Imagine going to Best Buy to purchase a new high-definition television and volunteering to pay 40% percent more than the listed price. You would never do that, would you? And yet some folks do something similar with Medicare. Why? Because they have never been introduced to IRMAA’s fantastic four superheroes.
Why Medicare Costs More for Some – Income Related Monthly Adjustment Amount (IRMAA) is an increase in the cost of Medicare due to an elevated income. IRMAA looks back at your income from two years ago. If your income (from 2024) exceeds $109,000 ($218,000 MFJ), your Part B and Part D costs go up $81.20 and $14.50 per month respectively (for 2026). If your income exceeds $137,000 ($274,000 MFJ), your part B premium doubles!
Hero #1 IRS Form SSA-44 – I know there’s no universe in which you think an IRS form could be a superhero but stay with me! As you approach retirement, it is likely that you are in some of your highest earning years. Because IRMAA looks back two years, many people exceed the IRMAA income limits in the first two years they are on Medicare. As a result, they pay more, but they don’t have to!
Enter our first hero, IRS Form SSA-44! If you have a life-changing event you can request a reduction to your Part B and Part D costs due to a lowered income. Life changing events include marriage, divorce, loss of income and death of a spouse. Retirement happens to be one of these life-changing events.
Unfortunately, this reduction in IRMAA is not something that happens automatically. You must complete and return form SSA-44 to request the reduction.
Hero #2 Roth Balance – Roth distributions do not count as income for the purpose of calculating IRMAA. With a Roth balance, you can draw from your pretax accounts until you reach the IRMAA limit, then draw additional needed income from your Roth Accounts. You can build a Roth balance now by contributing to a Roth account, or by converting a traditional balance to Roth by paying taxes in the year of conversion.
If you are planning to do Roth conversions after retirement, keep in mind that Roth conversions do count toward IRMAA in the year of the conversion. This means that two years later, you may have to pay more for Medicare. As a result, gradual contributions to Roth may be better than counting on a Roth conversion after retirement. If you are planning Roth conversions after retirement, do them before turning 63 years old (2 years prior to Medicare age.)
Hero #3 HSA Balance – Qualified distributions from a Health Savings Account (HSA) are not counted as income for the purpose of calculating IRMAA. Saving in an HSA now and paying for current medical expenses outside of your HSA will allow your HSA balance grow for retirement. Use HSA distributions to pay for medical expenses while on Medicare to avoid showing increased income.
Additionally, current medical expenses paid without using your HSA can be reimbursed income tax free at any time in the future. You may use these reimbursements for income while on Medicare to avoid IRMAA.
Hero #4 Qualified Charitable Distributions (QCD) – Even with Roth and HSA balances, required minimum distributions (RMD) may force you over the IRMAA limits. Starting at age 73 (2026) or 75 (2033 – for those born after 1960) you must draw RMDs from your pretax retirement accounts.
Enter another cape-less hero, the QCD! Qualified charitable distributions allow you to satisfy your RMD without increasing your income. A qualified charitable distribution is a direct distribution from your IRA to a qualified charity and doesn’t count as income for IRMAA.
Whether you are young and need assistance planning for retirement, or approaching Medicare age, Francis is here for you. We can help you avoid the mistakes that would result in you paying more for Medicare. We will make sure what you don’t know won’t hurt you.
“Now you know, and knowing is half the battle!” – G.I. Joe (A Real American Hero)
Did You Know?
Your employer sponsors this financial wellness benefit from Francis. The benefit connects you with down-to-earth financial planners who educate and advise on any money matters…without the sales pitch. We are exclusively engaged by employers like yours and have no investment products to sell, so you can feel confident that you will always receive objective advice.
Your financial planner will help you set priorities and achieve your money goals, without judgment or financial jargon. Know that all discussions are kept strictly confidential. This service is offered as an employee benefit with no per-session co-pays, so you can meet with a financial planner as often as you wish. Services are paid by your retirement plan or your employer.
Connecting with a financial planner is easy! Here’s how:
- Visit FrancisWay.com > Services > Participant Portal
- Call (866) 232-6457
Download the free mobile app (Search for Francis LLC)
Visit the Learning Library
