Emily and John had always dreamed of retiring early and traveling the world. After years of hard work and careful planning, they finally reached their goal. At 62, they both retired from their respective careers and began their adventure.

Their first few years of retirement were filled with excitement. They visited Europe, explored Asia, and even took a road trip across the United States. However, as they approached 65, they knew it was time to start thinking about Medicare.

One evening, while reviewing their finances, Emily noticed a letter from the Social Security Administration. It mentioned something called the Income-Related Monthly Adjustment Amount (IRMAA). Curious, she did some research and discovered that because of their higher income from investments and pensions, they would have to pay more for their Medicare Part B and Part D premiums.

Emily and John sat down to discuss their options. They realized that their income from the previous two years would place them in a higher IRMAA bracket. This meant they would each have to pay an additional $185.00 per month for their Medicare Part B premiums, on top of the standard premium of $185.00.

Their income sources included:

• John’s Pension: $40,000 per year
• Emily’s Pension: $35,000 per year
• Investment Income: $50,000 per year
• Social Security Benefits: $30,000 per year combined

With a total annual income of $155,000, they fell into the IRMAA bracket that required the additional $185.00 per month per person.

While this was an unexpected expense, Emily and John decided to adjust their budget. They cut back on some discretionary spending and re-evaluated their travel plans. They also consulted with a financial advisor to explore ways to manage their income more effectively and potentially reduce their IRMAA in the future.

Despite the higher premiums, Emily and John were grateful for the comprehensive coverage Medicare provided. They continued to enjoy their retirement, albeit with a bit more financial mindfulness. They even found joy in discovering new, budget-friendly travel destinations and activities.

In the end, Emily and John learned that while IRMAA was an important consideration, it didn’t have to derail their retirement dreams. With careful planning and a positive outlook, they continued to make the most of their golden years.

Determining the Additional Premium Amount

To determine the additional premium amount, follow these steps:

1. Identify Your Income: Determine your Modified Adjusted Gross Income (MAGI) from two years prior. For example, for 2025, use your 2023 income.
2. Find Your Bracket: Locate your income range in the IRMAA brackets.
3. Determine the Surcharge: The amount listed next to your income range is the additional premium you will pay on top of the standard Medicare Part B premium.

Example Calculation

Let’s use Emily and John’s situation as an example:

• Total Annual Income: $155,000 (joint tax filers)
• IRMAA Bracket: $133,001 – $167,000
• Additional Premium: $185.00 per month per person