated?

IRMAA is calculated using the following formula:

Where:

• AGI — Adjusted Gross Income from your tax return
• Tax-Exempt Interest — Interest from municipal bonds and other tax-exempt investments
• Other Additions — May include foreign earned income exclusion, non-taxable Social Security benefits, etc.

Note: IRMAA uses MAGI, not AGI. The thresholds are adjusted annually for inflation.

3. MAGI vs AGI

Key Difference: While AGI is your gross income minus certain adjustments, MAGI adds back certain items that were excluded from AGI. For Medicare purposes, MAGI is the figure that determines your IRMAA surcharge.

4. Using the Calculator

Instructions: Enter your AGI from your tax return, any tax-exempt interest income, and other MAGI additions. Select your filing status to calculate your estimated MAGI and potential IRMAA surcharge.

5. Frequently Asked Questions (FAQ)

Q1: Why does IRMAA use MAGI instead of AGI?
A: Medicare uses MAGI because it provides a more complete picture of your financial resources by including income that might be excluded from taxation.

Q2: How often are IRMAA thresholds updated?
A: Thresholds are adjusted annually for inflation. The calculator uses current year thresholds.

Q3: Can I appeal my IRMAA determination?
A: Yes, if you've had a life-changing event that reduced your income (retirement, divorce, etc.), you can file an appeal with Social Security.

Q4: Does IRMAA affect both Medicare Part B and Part D?
A: Yes, IRMAA applies surcharges to both Part B premiums and Part D prescription drug plans.

Q5: How can I reduce my MAGI to avoid IRMAA?
A: Strategies include Roth conversions, charitable contributions, tax-loss harvesting, and timing of retirement account distributions.