2024 Medicare Income-Indexed Premiums
Medicare Part B and D’s income-indexed premiums for 2024 were recently announced. These are referred to as income-related Medicare adjusted amounts (IRMAA). To recap, from 1966 until 2006, everyone paid the same for Medicare Part B. In 2006, the Part B premium was $88.50 per month. Then in 2007, income-indexing began and five brackets of income ranges were established with the highest income Americans paying $254.90/month for Medicare Part B in that year.
In 2011, Medicare Part D also became income-indexed. And to refresh your memory, Medicare Part A is typically premium free because one earns premium free Part A by working and paying into Social Security or being married to someone who worked and paid in long enough to be eligible.
The 2024 amounts follow. Remember 2024 income-indexed premiums are based on one’s 2022 tax return.
2024 Medicare Income Indexed Surcharge Chart:
If your yearly income in 2022 was:
It is likely that most Americans agree that higher income Americans should pay more for Medicare. But there’s no question that involving the IRS in this process added complexity and administrative expense.
One issue that we continue to believe should be addressed is the significant breadth of the second highest bracket. As you can see from the chart, the premium amounts increase gradually with higher income and the income brackets are also reasonably incremental. With the second to highest bracket, however, the income range is quite vast, for a single tax filer from $193,000 up to $500,000 and for a joint tax return, $386,000 to $750,000. This problem was created in 2019. In 2018, the highest incomes for income-indexed adjustments were $214,000 for an individual and $428,000 for a couple. When in 2019, a new bracket was added with income limits of above $500,000 for an individual and $750,000 for a couple, the bracket below was not adjusted to reflect the addition of a higher income bracket.
We feel there should have been more attention paid to the second highest bracket. As you can see, the difference between the two higher brackets is only $35 for Part B and $6.80 for Part D. And I hope we can agree that there is a huge difference between making roughly $193,000 as an individual or above $500,000 or roughly $386,000 or above $750,000 as a couple. Hopefully the government will address this issue which seems relatively straightforward to fix.
According to the government, only five percent of Americans pay income-indexed amounts. We are often asked what one can do to reduce these amounts and there isn’t much unless you have one of the life-changing events noted on form SSA-44 such as divorce, death of a spouse, work reduction or work stoppage. In those instances, one can use that form to request Social Security to base income-indexed premiums on current projected income rather than two years prior.
Finally, because such a small percentage of Americans pay income-indexed premiums, we suspect most Americans are unaware that Medicare Part B and D premiums are income-indexed. We occasionally receive inquiries from those who haven’t paid them and then sell their home which is accompanied by a large capital gain and income-indexed premiums are assessed for the one year of higher income. This is how the system is supposed to work. When income goes down again, Medicare income-indexed premiums will be reduced.