When you consider what is included in ones modified adjusted gross income (MAGI), you don’t have to be a millionaire to pay high Medicare Part B and D premiums. A substantial required minimum distribution will put some people over the top, as will a good year of investment income.
In the early years of retirement pre-retirement income can throw a household into IRMAA charges.
If you are a few years away from Medicare, these premiums are an important consideration in your financial planning.
Your MAGI is the total of the following for each member of your household who’s required to file a tax return:
• Your adjusted gross income (AGI) on your federal tax return
• Excluded foreign income
• Nontaxable Social Security benefits (including tier 1 railroad retirement benefits)
• Tax-exempt interest
Qualified distributions from Roth accounts are not counted as part of MAGI.
Starting in 2020, the income thresholds will be indexed to general price inflation, except for the top-level income thresholds of $500,000 for individuals and $750,000 married couples filing jointly. The top tiers will be indexed to inflation starting in 2028.
Prescription drug Part D premiums