9 Types of Retirement Income That Won’t Raise Your Medicare Premiums

When living on a fixed income, understanding Medicare's Income-Related Monthly Adjustment Amount (IRMAA) is crucial for a stress-free retirement. IRMAA is an extra charge added to your Medicare premiums if your income is above a certain threshold, and unexpected higher premiums can take a big bite from your fixed income.

IRMAA is based on your modified adjusted gross income (MAGI), but not all income counts toward that amount. By tapping into tax-advantaged and non-taxed income streams, you can reduce your MAGI and avoid higher Part B and Part D premiums. Here are 10 income types that help you stretch your nest egg and keep Medicare premiums in check.

IRMAA is an extra fee added to your Medicare Part B and Part D premiums if your MAGI exceeds set thresholds two years prior. That means the 2025 IRMAA brackets are based on your MAGI from 2023.

Essentially, if your MAGI as reported on your IRS tax return from 2023 years ago is above a certain amount, you'll pay the standard premium plus the IRMAA. Ultimately, these charges are applied to higher-income retirees for certain Medicare plans that result in higher premiums.

MAGI includes adjusted gross income plus tax-exempt interest, so even nontaxable interest may count toward IRMAA unless structured properly.

In 2025, single filers whose 2023 income exceeded $106,000 pay higher Medicare Part B and D premiums. This is $212,000 for joint filers. The total premium amount varies depending on specific income tiers, but Part B surcharges range from $74.00 to $443.90, and Part D surcharges range from $13.70 to $85.80.

That means that being just above a threshold could add hundreds of dollars a year to Part B and Part D costs. Knowing where you fall helps you plan your income accordingly.

Luckily, not all types of income count toward IRMAA. Keep reading to find out which can help you avoid higher premiums.

Qualified Roth IRA withdrawals, when you're over 59½ and the account's been open for at least five years, aren't included in the calculation of your MAGI for IRMAA purposes since these distributions are tax-free.

For example, a $10,000 Roth withdrawal won't bump your MAGI. Retirees can prioritize Roth withdrawals to fund living expenses while avoiding IRMAA triggers.

HSA distributions used for qualified medical costs are tax-free and, therefore, excluded from your MAGI. For example, if you withdraw $7,500 to pay for long-term care premiums, that amount doesn't affect your IRMAA brackets. Make sure to keep receipts to prove the expenses were qualified.

Lump-sum death benefits from a life insurance policy are not included in MAGI, as they are tax-free. For example, if you receive a $100,000 payout, it won't impact your MAGI even if used for estate planning. 

This can be an intentional strategy to preserve cash flow without triggering higher Medicare costs. However, be cautious since any interest earned on the proceeds or income generated from the cash value of a permanent life insurance policy is generally not taxable and may affect your MAGI.

Funds from a reverse mortgage are considered loan advances, not income, so they don't increase your MAGI as they are not taxable. Use these funds carefully as a non-taxed liquidity option. Remember, the loan becomes due when the home is sold or the borrower moves out.

For tax year 2025, direct donations up to $108,000 from IRA owners age 70 ½ or older to qualified charities bypass taxable income and MAGI. Because the distribution bypasses you and goes directly to a qualified charity from your IRA, it avoids counting as taxable income and won't bump your premiums.

QCDs not only support good causes, but they can also help effectively manage income and count toward the year's required minimum distributions (RMDs) for those age 73 or older. It's ideal to make QCDs in years when your MAGI is creeping near the threshold.

As an individual, cash gifts you receive up to $19,000 in 2025 are not considered taxable income under IRS rules and don't count toward your MAGI. That means if a friend or family member gives you a cash gift within that limit, it won't raise your Medicare premiums or affect your IRMAA calculation unless income is generated from the asset after you receive it.

As long as you stay within the annual limit, gifts can be a helpful, tax-free boost to your retirement income strategy.

Disability payments from workers' compensation are not subject to federal taxes and are excluded from MAGI (if paid under a workers' compensation act). So, if a retiree receives $15,000 from a work-related injury fund, it won't affect their Medicare premiums.

It offers stability without adding to taxable income, but be sure that the payments are properly classified to retain tax exclusion.

Disability pensions and other qualifying VA benefits are non-taxable and therefore are not included in the calculation of your MAGI. For example, an annual $20,000 disability pension won't count toward IRMAA.

For qualifying veterans, it's a significant tax-free income source, but ensure filings clearly designate such benefits to avoid misclassification.

If you inherit cash, property, or other assets outside of tax-deferred accounts, those inheritances generally do not count toward your MAGI. IRS Publication 525 confirms that gifts, bequests, and inheritances, such as money and real estate, are not considered taxable income when received.

For example, inheriting $50,000 in a savings account should not spike your reported income in that year, helping you stay below IRMAA thresholds. However, keep in mind that any future income generated by those assets, like rent or dividends, will count as taxable income when it's received.

You don't have to let IRMAA penalties erode your retirement funds. By stacking non-MAGI income like Roth withdrawals, reverse mortgages, or qualified charitable distributions, you can keep Medicare costs in check. Consider these tips to maximize your senior benefits and make smart money moves as you enter your golden years.