IRMAA is the Medicare premium surcharge that high-income retirees pay on top of standard Part B and Part D premiums. It works on a cliff structure, not a slope. Going $1 over a threshold can trigger thousands in additional premiums per year. The lookback is two years, so the planning has to happen well upstream of the bill.
A client (illustrative, not a real client) sold a few appreciated positions in late 2024 to fund a remodel and converted $50,000 of his traditional IRA to a Roth at the same time. Each transaction made sense in isolation. The combined increase in his 2024 MAGI pushed him about $4,000 over the IRMAA Tier 1 threshold. Two years later, he and his wife are paying roughly $2,500 in additional Medicare premiums they didn’t expect, didn’t plan for, and didn’t see coming until the bill arrived.
That’s IRMAA. The Medicare premium surcharge that higher-income retirees pay on top of standard Part B and Part D premiums. It’s based on modified adjusted gross income from two years earlier. And it works on a cliff structure — going $1 over a threshold triggers the full tier surcharge.
For households in or near retirement with meaningful assets, IRMAA is one of the most consistently overlooked cost drivers in retirement income planning. It’s also one of the most controllable, if you understand the rules. Most people don’t.
How IRMAA actually works
IRMAA (Income-Related Monthly Adjustment Amount) is a surcharge added to Medicare Part B and Part D premiums when MAGI exceeds defined thresholds. For 2026:
• Base Part B premium: $202.90/month.
• Average Part D premium: $38.99/month.
• IRMAA surcharges range from approximately $76 per person per month at Tier 1 to $462 per person per month at Tier 5.
The 2026 threshold structure (rounded; verify against current SSA tables at publish):
• Tier 0 — No IRMAA: MAGI ≤ $109,000 single / ≤ $218,000 joint.
• Tier 1: $109K–$137K single / $218K–$274K joint.
• Tier 2: $137K–$171K single / $274K–$342K joint.
• Tier 3: $171K–$205K single / $342K–$410K joint.
• Tier 4: $205K–$500K single / $410K–$750K joint.
• Tier 5: $500K+ single / $750K+ joint.
Three facts most retirees don’t know until it’s too late:
MAGI for IRMAA purposes is AGI plus tax-exempt interest. Municipal bond interest, normally tax-free at the federal level, is added back for IRMAA. Many retirees holding “tax-free” municipal bonds discover those bonds are not, in fact, tax-free for IRMAA purposes.
The lookback is two years. 2026 premiums are based on 2024 MAGI. 2027 premiums will be based on 2025 MAGI. Planning has to happen at least two years before the income event matters for Medicare cost.
There is no phase-in. A joint filer at $217,999 MAGI owes no IRMAA. At $218,001 they owe approximately $1,148 per person — $2,296 for a couple. Two dollars of income costs $2,296 in Medicare expense. This is a cliff, not a slope.
The pre-Medicare planning window
The most important IRMAA insight for households planning retirement: the years 63 and 64 — before Medicare enrollment at 65 — set the initial IRMAA tier.
If you retire at 63 and have meaningful 1099 income, pension lump sums, capital gains realizations, or Roth conversions in your 63rd or 64th year, those events flow through to your initial IRMAA tier two years later. By the time you enroll in Medicare at 65, you’re locked into whatever tier your prior-year income set.
For households planning multi-year Roth conversion strategies — covered in the prior post in this series on Roth conversions — the IRMAA interaction is often the binding constraint. A conversion that looks attractive on its own can become unattractive once the IRMAA cost is factored in.
The widow/widower trap
The least-discussed IRMAA risk for couples: filing status changes after the death of a spouse.
A couple filing jointly with MAGI of $260,000 sits comfortably under the joint Tier 1 threshold ($274,000) and pays no IRMAA. If one spouse dies and the surviving spouse continues to draw similar income — pensions, Social Security, RMDs — they’re suddenly filing single. The single Tier 1 threshold is $137,000. The same $260,000 of income puts the survivor in Tier 4, costing roughly $5,500–$7,000 per year in IRMAA surcharges.
