Medicare premium planning
Have You Met MAGI?
She is quiet, she looks backward, and she may have more influence over your Medicare premiums than you realize.
MAGI stands for Modified Adjusted Gross Income. Medicare may use this number to determine whether you pay an additional amount for Medicare Part B and Part D.
The part people usually discover too late
Medicare generally looks at tax information from two years earlier when determining whether an income-related adjustment may apply.
That means financial decisions made around age 63 may affect what you pay for Medicare at 65.
MAGI measures income
MAGI is calculated using information from your federal tax return. It is not necessarily the same number you think of as your everyday income or take-home pay.
Medicare looks backward
You may already be retired while Medicare is still looking at income from when you were working, receiving bonuses or making major financial moves.
IRMAA may follow
When MAGI exceeds the applicable income level, an Income-Related Monthly Adjustment Amount may be added to Medicare Part B and Part D costs.
MAGI does not send the bill. IRMAA does.
Think of MAGI as the income calculation Medicare reviews. IRMAA is the additional amount that may show up when that income exceeds the applicable level.
Income events worth reviewing before Medicare
These events do not automatically mean you will pay more. They may, however, affect the income Medicare reviews.
- Large IRA or retirement-account withdrawals
- Roth conversions
- Capital gains from investments
- Selling a home or other property
- Bonuses, severance or deferred compensation
- Investment and interest income
- Continuing to work after age 65
- A major change in household income
Your MAGI resources are ready
Start with the IRMAA planning guide, then use the Medicare Roadmap to see how income, retirement and Medicare timing can overlap.
Get the MAGI planning checklist
Enter your name and email to receive the MAGI planning resources and keep the important Medicare links together.
Planning ahead matters
By the time many people learn about MAGI and IRMAA, the income Medicare is reviewing has already happened.
That does not mean every financial decision should be based on Medicare premiums. It means Medicare should be part of the conversation before large withdrawals, property sales, retirement changes or other major financial decisions.
Keep going while you are planning
Medicare does not live in its own little box. Income, retirement, Social Security, employer coverage, prescription drugs and HSA decisions may overlap.
IRMAA Planning Before Medicare
Learn how the two-year lookback works and why age 63 can become an important Medicare planning year.
Read the IRMAA guide →Medicare Roadmap
See the major Medicare, retirement and aging-well checkpoints before important deadlines arrive.
Explore the Roadmap →Medicare Timing Hub
Review the deadlines and timing decisions that can affect Medicare enrollment and retirement planning.
Review Medicare timing →Turning 65? Start Here
Walk through employer coverage, HSA questions, enrollment timing and the decisions that tend to collide around age 65.
Start the Medicare guide →Working Past 65
Learn why continuing to work does not automatically answer whether you should enroll in Medicare.
Read about working past 65 →HSA Before Medicare
Understand why HSA contributions and Medicare enrollment timing need to be coordinated carefully.
Review the HSA guide →Social Security and Medicare
Learn how Social Security timing and Medicare enrollment may overlap, especially when working or retiring after age 65.
Explore Social Security and Medicare →Medicare Glossary
MAGI, IRMAA, HSA, COBRA and the rest of the language nobody remembers asking to learn.
Read the glossary →Not sure how MAGI applies to your situation?
Medicare premium planning can overlap with retirement timing, employer coverage, Social Security, taxes and financial decisions. A Medicare review can help you identify which questions you need answered before you move forward.
This information is provided for general educational purposes only and is not tax, legal or financial advice. Medicare premiums, IRMAA income levels and tax rules may change. Review your individual circumstances with Medicare and qualified tax, legal or financial professionals before making financial decisions.