IRMAA
Certified Financial Planner glossary · Certified Financial Planner
Definition
Income-Related Monthly Adjustment Amount: higher Medicare Part B and Part D premiums based on MAGI from two years prior.
IRMAA in plain English
A Roth conversion looks brilliant on this year's return, then Medicare Part B and Part D premiums jump two years later. IRMAA is the Income-Related Monthly Adjustment Amount: higher Medicare premiums driven by MAGI from two years prior. Crossing a cliff usually applies for the whole premium year, not just the conversion month. The ignored constraint is that today's taxable income can raise tomorrow's healthcare costs even when the conversion arithmetic itself is clean. Model the two-year lag before you celebrate the tax savings.
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