This is on top of every other adjustment a surviving spouse is making. And it’s largely solvable if anticipated — but it requires modeling the survivor scenario as a separate planning exercise, not assuming current joint-filer income translates to current Medicare cost.
The appeals process most retirees don’t know exists
The single most underutilized IRMAA tool: Form SSA-44, the “Medicare Income-Related Monthly Adjustment Amount Life-Changing Event” form.
If a qualifying life-changing event causes income to drop significantly relative to the lookback year, you can request that Social Security use a more recent year’s income — or projected current income — instead of the default two-year lookback.
Qualifying life-changing events include:
• Marriage, divorce, or annulment.
• Death of a spouse.
• Work stoppage (typically retirement).
• Work reduction.
• Loss of income-producing property.
• Loss of pension income.
• Employer settlement payment.
The retiree-applicable event most commonly missed: work stoppage. If you retired in 2025 and your 2024 tax return (the lookback year for 2026 IRMAA) reflects a full year of employment income, you can file SSA-44 with your post-retirement income documentation and have IRMAA recalculated based on actual current income.
For a household whose income dropped substantially after retirement, this can eliminate IRMAA for the years immediately following retirement — saving thousands per year, per person. The form is short. The process is straightforward. The result is meaningful. And most retirees don’t know it exists.
The Roth conversion interaction
The prior post in this series covered Roth conversion strategy. The IRMAA layer adds a constraint that conversion-focused content often skips: every dollar of a Roth conversion adds to MAGI in the conversion year, which determines IRMAA two years later.
A $50,000 Roth conversion that crosses an IRMAA threshold doesn’t just cost conversion-amount times marginal rate. It costs that plus the IRMAA cliff. For a household just below a Tier 1 threshold, a conversion that pushes them over adds $2,000–$2,500 of unplanned Medicare cost.
The planning answer: model conversions against the IRMAA bracket schedule, not just the income tax brackets. The IRMAA-aware conversion plan often involves smaller conversions across more years to stay in lower tiers, or concentrated “take the hit” years where the IRMAA increase is accepted in exchange for completing the conversion strategy faster.
When to take the hit, when to avoid it
A common IRMAA planning question: spread income evenly to stay just under thresholds, or concentrate income in fewer years and accept higher IRMAA?
The framework:
If income is structurally above thresholds (due to RMDs, pension income, or other ongoing sources), small adjustments rarely help. You’re paying IRMAA either way; the question is whether to add controllable income (like Roth conversions) without much marginal IRMAA cost.
If income is structurally below thresholds and the question is one-time events (sale of a business, large IRA distribution, sale of appreciated property), concentrating the event in one year may be more efficient than spreading across multiple years that each cross a threshold. One year of Tier 3 may cost less than three years of Tier 1.
The modeling is specific to each household. The principle is that IRMAA should be planned as one element of an integrated tax and retirement income strategy, not as an after-thought once the conversion plan or distribution plan is set.
The pattern
The recurring theme of this series is that planning isn’t paperwork. Estate planning isn’t the document. Roth conversion isn’t the conversion. SALT relief isn’t the headline. Business value isn’t the gap.
IRMAA fits the same pattern. The Medicare premium is the visible cost. The IRMAA structure underneath — the two-year lookback, the cliff thresholds, the appeals process, the interaction with everything else — is the planning. Most households learn about IRMAA when they get the bill. The households that get the most benefit are the ones modeling it two years upstream of the income event.
IRMAA is the Medicare cost most households learn about two years too late.
The plan is the residue. The planning is the work.
Key takeaways
• IRMAA is a Medicare premium surcharge based on MAGI from two years prior, with no phase-in — going $1 over a threshold triggers the full tier surcharge.
• 2026 IRMAA is based on 2024 MAGI; 2027 will be based on 2025 MAGI. Planning happens two years upstream of the cost.
• MAGI for IRMAA includes AGI plus tax-exempt interest — so municipal bond income doesn’t escape the calculation.
• The pre-Medicare years (63–64) determine initial IRMAA tier when Medicare enrollment begins at 65.
• Form SSA-44 lets retirees appeal IRMAA based on life-changing events (work stoppage, death of spouse, divorce, etc.). Most retirees don’t know it exists; it’s one of the most underutilized planning tools in the Medicare system.
