We’re in the fourth quarter of the year and people on Medicare want to know what it will cost them in 2025. So far, the government hasn’t released the figures, but they have floated estimates that will probably come close if they aren’t the actual numbers.
First, let’s talk about the Medicare Part B monthly premium. Part B covers things like doctor visits, outpatient care, home health care and preventative services. The estimated cost will go up to $185 from $174.70. That’s a 5.9% increase for 2025.
The Medicare Part B deductible is projected to go from $240 to $257 which is a little over 7%.
The average cost of Medicare Part D prescription plans is projected to decrease from $41.63 in 2024 to $40.00 in 2025, a decrease of $1.63.
Those are the basic numbers for everyone. But for higher income individuals, you may have to pay the Income Related Monthly Adjust Amount (IRMAA). It’s a surcharge in addition to your Part B or Part D premiums if your income exceeds certain levels set by the Social Security Administration (SSA).
SSA sets four income brackets used to determine if you owe an IRMAA. SSA looks at your income from two years ago to see if you have to pay an IRMAA this year. It’s calculated on a sliding scale topping out at $500,000 and $750,000 for individual and joint filing, respectively and is based on your Modified Adjusted Gross Income (MAGI).
It’s not difficult to determine your Medicare MAGI. Find your adjusted gross income (AGI) on line 11 of IRS tax form 1040. AGI is the sum of all your income that is subject to tax — the most common sources for retirees is IRA withdrawals, capital gains, dividends, interest from CDs, and only the taxable portion of your social security. You add the amount from line 11 to the tax-exempt interest income found on line 2a of IRS Form 1040.
The Social Security Administration will inform you if you have to pay the IRMAA surcharge. However, you can appeal the assessment if your financial situation has changed. For example, if you amended your tax return, and it changes the income counted to determine the IRMAA, let the SSA know. They will need to see a copy of the amended tax return you filed and your acknowledgment receipt from the IRS.
Your MAGI is calculated every year, so your IRMAA can change, or even disappear, depending on how your income fluctuates. But no matter whether you have a stand-alone Part D plan or you have a Medicare Advantage plan that includes prescription drug coverage, the Part D IRMAA applies.
The IRMAA is indexed for inflation every year. The indexing is done each August and is based on how much the Consumer Price Index for Urban Consumers (CPI-U) has changed from the current year to the previous year.
| Projected IRMAA for 2025 | |||
| Single | Married filing jointly | Part B Income-Related Monthly Adjustment Amount | Part D Income-Related Monthly Adjustment Amount |
| Less than or equal to $106,000 | Less than or equal to $212,000 | $0.00 | $0.00 |
| Greater than $106,000 and less than or equal to $133,000 | Greater than $212,000 and less than or equal to $265,000 | $71.90 | $13.30 |
| Greater than $133,000 to and less than or equal to $166,000 | Greater than $265,000 and less than or equal to $332,000 | $179.90 | $34.30 |
| Greater than $166,000 to and less than or equal to $199,000 | Greater than $332,000 and less than or equal to $398,000 | $287.80 | $55.40 |
| Greater than $199,000 to and less than or equal to $500,000 | Greater than $398,000 and less than or equal to $750,000 | $396.00 | $76.50 |
| Greater than or equal to $500,000 | Greater than or equal to $750,000 | $432.00 | $83.50 |
Married Medicare beneficiaries that file separately pay a steeper surcharge because there are only two brackets. If income is greater than $103,000 and less than or equal to $397,000, there is a $396.00 surcharge for Part B coverage and $76.50 for Part D coverage. Income greater than $403,000 will result in a Part B and Part D surcharges of $432.00 and $83.50 respectively.
Paying the IRMAA
Your monthly Medicare Part B and Part D IRMAA charges will be deducted automatically from your Social Security check, with two exceptions:
- You’re eligible for Social Security but haven’t started taking your benefit yet or,
- If you are receiving a check but the amount is not large enough to cover your IRMAA. In that case, you will receive a bill for the unpaid IRMAA balance from the Centers for Medicare & Medicaid Services.
IRMAAs can be paid on line through your My Medicare account or your bank’s bill pay service.
This information is presented for informational purposes only and does not constitute an offer to sell, or the solicitation of an offer to buy any investment products. None of the information herein constitutes an investment recommendation, investment advice or an investment outlook. The opinions and conclusions contained in this report are those of the individual expressing those opinions. This information is non-tailored, non-specific information presented without regard for individual investment preferences or risk parameters. Some investments are not suitable for all investors, all investments entail risk and there can be no assurance that any investment strategy will be successful. This information is based on sources believed to be reliable and Alhambra is not responsible for errors, inaccuracies, or omissions of information. For more information contact Alhambra Investment Partners at 1-888-777-0970 or email us at [email protected].
