Most people think Medicare costs $202.90 a month for Part B. That's the standard premium. But about 8% of beneficiaries pay more, some dramatically more, because of a surcharge most of them didn't know existed until the bill arrived [1].
IRMAA (Income-Related Monthly Adjustment Amount) is a cliff-based surcharge that can push your Part B premium from $202.90 to $689.90 per month and add another $91 on top of your Part D drug plan premium [1]. The trigger? Your income from two years ago. Not this year. Not last year. Two years ago.
The cruelest feature: these are cliffs, not gradual slopes. Earn $1 over a threshold and you pay the full surcharge for that tier. There is no phase-in.
30-Second Summary: IRMAA adds surcharges to Medicare Part B and Part D premiums for individuals with MAGI above $109,000 (or couples above $218,000) based on income from two years prior. The surcharges use cliff-based brackets with no phase-in. You can appeal using Form SSA-44 if you've had a qualifying life change like retirement. Strategic income planning can save thousands per year.
How IRMAA Is Calculated
IRMAA uses a specific definition of income: your Modified Adjusted Gross Income (MAGI). For Medicare purposes, MAGI equals your Adjusted Gross Income (Form 1040, line 11) plus tax-exempt interest income (Form 1040, line 2a) [2].
This is different from the MAGI used for ACA (Obamacare) subsidies. The Medicare version does not add back non-taxable Social Security benefits [2]. Only AGI plus tax-exempt interest.
The two-year lookback means 2026 premiums are based on your 2024 tax return. Retired this year with minimal income? Doesn't matter for premium purposes. Medicare is looking at what you earned in 2024.
The 2026 IRMAA Brackets
| Filing Single | Filing Jointly | Part B Premium | Part D Surcharge |
|---|
| ≤ $109,000 | ≤ $218,000 | $202.90 | $0 |
| $109,001 – $136,000 | $218,001 – $272,000 | $284.10 | $14.50 |
| $136,001 – $170,000 | $272,001 – $340,000 | $405.80 | $37.40 |
| $170,001 – $204,000 | $340,001 – $408,000 | $527.50 | $60.40 |
| $204,001 – $500,000 | $408,001 – $750,000 | $649.20 | $83.30 |
| > $500,000 | > $750,000 | $689.90 | $91.00 |
The lower brackets adjust for inflation annually (tied to CPI-U). The top bracket ($500k/$750k) is frozen and will not be adjusted for inflation until 2028 [3]. That means inflation will push more people into the top tier each year until the freeze ends.
Also worth knowing: the "Married Filing Separately" brackets are much tighter. If you live with your spouse and file separately, IRMAA kicks in at just $109,000 and jumps to the near-maximum tier at $394,001. There's no strategic benefit to filing separately to avoid IRMAA.
The Cliff Problem: Robert's Story
Robert is a retired single filer. His 2024 income breaks down like this:
| Source | Amount |
|---|
| Social Security (taxable portion in AGI) | $22,000 |
| Traditional IRA withdrawals | $75,000 |
| Pension | $7,000 |
| Adjusted Gross Income | $104,000 |
| Tax-exempt municipal bond interest | $6,000 |
| MAGI for IRMAA | $110,000 |
Robert is $1,000 over the $109,000 threshold. That $6,000 in tax-exempt interest (income he assumed wouldn't count for anything) pushed him into the first IRMAA tier.
The annual cost of being $1,000 over:
| Surcharge | Monthly | Annual |
|---|
| Part B surcharge | $81.20 | $974.40 |
| Part D surcharge | $14.50 | $174.00 |
| Total extra cost | $95.70 | $1,148.40 |
Robert pays $1,148 more per year because his income exceeded the threshold by a thousand bucks. That's an effective marginal rate of over 100% on that last thousand dollars. The surcharge costs more than the income that triggered it.
If Robert had contributed $1,000 more to a tax-deferred account (lowering his AGI) or held non-tax-exempt bonds instead of munis (eliminating the line 2a addition), he'd have saved $1,148 in premiums.
What Catches People Off Guard
Tax-exempt interest counts. Municipal bond interest doesn't appear on your taxable income, but Medicare adds it back for IRMAA. Retirees holding large municipal bond portfolios are often surprised.
Roth conversions trigger IRMAA. Converting a Traditional IRA to a Roth IRA creates taxable income in the conversion year. A $100,000 Roth conversion in 2024 shows up as income on your 2024 return, which determines your 2026 Medicare premiums. Time conversions carefully.
One-time income events create two-year echoes. Sold a rental property in 2024 with a $200,000 capital gain? That gain inflates your MAGI for 2024, which inflates your premiums in 2026. The property is gone, the income was temporary, but the surcharge lasts all year.
