Should I Be Filing Separately for IRMAA?
- The way you file your taxes can have a big impact on how much you pay for your Medicare coverage. Learn about filing separately vs. jointly as it relates to Medicare IRMAA.
Who doesn’t want to save money on their Medicare insurance? Beneficiaries are often careful to avoid out-of-network charges, take the time to shop around for more affordable plans every year and take other measures designed to keep more money in their own pockets.
So why not file your taxes differently too?
If you earn a higher income, you may be familiar with the Income-Related Monthly Adjusted Amount, or IRMAA. If you’re not up to speed, IRMAA is a surcharge for Medicare Part B and Part D premiums that is applied to beneficiaries who earn an income above a certain threshold.
But there’s one small caveat about IRMAA. The amount of IRMAA tax that you pay for your Medicare premiums can be lowered simply by filing your taxes differently.
How Is IRMAA Determined?
IRMAA charges are determined by using the modified adjusted gross income (MAGI) reported on your taxes from two years prior.
If your reported MAGI is above a certain limit, you pay extra for your Medicare Part B and/or Part D premiums. And the more you earn, the more you’ll pay. If your income is at or below the limit, you pay only the standard amount and nothing extra.
The charts below show how much IRMAA tax you may be responsible for given your reported income.
IRMAA Brackets for 2023
|2021 Individual tax return||2021 Joint tax return||2021 Married and separate tax return||2023 Part B monthly premium|
|$97,000 or less||$194,000 or less||$97,000 or less||$164.90|
|More than $97,000 and up to $123,000||More than $194,000 and up to $246,000||N/A||$230.80|
|More than $123,000 up to $153,000||More than $246,000 up to $306,000||N/A||$329.70|
|More than $153,000 up to $183,000||More than $306,000 up to $366,000||N/A||$428.60|
|More than $183,000 up to $500,000||More than $366,000 up to $750,000||More than $97,000 up to $403,000||$527.50|
|More than or equal to $500,000||More than or equal to $750,000||More than or equal to $403,000||$560.50|
|2021 Individual tax return||2021 Joint tax return||2021 Married and separate tax return||2023 Part D monthly premium|
|$97,000 or less||$194,000 or less||$97,000 or less||
Your plan premium
|More than $97,000 and up to $123,000||More than $194,000 and up to $246,000||N/A||
$12.20 + your plan premium
|More than $123,000 up to $153,000||More than $246,000 up to $306,000||N/A||
$31.50 + your plan premium
|More than $153,000 up to $183,000||More than $306,000 up to $366,000||N/A||
$50.70 + your plan premium
|More than $183,000 up to $500,000||More than $366,000 up to $750,000||More than $97,000 up to $403,000||
$70.00 + your plan premium
|More than or equal to $500,000||More than or equal to $750,000||More than or equal to $403,000||
$76.40 + your plan premium
Is it Better to File Separately?
What do you notice when looking at the charts above? For beneficiaries of particular income brackets, filing your taxes jointly can save you bundles on your Medicare premiums when compared to filing married but separate.
For example, let’s say your income is $100,000. If you file jointly, you’ll be paying the standard Part B premium of $164.90 per month in 2023 and no additional tax on top of any Part D premiums.
But if you filed that $100,000 as married but separate, you’d be paying $527.50 for Part B and a $70 per month tax on top of any Part D premiums.
That’s an enormous difference in your Medicare premiums. If you had both Part B and Part D, the savings would amount to more than $5,000 per year for each person, or more than $10,000 per year as a household if both spouses have both Part B and Part D.
Of course, filing jointly won’t help in every scenario. If you make $400,000 a year, your Part B and Part D IRMAA costs will be the same no matter how you file your taxes.
There is not a scenario in which filing jointly will cause you to pay more IRMAA versus filing separately.
In other words, filing jointly will either lower your IRMAA or keep it the same. It will never cause you to pay more. Filing separately will either raise your IRMAA or keep it the same. It will never cause you to pay less.
To be clear, there are numerous other pros and cons of filing your taxes jointly vs. separate that you should consider.
To determine if you would benefit more by filing jointly, simply consult the charts above to find your income level and check the corresponding IRMAA amounts for both joint and married but separate filings.
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Does IRMAA Apply to Both Spouses?
IRMAA applies to both spouses when both are on Medicare. Medicare premiums are charged to each individual beneficiary as there is no “family plan.”
Should Two High-Income Earners File Separately?
Once your combined incomes reach at least $750,000, it makes no difference how you file for the purpose of IRMAA as you will be paying the same amount no matter what.
But when two high-income earners combine to make less than $750,000, it may be advantageous to file jointly.
For example, if your combined income is $600,000, a joint file would require a Part B payment of $527.50 and an additional $70 for Part D in 2023.
Meanwhile, a married but separate file would require $560.50 for Part B and an extra $76.40 for Part D. Again, filing separately may not cost you more in every situation, but it will never save you money on your IRMAA.
Is it Better to File Separately if One Spouse is on Social Security?
Social Security status for the purpose of IRMAA makes no difference. IRMAA is based off income and tax filing status.
Any income received through Social Security will count toward one’s IRMAA status.
Does Social Security Automatically Adjust IRMAA?
Any applicable IRMAA tax will be automatically added to your Medicare Part A or Part D premium.
IRMAA amounts typically increase each year, and any increase will also be automatically adjusted to your bill.
How Else Can I Save Money on Medicare?
There are some additional ways you can save money on your Medicare coverage. A Medicare Supplement Insurance (Medigap) plan can provide coverage for Medicare deductibles, copayments and coinsurance.
Speak to a licensed insurance agent about how you can start saving money on your Medicare.