What Is IRMAA

How a Single Financial Decision Can Quietly Raise Your Medicare Costs

Medicare is not free, and it is not the same cost for everyone. Most people know that Part B and Part D carry monthly premiums. Fewer know that those premiums are income-tested — meaning higher-income retirees pay significantly more than the standard rate.

This income-based adjustment is called IRMAA: the Income-Related Monthly Adjustment Amount. For retirees who do not plan around it, IRMAA can add hundreds or even thousands of dollars per year to Medicare costs — often as a surprise.

How IRMAA Works

Medicare uses your modified adjusted gross income (MAGI) from your tax return two years prior to set your premium tier for the current year. This is called the two-year lookback.

In practical terms: your 2026 Medicare premiums are based on your 2024 tax return. If your income spikes in a particular year — due to a large Roth conversion, a business sale, or required minimum distributions — that spike can push you into a higher IRMAA tier two years later, even if your income has since returned to normal.

The IRMAA Tiers

IRMAA applies in brackets above the standard income thresholds. For 2026, the standard Part B premium applies to individuals with MAGI below approximately $106,000 (married filing jointly: approximately $212,000). Above those thresholds, surcharges apply in tiers.

Because the surcharges apply per person, a married couple where both spouses are on Medicare can face surcharges that are double the individual amount — easily $5,000 or more in additional annual Medicare costs.

What Triggers IRMAA

• Roth IRA conversions — one of the most common IRMAA triggers for retirement-age households engaged in tax planning.
• Required minimum distributions — as balances grow, RMDs grow and can push retirees into higher tiers over time.
• Capital gains realizations — the sale of appreciated securities, real estate, or a business.
• Pension income — traditional pension income is fully taxable and counts toward MAGI.
• Social Security benefits — up to 85% of benefits can be included in MAGI.

How to Plan Around IRMAA

Staying below thresholds deliberately. Modeling the IRMAA thresholds alongside bracket thresholds helps identify the point where additional income triggers a disproportionate cost.

Spreading income across multiple years. Rather than concentrating a large income event in a single year, spreading it may keep you below IRMAA thresholds in each individual year.

Qualified charitable distributions (QCDs). Retirees 70½ or older can make QCDs directly from an IRA to a qualified charity — up to $111,000 per year under 2026 limits. QCDs satisfy RMD requirements but are excluded from MAGI.

Life change appeals. If your income dropped due to a qualifying life event, you can appeal your IRMAA determination using IRS Form SSA-44.

The Two-Year Lookback Problem

A retiree who leaves work in 2026 may still face IRMAA surcharges in 2027 and 2028 based on high earned income from their working years. This is expected and manageable if planned for — but surprises many retirees who assume their Medicare costs immediately reflect their new income level.

This article is for educational and informational purposes only. IRMAA thresholds and premium amounts are set annually by the Centers for Medicare and Medicaid Services and are subject to change. Consult a qualified advisor and medicare.gov for current information. We do not provide tax advice or tax preparation services.