What Counts as MAGI for IRMAA
MAGI for Medicare is not the MAGI you see on every tax form. Here is the exact line-by-line, what is in, what is out, and the surprises.
IRMAA-MAGI is one of the most confusing tax concepts in retirement because it differs from MAGI definitions used elsewhere. Here is the actual formula CMS uses, with each line item.
The base
Start with your adjusted gross income (AGI), which is line 11 of Form 1040 for tax year 2024 onward. This already includes wages, taxable interest, ordinary dividends, qualified dividends, capital gains, IRA and pension distributions (taxable portion), Social Security taxable portion, business income, rental income, and unemployment.
The add-back
IRMAA-MAGI then adds back tax-exempt interest, line 2a of Form 1040. This is mostly municipal bond interest. So if you have $40,000 of muni interest that does not show up in AGI, it lifts your IRMAA-MAGI by $40,000 anyway.
What does not count
Roth IRA distributions and Roth 401(k) qualified distributions are excluded entirely because they are not in AGI to begin with. HSA distributions used for qualified medical expenses are also excluded. The non-taxable portion of Social Security stays out (only the taxable portion that landed on your 1040 counts). Life insurance proceeds, gifts, and inheritances are excluded.
The Roth conversion trap
A Roth conversion is the big IRMAA killer. Converting $100,000 from a traditional IRA to a Roth adds $100,000 to your AGI in the year of conversion, which two years later sets your Medicare premium. Many retirees discover this only after the fact. Plan conversions in years before age 63 to keep them out of the IRMAA window.
The capital gains trap
Selling appreciated stock or a second home can spike MAGI for one year. The IRMAA hit lasts one year too, but it can run several thousand dollars. Spreading sales across two tax years often keeps both years in lower brackets. For real estate, the $250,000 / $500,000 primary residence exclusion does not count toward MAGI, only the gain above that.
The Social Security taxable portion
If your provisional income is high enough, up to 85% of Social Security benefits become taxable and that 85% is part of AGI. Couples with $44,000+ provisional income hit the 85% threshold quickly. This pulls Social Security into IRMAA-MAGI indirectly.
Spouse-specific quirks
Married filing jointly uses the joint MAGI for both spouses' IRMAA. Married filing separately uses each spouse's individual MAGI but with the punitive separate-filer brackets. Death of a spouse triggers a one-year window where the surviving spouse files single, often a higher bracket than joint.
How to verify your number
SSA mails an IRMAA notice each November. The notice cites the exact MAGI it used. If it does not match your records, you have 60 days to appeal with documentation, typically the 1040 transcript from the IRS.