Dear Rusty: Please explain the Medicare premium increase based on income reported to Social Security. For those of us that waited to draw Social Security until age 70, and who are still working -- drawing a salary, and planning to retire at age 75 after RMDs kick in at age 73 -- how do we make sure that Social Security reports our earnings accurately, so we don't wind up with increased Medicare premiums? Why not charge increased Medicare premiums when we are younger, instead of waiting to sneak up on us when we are older? Signed: Confused about Medicare Premiums
Dear Confused: I believe you are referring to Medicare's "Income-Related Monthly Adjustment Amount," or "IRMAA." IRMAA increases the Medicare Part B (and Part D) premium amounts for those whose combined income from all sources exceeds specified levels for their IRS tax filing status. Social Security (and Medicare) get your earnings information from the IRS and use your reported IRS income (on your income tax return) to calculate your Medicare premium each year. But there is a twist -- they use your reported combined income (also known as your "MAGI" or "Modified Adjusted Gross Income") from 2 years ago to determine your current year's Medicare premium. For example, they will use your 2023 MAGI to determine your 2025 Medicare Part B premium (and your Part D premium if you have Part D). So, if your income reported to the IRS on your tax return in 2023 is correct, Social Security will use that amount to determine next year's Medicare premium.