• The widow/widower trap: filing-status change after a spouse’s death halves the bracket thresholds and frequently pushes survivors into higher IRMAA tiers without any change in actual income.
• Roth conversions add to MAGI, which determines IRMAA two years later. IRMAA-aware conversion planning often requires smaller conversions across more years, or concentrated “take the hit” years where the IRMAA cost is accepted to complete the conversion strategy faster.
Common questions about IRMAA
What is IRMAA in Medicare?
IRMAA (Income-Related Monthly Adjustment Amount) is a surcharge added to Medicare Part B and Part D premiums for beneficiaries whose modified adjusted gross income (MAGI) exceeds defined thresholds. It applies to all Medicare beneficiaries — including those whose employer or retirement system pays the base premium. The surcharge is determined by MAGI from two years prior, so 2026 IRMAA is based on 2024 income.
What are the IRMAA brackets for 2026?
The 2026 IRMAA brackets (single filer / joint filer): No surcharge up to $109,000 / $218,000. Tier 1: $109K–$137K / $218K–$274K. Tier 2: $137K–$171K / $274K–$342K. Tier 3: $171K–$205K / $342K–$410K. Tier 4: $205K–$500K / $410K–$750K. Tier 5: above $500K / $750K. Surcharges range from approximately $76 per person per month at Tier 1 to $462 per person per month at Tier 5, on top of the base Part B premium of $202.90 per month.
How can I avoid IRMAA?
The most reliable way to avoid IRMAA is to manage MAGI two years before the year the premium is paid. Strategies include: timing Roth conversions to stay below tier thresholds, using qualified charitable distributions (QCDs) after age 70½ to reduce MAGI from RMDs, avoiding bunching of large taxable events into single years that would push across thresholds, and managing tax-exempt interest income (which is added back for IRMAA purposes despite being federally tax-free). For households with structurally above-threshold income, the planning question shifts from avoidance to optimization — how to add controllable income (like conversions) without crossing additional tier thresholds.
Can you appeal IRMAA?
Yes. Form SSA-44 (“Medicare Income-Related Monthly Adjustment Amount Life-Changing Event”) allows beneficiaries to appeal IRMAA based on qualifying life-changing events: marriage, divorce, death of a spouse, work stoppage (retirement), work reduction, loss of income-producing property, loss of pension income, or an employer settlement payment. If income has dropped significantly relative to the lookback year, the SSA can use more recent income — or projected current-year income — instead. The form is short, the process is straightforward, and it’s one of the most underutilized planning tools in the Medicare system. Beneficiaries have 60 days from receiving an IRMAA notice to file the appeal.
Does a Roth conversion trigger IRMAA?
A Roth conversion adds the converted amount to MAGI in the year of the conversion. If that addition pushes MAGI across an IRMAA tier threshold, the household will pay higher Medicare premiums two years later. The IRMAA cost is in addition to the income tax owed on the conversion itself. For households near a threshold, the full cost of a conversion includes both the conversion tax and any incremental IRMAA — planning the two together rather than separately produces materially better outcomes.
What happens to IRMAA when a spouse dies?
When a spouse dies, the surviving spouse generally transitions to “single” filing status in the following tax year. Because the single-filer IRMAA thresholds are approximately half the joint thresholds, the same level of household income often pushes the survivor into a substantially higher IRMAA tier. A couple paying no IRMAA at $260,000 of joint MAGI can have the survivor paying Tier 4 IRMAA on the same $260,000 of single MAGI — adding $5,500–$7,000 per year in Medicare cost on top of other adjustments. This is one of the most predictable and least-planned-for IRMAA scenarios.
This article is for informational and educational purposes only and is not intended as tax, legal, Medicare, or financial planning advice. IRMAA thresholds, surcharge amounts, and appeal procedures are set by the Social Security Administration and may change annually. Confirm current thresholds with the SSA or your Medicare advisor at the time of any planning decision. Consult your CPA, tax advisor, and Medicare professional about your specific situation.
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There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.
Source: irs.gov