Almost all federal retirees enroll in Medicare Part A (Hospital Insurance) when they become age 65. Many federal retirees also enroll in Medicare Part B (Medical Insurance) at the later of age 65 or when they retire from federal service. This assumes that the federal retiree was enrolled in the Federal Employees Health Benefits (FEHB) program while in federal service and was eligible to continue FEHB enrollment throughout retirement.
Medicare Part A is free (no monthly premium), a result of a Medicare Part A beneficiary ’s prepaying the premiums by working at least 10 years and paying the Medicare Hospital Insurance Tax (HIT), deducted from his or her salary. But Medicare Part B is not free. There is a monthly premium, usually deducted from a Medicare beneficiary’s monthly Social Security check.
SEE ALSO: 10 Medicare Mistakes Federal Retirees Should Avoid
Each year, the Center for Medicare and Medicaid Services (CMS) sends notices to Medicare Part B beneficiaries regarding the monthly premium cost of their Medicare Part B premium during the following calendar year. The amount to be paid by a Medicare Part B beneficiary is based on the beneficiary’s previous year’s modified adjusted gross income (MAGI). For example, the notices for 2025 were sent out by CMS during November and December 2024. The table below summarizes the 2025 Medicare Part B monthly premium amounts broken down by tax filing status and 2023 MAGI “income tiers”.
Note: Yearly income in 2023 is modified adjusted gross income (MAGI) during 2023 which is adjusted gross income (AGI) plus tax-exempt interest and exclusions for US savings bond interest and foreign earned income and housing.
The disparity in monthly premiums can result from an “income-related monthly adjustment amount,” (IRMAA).The Social Security Administration (SSA) uses a Medicare Part B beneficiary’s MAGI from 2 years ago to determine whether a Medicare Part B beneficiary owes a current year IRMAA. The reason the SSA uses a beneficiary’s MAGI from two years ago (for determining 2025 IRMAA, the SSA uses 2023 MAGI) is because two years ago is the most recent year a Medicare Part B beneficiary has filed his or her federal income tax return).
How does a Medicare Part B beneficiary know if he or she will pay an IRMAA?
The SSA determines a Medicare Part B beneficiary’s IRMAA based on information provided by the IRS. Medicare beneficiaries can receive an IRMAA from the SSA at any time of the year. If the SSA decides that an IRMAA applies to a Medicare Part B beneficiary’s premium, then the beneficiary will receive a predetermination notice in the mail. This will inform the beneficiary about his or her IRMAA and will also include information such as:
• How the IRMAA was calculated.
• What to do if the information used to calculate the IRMAA is incorrect.
• What to if the beneficiary had a reduction in income or a life changing event.
The beneficiary will then receive an initial determination notice in the mail 20 days or more after receiving the predetermination notice. This will include information about the IRMAA, when the IRMAA goes into effect, and steps that the beneficiary can take to appeal it.
Each year, the SSA reevaluates whether an IRMAA should apply to a beneficiary’s Medicare Part B premiums. Depending on a beneficiary’s MAGI, an IRMAA could be added, updated, or removed.
How can a Medicare Part B beneficiary appeal an IRMAA notice?
A Medicare Part B beneficiary can appeal an IRMAA decision within 60 days of receiving an IRMAA determination notice in the mail. To do this, the beneficiary needs to download, fill out, and submit SSA form SSA-44 (Medicare Income-Related Monthly Adjustment Amount). A portion of SSA Form SSA-44 is presented here:
There are two situations in which a Medicare Part B beneficiary can appeal an IRMAA. The first situation involves
the tax information used to determine the IRMAA. Two examples are: (1) The SSA used older or out-of-date tax information to determine the IRMAA; and (2) The Medicare Part B beneficiary filed an amended tax return during the year the SSA used to determine the IRMAA. The following example illustrates:
Example 1. Carl is a single federal retiree. He became age 65 in April 2025 and enrolled in Medicare Part A and Medicare Part B in May 2025. The SSA used Carl’s 2023 MAGI of $120,000 to determine Carl’s 2025 Medicare Part B monthly premium of $259 ($74 IRMAA) (see table above). However, when Carl had his 2023 federal income tax return prepared in spring 2024, he forgot to include on the income tax return a loss of $14,500 he incurred during 2023 from a rental property he owned. In July 2024, Carl filed a 2023 federal amended income tax return that included a $14,500 rental loss. By including the $14,500 rental property loss, Carl’s 2023 MAGI was reduced from $120,000 to $105,500. The 2023 $105,500 MAGI puts Carl in the 2023 first “income-tier” with no IRMAA. Carl’s 2025 Medicare Part B monthly premium should be $185/month and not $259 per month.
