For many retirees, enrolling in Medicare feels straightforward—until they encounter IRMAA. The Income-Related Monthly Adjustment Amount (IRMAA) is a surcharge added to your Medicare Part B and Medicare Part D premiums if your income exceeds certain thresholds. While Medicare premiums are standardized for most beneficiaries, IRMAA introduces income-based pricing that can materially increase healthcare costs for higher earners.

Here is what you need to know.

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What Is IRMAA?

IRMAA stands for Income-Related Monthly Adjustment Amount. It is not a separate policy or optional coverage it is an additional premium surcharge applied to:

• Medicare Part B (medical insurance)
• Medicare Part D (prescription drug coverage)

The surcharge is determined by the Social Security Administration (SSA) using your Modified Adjusted Gross Income (MAGI) from two years prior. For example, your 2026 premiums are generally based on your 2024 tax return.

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How Income Affects Your Medicare Premiums

IRMAA applies once your income crosses specific annual thresholds. These thresholds are tiered. The higher your income, the higher your surcharge.

Key factors include:

• Filing status (single vs. married filing jointly)
• MAGI (Adjusted Gross Income + tax-exempt interest)
• Two-year lookback period

This means a one-time spike in income such as selling a business, converting a large IRA to a Roth, or realizing significant capital gains can temporarily increase your Medicare premiums two years later.

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How Much Can IRMAA Increase Your Costs?

While standard Part B and Part D premiums are set annually, IRMAA can substantially increase your total healthcare expenses.

The surcharge:

• Increases Part B monthly premiums incrementally based on income tier.
• Adds an additional amount to your Part D premium, paid directly to Medicare (separate from your plan’s base premium).

For higher-income retirees, IRMAA can add several thousand dollars per year in additional premiums.

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Common Triggers for IRMAA

Many retirees are surprised by IRMAA because the income event occurred years earlier. Common triggers include:

• Large Required Minimum Distributions (RMDs)
• Roth IRA conversions
• Sale of appreciated assets
• Business sale or deferred compensation payouts
• Real estate transactions
• Capital gains from portfolio rebalancing

Strategic income planning can help mitigate these impacts.

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Can You Appeal IRMAA?

Yes. If your income has decreased due to a qualifying life event, you can request a reassessment from the SSA.

Qualifying life-changing events include:

• Retirement or reduction in work hours
• Divorce or death of a spouse
• Loss of income-producing property
• Employer settlement payment

You must file Form SSA-44 to request a reduction.

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Planning Strategies to Manage IRMAA

Because IRMAA is tied to taxable income, proactive tax planning is essential. Strategies may include:

• Managing the timing of Roth conversions
• Coordinating capital gains realization
• Strategic withdrawal sequencing from retirement accounts
• Utilizing tax-efficient investment vehicles
• Charitable giving strategies such as Qualified Charitable Distributions (QCDs)

For retirees with sizable portfolios, IRMAA becomes part of broader retirement income engineering not just healthcare planning.

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Lastly

IRMAA is effectively a means-tested premium adjustment built into Medicare. It is not a penalty, but it can feel like one if you are unprepared.

Understanding how your income today affects your Medicare premiums two years from now is critical. With thoughtful planning, retirees can reduce surprises and potentially minimize unnecessary surcharges.

As healthcare costs continue to rise, integrating Medicare premium planning into your tax and retirement strategy is no longer optional… it is prudent financial management.