Austin Stuhr, OLP Financial Advisor with Cornerstone Investments
Many people assume Medicare costs the same for everyone. For roughly 8 percent of beneficiaries, it does not.
The basics
IRMAA stands for Income-Related Monthly Adjustment Amount. It is a surcharge added to Medicare Part B and Part D premiums for beneficiaries whose income exceeds specified thresholds. Part B has been income-adjusted since 2007 and Part D since 2011, and CMS reports that each affects about 8 percent of enrollees [1]. The Part B surcharge is built into the Part B premium. The Part D surcharge is separate from the plan premium and is either deducted from a Social Security payment or billed directly by Medicare [1].
Income from two years ago sets today’s premium
The Social Security Administration generally uses modified adjusted gross income reported to the IRS for the tax year two years before the premium year [2]. Premiums for 2026 are therefore based on 2024 tax returns. For this purpose, modified adjusted gross income means adjusted gross income plus tax-exempt interest [3].
The thresholds are cliffs, not phase-ins
The 2026 amounts published by CMS are as follows [1]:
| 2024 MAGI — single | 2024 MAGI — joint | Total Part B | Part D add-on |
$109,000 or less $109,001 – $137,000 $137,001 – $171,000 $171,001 – $205,000 $205,001 – $499,999 $500,000 or more
$218,000 or less $218,001 – $274,000 $274,001 – $342,000 $342,001 – $410,000 $410,001 – $749,999 $750,000 or more
$202.90 $0.00 $284.10 $14.50 $405.80 $37.50 $527.50 $60.40 $649.20 $83.30 $689.90 $91.00
There is no gradual phase-in. Exceeding a threshold by one dollar applies the entire tier. The amounts are per person, so a married couple who are both enrolled each pay the surcharge separately. Between the standard premium and the top tier, the difference is roughly $5,844 per year for Part B and about $1,092 for Part D, per person. Beneficiaries who are married, lived with a spouse during the year, and file separately are subject to a different and more compressed schedule [1].
Why it matters for planning
IRMAA is redetermined annually. A single year of elevated income generally raises premiums for one year and then drops off once that tax year moves out of the two-year lookback window. The complication is that the income which triggers it is frequently income whose timing is discretionary: traditional IRA or 401(k) withdrawals, required minimum distributions, Roth conversions, realized capital gains, the sale of a home or business, or a lump-sum payment. Because the cause and the effect are separated by two years, the surcharge often arrives without warning.
Options after the fact are limited
If a qualifying life-changing event has reduced income, a beneficiary may ask SSA to use a more recent tax year by filing Form SSA-44. SSA identifies qualifying events as including marriage, divorce, the death of a spouse, loss of income, and an employer settlement payment [4][5]. Work stoppage and work reduction are among the recognized events, which is why people who retire mid-lookback are often able to have premiums recalculated.
The list is specific, and a one-time capital gain or a voluntary Roth conversion is not on it. A surcharge that results from a planned transaction generally stands.
The practical takeaway
IRMAA is largely a question of timing, and timing can only be managed before income is recognized. For someone planning to enroll in Medicare at 65, the first tax year that can affect premiums is the year they turn 63. Reviewing projected income with a qualified tax or financial professional before taking discretionary distributions is one way to see where the thresholds fall relative to a given year’s plan.
Disclosure: This article is educational and general in nature. It is not investment, tax, insurance, or legal advice, and it is not a recommendation to buy or sell any product or security, or to take or defer any distribution. Premium amounts and income thresholds are those published for 2026 and are adjusted annually. Individual circumstances vary; consult a qualified tax, financial, or legal professional before acting.
References
1. Centers for Medicare & Medicaid Services, “2026 Medicare Parts A & B Premiums and Deductibles,” fact sheet, November 14, 2025. https://www.cms.gov/newsroom/fact-sheets/2026-medicare-parts-b-premiums- deductibles
2. 20 C.F.R. § 418.1135, “What modified adjusted gross income information will we use to determine your income- related monthly adjustment amount?” https://www.ecfr.gov/current/title-20/chapter-III/part-418/subpart- B/subject-group-ECFRf5374288b57d874/section-418.1135
3. 20 C.F.R. Part 418, Subpart B, “Medicare Part B Income-Related Monthly Adjustment Amount” (definitions, § 418.1010). https://www.ecfr.gov/current/title-20/chapter-III/part-418/subpart-B
4. Social Security Administration, “Request to lower an Income-Related Monthly Adjustment Amount (IRMAA).”
5. Social Security Administration, Form SSA-44, “Medicare Income-Related Monthly Adjustment Amount – Life- Changing Event.” https://www.ssa.gov/forms/ssa-44.pdf