The second situation in which a Medicare Part B beneficiary can appeal an IRMAA notice involves life-changing events that significantly impact a beneficiary’s income. There are seven qualifying events:
1. Marriage.
2. Divorce or marriage annulment.
3. Death of a spouse
4. Reduction in work
5 Cessation of work (for example, retirement). 6. Loss or reduction of specific types of pensions.
7. Loss of income from an income-generating property.
The following is an example of a life-changing event that significantly impacts a beneficiary’s income, namely cessation of work (retirement)
Example 2. Karen, a single individual, retired from federal service on December 31,2023 at age 63 with 33 years of federal service. Karen turned 65 in March 2025 and enrolled in Medicare Part A and Medicare Part B in March 2025. The SSA informed Karen that based on her 2023 MAGI of $152,500, Karen would be subject to an IRMAA of $185 for a total 2025 Medicare Part B monthly premium of $370. Karen appealed her $370 IRMAA based on the fact that she worked full-time during all of 2023 but as of January 1,2024 she was fully retired with a significantly reduced MAGI. When she filed her 2024 federal income tax return in early March 2025, her 2024 MAGI was $83,760, putting her in the “first income” tier and not subject to ant IRMAA. Karen filed Form SSA-44 with the SSA. The SSA agreed with Karen, eliminating the $185 IRMAA resulting in Karen paying a monthly Medicare Part B premium of $185 during 2025.
However, according to the SSA, one-time MAGI spikes from certain events such as capital gains, property sales, IRA withdrawals or Roth IRA conversions are not grounds for requesting a new initial determination. That said, such a spike will lead to a Medicare premium increase, but likely for only one year.
What documents need to be provided to file an IRMAA appeal with the SSA?
The documents that a Medicare Part B beneficiary must provide to appeal an IRMAA appeal depends on the beneficiary’s situation. The documents may include: (1) Federal income tax returns; (2) Marriage; (3) Decree of divorce or marriage annulment; (4) Death certificate; (5) Copies of pay stubs; (6) A signed statement from the Medicare Part B beneficiary’s employer indicating reduction or stoppage of work; (7) A letter or statement indicating a loss or reduction of a pension; (8) Statement from an insurance adjuster indicating the loss of an income-generating property (for example, a rental property).
To begin the appeals process, a beneficiary should file Form SSA-561 (Request for Reconsideration (available for download at https://www.ssa.gov/forms/ssa-561.pdf). The beneficiary’s initial determination should also have information on how to do this. If the SSA reviews and approves the appeal, the beneficiary’s monthly premiums will be corrected. If the beneficiary’s appeal is denied, then the SSA can provide the beneficiary with instructions on how to appeal the denial in a hearing.
According to the Center for Medicare and Medicaid Services (CMS), approximately 7 percent of Medicare beneficiaries pay an IRMAA in addition to their standard Medicare Part B monthly premium. The impact of the IRMAA can be particularly felt by individuals who have saved vigorously for their retirement. When retirement income strategies are being developed, it is important for individuals to be fully aware of the impact of IRMAA as part of the income planning process.
Federal retirees enrolled in Medicare and enrolled in an FEHB health plan should be aware Starting in late 2022, OPM encouraged FEHB health insurance carriers to maximize value to federal retirees enrolled in the FEHB program and in Medicare. OPM pointed out that since 2020, a growing number of insurance carriers have offered a Medicare Advantage Prescription Drug Employer Group Waiver Plan (MA-PD EGWP) to FEHB participants who are enrolled in Medicare Part A only or enrolled in Medicare Part A and Medicare Part B.
OPM points out that the coordination between an FEHB health plan and its associated MA-PD EGWP allows FEHB program health insurance enrollees to benefit from the statutorily required manufacturer discounts required under Medicare Part D. The problem is that enrollment in Medicare Part D requires that a federal retiree enrolled in an FEHB health plan (that includes prescription drug coverage) has to pay a separate monthly premium for their Medicare Part D prescription drug coverage. Like Medicare Part B monthly premiums, Medicare Part D monthly premiums are subject to IRMAA. The following table presents the 2025 Medicare Part D monthly premiums and IRMAA charges:
Note that the definition of “income” for Medicare Part D and IRMAA purposes is modified adjusted gross income (MAGI) (the same MAGI that is used for determining Medicare Part B and IRMAA purposes.
Medicare Part B and Medicare Part D IRMAA Planning
The following are some suggestions for individuals to avoid future IRMAA surcharges:
• The process to avoid IRMAA surtaxes ideally should start before an individual becomes age 63.
• Converting pre-tax retirement accounts such as traditional IRAs and traditional TSP to Roth IRAs in years in which income is low in order to build a source of potentially tax-free distributions. Ideally, full conversion of traditional retirement accounts to Roth retirement accounts should happen at least three years prior to Medicare enrollment if the converted amount would otherwise bump the future enrollee into IRMAA territory.
• Those individuals aged 70.5 and older who are charitably inclined should consider taking advantage of qualified charitable distributions (QCDs) from traditional IRAs to reduce MAGI and satisfy all or a portion of any required minimum distributions (RMDs).
• Withdrawing from Roth IRAs and designated Roth accounts or taking loans from cash value life insurance in years in which MAGI may increase to the extent that IRMAA may occur, or
• Before making withdrawals from a pre-taxed retirement account such as the traditional TSP in order to make a large purchase at age 63 or older, consider “straddling” the withdrawal over two tax years to reduce or eliminate the impact of IRMAA.