Medicare Premiums and Gift Exclusions
Medicare premiums and federal gift exclusions are essential planning figures. Sterling tracks current schedules including income-related adjustments for Medicare Parts B and D.
Medicare Part A Premiums
Most clients qualify for premium-free Part A based on their work history or their spouse's work history. Clients with fewer than 40 quarters of Medicare-covered employment pay monthly premiums that vary by quarters earned.
Medicare Part B Premiums
Part B covers physician services and outpatient care. The standard premium applies to most beneficiaries. Higher-income clients pay additional amounts based on the Income-Related Monthly Adjustment Amount schedule.
IRMAA: Income-Related Adjustments
IRMAA surcharges apply to both Part B and Part D premiums when modified adjusted gross income exceeds certain thresholds. The tables show premium amounts by income range and filing status.
IRMAA Look-Back
IRMAA calculations use income from two years prior. A client paying 2025 premiums has their surcharge determined by 2023 tax returns. This creates planning opportunities around income timing.
| Filing Status | When IRMAA Begins |
|---|---|
| Single | MAGI above $103,000 |
| Married Filing Jointly | MAGI above $206,000 |
| Married Filing Separately | Lower thresholds apply |
Federal Gift Exclusion
The annual gift exclusion allows transfers to any individual without gift tax consequences or using lifetime exemption. Gifts exceeding this amount count against the lifetime estate and gift tax exemption.
- Annual Exclusion: Per-recipient limit for tax-free gifts each year
- Lifetime Exemption: Total amount that can pass gift and estate tax free
Gift Splitting
Married couples can combine their annual exclusions. A joint gift of twice the annual limit to a single recipient requires filing a gift tax return to split the gift but uses no lifetime exemption.
Sterling considers gift exclusion amounts when generating estate planning advice for high-net-worth households.