The Hold Harmless rule doesn't protect IRMAA payers. The provision that prevents your Social Security check from declining due to Part B increases only applies to standard-premium beneficiaries. IRMAA payers get no such protection [4].
How to Appeal (Form SSA-44)
If your income dropped because of a qualifying "Life-Changing Event," you can request that Medicare use your current income instead of the two-year-old return. The qualifying events are [5]:
- Marriage
- Divorce or annulment
- Death of a spouse
- Work stoppage (retirement)
- Work reduction
- Loss of income-producing property (due to disaster, not voluntary sale)
- Loss of pension income
- Employer settlement payment (as specified by SSA)
File Form SSA-44 with the Social Security Administration. You'll need documentation of both the event and your expected current-year income.
This is one of the most valuable forms in retirement planning. A new retiree whose 2024 return shows $250,000 from their final working year can file SSA-44, demonstrate their 2026 income is now $50,000, and drop from IRMAA Tier 2 back to the standard premium. That saves $2,400+ per year.
What does NOT qualify: Voluntary sale of property. If you sold your rental house by choice and pocketed a gain, that is not a "loss of income-producing property." The loss must be involuntary: destruction from a natural disaster, arson, or theft [6].
Strategies to Manage IRMAA
1. Know your number two years out. In 2024, estimate your MAGI carefully. If you're near a bracket threshold, find ways to reduce income by even a small amount.
2. Use Roth accounts strategically. Roth IRA and Roth 401(k) withdrawals do not count toward MAGI. A retiree pulling $50,000 from a Roth instead of a Traditional IRA keeps that $50,000 off the IRMAA radar entirely. The tax planning you do in your 50s (through Roth conversions during low-income years) pays off in lower Medicare premiums for decades.
3. Time large income events. If you must sell an investment property, take a large capital gain, or do a big Roth conversion, consider whether it can happen in a year that's already in a high IRMAA tier rather than creating a new trigger year.
4. Revisit municipal bonds. Tax-exempt interest sounds great until it pushes you into IRMAA. For retirees near a threshold, the tax benefit of munis may be smaller than the IRMAA cost. Run the numbers. Sometimes holding taxable bonds in an Ally Bank savings account with lower total income impact is cheaper overall.
5. Coordinate with your tax advisor. IRMAA planning intersects with tax bracket management, Required Minimum Distributions, Social Security claiming strategy, and estate planning. Small moves in the right year can save cumulative thousands.
6. File SSA-44 immediately after retirement. Don't wait for Medicare to figure out you've retired. Proactively submit the form with your retirement documentation and a current-year income estimate.
Your Next Move
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Pull your 2024 tax return. Add line 11 (AGI) and line 2a (tax-exempt interest). That's your IRMAA MAGI. Are you near a cliff?
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If you're over a threshold by a small amount, explore whether a retirement account contribution, charitable donation, or income timing adjustment for 2025 (which affects 2027 premiums) could save you.
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If you recently retired, file Form SSA-44 now. Don't pay surcharges based on your working-year income.
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Use our compound interest calculator to project how Roth vs. Traditional withdrawals in retirement affect your total MAGI over time and, by extension, your Medicare costs.
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Review this annually. IRMAA brackets change. Your income changes. A strategy that worked this year might not work next year. Build IRMAA review into your annual financial checkup alongside your retirement withdrawal strategy.
References
- Centers for Medicare & Medicaid Services (CMS). (2025). 2026 Medicare Parts A & B Premiums and Deductibles. CMS.gov. https://www.cms.gov/newsroom/fact-sheets/2026-medicare-parts-b-premiums-deductibles
- Social Security Administration (SSA). (2025). POMS HI 01101.010: Modified Adjusted Gross Income (MAGI). SSA.gov. https://secure.ssa.gov/poms.nsf/lnx/0601101010
- Kiplinger. (2025). What Is the IRMAA?. Kiplinger.com. https://www.kiplinger.com/retirement/medicare
- Medicare Rights Center. (2025). Hold Harmless Provision. MedicareRights.org.
- Social Security Administration (SSA). (2025). Form SSA-44: Medicare Income-Related Monthly Adjustment Amount - Life-Changing Event. SSA.gov. https://www.ssa.gov/forms/ssa-44.pdf
- Social Security Administration (SSA). (2010/Updated). POMS HI 01120.035: Life Changing Event (LCE) – Loss of Income-Producing Property. SSA.gov. https://secure.ssa.gov/poms.nsf/lnx/0601120035
