IRMAA: Ins and Outs

Ins and Outs of IRMAA

IRMAA stands for Income-Related Monthly Adjustment Amount and is an increase in Medicare premium based on income. IRMAA matters because if you are not careful you may unexpectedly add a large expense to your insurance bill.

How is IRMAA Calculated

IRMAA is calculated based on your MAGI (Modified Adjusted Gross Income) from your tax return two years ago. This means that you not only need to look out for earned income, but also IRA distributions, Capital gains, bond interest, passive income, roth conversions ETC. And remember it wont raise your premiums this year or next, but two years from your tax return your premiums could spike if you are not careful.