As Turkey Day closes in, it’s hard to believe that 2025 is less than two months away!
As we look ahead to 2025, one of the most important updates for federal government retirees who are age 65 and older is the change to Medicare’s Income-Related Monthly Adjustment Amount (IRMAA) brackets. These adjustments can significantly impact the monthly premiums for Medicare Part B (medical insurance) and Part D (prescription drug coverage). Understanding these changes is crucial for retirees, as they can have a direct impact on your healthcare budget during retirement.
In this article, we'll break down the new IRMAA brackets for 2025, highlight what this means for Feds on Part B, and provide a handy reference chart to help you better understand how your income might affect your Medicare premiums.
What is IRMAA?
The Income-Related Monthly Adjustment Amount (IRMAA) is an additional fee added to your standard Medicare Part B and Part D premiums. The amount you pay for Medicare premiums depends not only on the standard rates but also on your modified adjusted gross income (MAGI) from two years prior. So, for example, the 2025 IRMAA brackets will be based on your income in 2023. IRMAA was created to ensure that wealthier Medicare beneficiaries pay higher premiums for their coverage, helping to offset the overall cost of Medicare. The brackets are set by the Social Security Administration (SSA) and are indexed for inflation each year.
New IRMAA Brackets for 2025
The SSA recently released the updated IRMAA thresholds and premium amounts for 2025—see the below chart.
| IRMAA for 2025
|
|||||
| Single (MAGI) | Married Filing Jointly (MAGI) | Amount of Increase for Part B | Part B Total Monthly Premium Cost Per Person | Amount of Increase for Part D | Part D Total Monthly Premium Cost per Person |
| $106,000 or less | $212,000 or less | $0.00 | $185.00 | $0.00 | $46.50 |
| Above $106,000 to $133,000 | Above $212,000 to $266,000 | $74.00 | $259.00 | $13.70 | $60.20 |
| Above $133,000 to $167,000 | Above $266,000 to $334,000 | $185.00 | $370.00 | $35.30 | $81.80 |
| Above $167,000 to $200,000 | Above $334,000 to $400,000 | $259.90 | $444.90 | $57.00 | $103.50 |
| Above $200,000 to $500,000 | Above $400,000 to $750,000 | $406.90 | $591.90 | $78.60 | $125.10 |
| Above $500,000 | Above $750,000 | $443.90 | $628.90 | $85.80 | $132.30 |
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Key Takeaways for Feds
Being aware of these updated IRMAA brackets is important to your financial wellbeing as a Fed for a number of reasons—here’s just a few:
- Income-Related Adjustments: If you are a federal retiree or employee with a higher income in retirement—whether from a pension, investment income, or other sources—you could be subject to higher IRMAA brackets, leading to significantly higher premiums.
- Retirement and Post-Retirement Planning: Understanding how IRMAA works and how it may impact your premiums is essential for planning your retirement income strategy. Since the IRMAA surcharge is based on income from two years earlier, your planning should account for potential income spikes or changes, such as the sale of investments or the withdrawal of large sums from retirement accounts.
- Taxable Income Matters: Feds need to consider their taxable income when evaluating their IRMAA impact. It’s not just your salary or pension, but other taxable income such as withdrawals from tax-deferred accounts, dividends, capital gains, and rental income that can push you into a higher IRMAA bracket.
- Consider Timing and Withdrawal Strategies: In some cases, it might make sense to plan ahead for the timing of income withdrawals from retirement accounts or other sources to avoid crossing into a higher IRMAA bracket. Strategic planning with a financial advisor can help mitigate unnecessary costs.
Plan Ahead to Minimize IRMAA Impact
The new 2025 IRMAA brackets are a reminder that Medicare premiums are not a “one-size-fits-all” cost. For Feds, this means it's even more important to understand how your income may affect your healthcare premiums as you enter retirement and navigate the complexities of Medicare coverage.
Feds need to be proactive in understanding how changes in IRMAA can affect their retirement budgets. For Feds who want to minimize the impact of IRMAA, working with a fed-focused financial planner who specializes in retirement income and tax strategies can be invaluable.
Take the time now to review your retirement income plan, forecast your future income, and work with an advisor to develop strategies to minimize any potential negative impact from IRMAA. With the right planning, you can make sure that your Medicare costs don’t take a larger bite out of your retirement savings than necessary.
Need help understanding how IRMAA affects you? Contact us the team at Serving Those Who Serve at [email protected] today.
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Katelyn Murray, CFP®, ChFEBC℠, FBS®, CFT-1™: Relationship Team Lead & Financial Planning Expert
Katelyn is a financial advisor with over a decade of experience working with Feds to build a healthy, balanced relationship with money and to design and enjoy the retirement of their dreams. In addition to her CERTIFIED FINANCIAL PLANNER™ and Chartered Federal Employee Benefits Consultant℠ designations, Katelyn also holds a Master in Business Administration as well as a graduate certificate in financial psychology and behavioral finance. Her unique approach merges financial psychology with traditional wealth management expertise to create an integrated financial planning approach that helps clients make the most of the one resource they can’t get more of: time.
Here at Serving Those Who Serve, Katelyn serves as our Director of Relationship Management, mentoring our advisors and guiding our client experience. She also co-hosts The Fed15 podcast each week with STWS founder Dan Sipe.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
**Written by Katelyn Murray, CFP®, ChFEBC®, FBS®, CFT-1™, ECA. The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Katelyn Murray and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. **
