You did everything right. You saved diligently, built a solid retirement account, and now you're staring down a Medicare premium that's nearly double what your neighbor pays. Welcome to IRMAA, one of the least understood costs in retirement planning.
IRMAA stands for Income-Related Monthly Adjustment Amount. It's a surcharge added to your Medicare Part B and Part D premiums if your income crosses certain thresholds. And here's the part that trips people up: it's not based on what you're earning today. It's based on your tax return from two years ago.
If you're a high earner approaching Medicare eligibility, or you're already retired and doing Roth conversions, selling appreciated stock, or taking a larger IRA withdrawal, IRMAA deserves a seat at your planning table. Let's break down how it works in 2026 and what you can actually do about it.
What Is IRMAA and Who Does It Affect?
IRMAA applies to Medicare Part B (medical insurance) and Part D (prescription drug coverage). About 8% of Medicare beneficiaries pay it, according to the Centers for Medicare & Medicaid Services (CMS).¹ That might sound like a small group, but if you've built meaningful retirement savings or you're still working in your final pre-Medicare years, you may be closer to that 8% than you think.
Unlike your regular Medicare premium, IRMAA isn't a flat fee. It's a sliding scale. The more your income exceeds the threshold, the more you pay, and it applies per person, not per household. That means a married couple who are both on Medicare could each owe the surcharge separately.
How Do the 2026 IRMAA Brackets Work?
For 2026, the standard Part B premium is $202.90 per month.² If your modified adjusted gross income (MAGI) from your 2024 tax return was above the threshold below, you'll pay more.
Here's the official 2026 bracket table from CMS:²
| Individual MAGI (2024) | Joint MAGI (2024) | Part B Monthly Surcharge | Total Part B Premium | Part D Monthly Surcharge |
|---|---|---|---|---|
| $109,000 or less | $218,000 or less | $0 | $202.90 | $0 |
| $109,001–$137,000 | $218,001–$274,000 | $81.20 | $284.10 | $14.50 |
| $137,001–$171,000 | $274,001–$342,000 | $202.90 | $405.80 | $37.50 |
| $171,001–$205,000 | $342,001–$410,000 | $324.60 | $527.50 | $60.40 |
| $205,001–$499,999 | $410,001–$749,999 | $446.30 | $649.20 | $83.30 |
| $500,000 or more | $750,000 or more | $487.00 | $689.90 | $91.00 |
A few things worth noticing. First, this is a cliff, not a gradual phase-in. If your MAGI is $1 over a threshold, you pay the full surcharge for that entire bracket, not just on the amount over the line. Second, the Part D surcharge is paid on top of whatever your Part D plan already charges. Third, if you're married and file separately but lived with your spouse during the year, the brackets are much less forgiving. IRMAA kicks in at the same $109,000 threshold, but the next bracket jumps straight to $446.30 a month.²
Why Is My Medicare Premium Based on Old Income?
This is the part that catches people off guard almost every year. Social Security determines your IRMAA using the most recent tax return the IRS has on file, which is typically from two years prior.² So your 2026 premium is based on your 2024 income, not what you're actually earning or withdrawing right now.
That lag cuts both ways. If your income was unusually high two years ago because you were still working, sold a business, or took a large one-time distribution, you could be paying a surcharge today even though your current income looks nothing like it did then. On the flip side, if you retired this year and your income dropped significantly, that lower income won't show up in your premium for another two years unless you take action (more on that below).
What Counts as Income for IRMAA Purposes?
IRMAA uses modified adjusted gross income, which is your adjusted gross income (AGI) plus any tax-exempt interest, such as interest from municipal bonds. This add-back surprises a lot of retirees who assumed muni bond income was invisible to the IRS. For IRMAA purposes, it isn't.
This is why IRMAA planning tends to intersect with several other financial decisions:
- Roth conversions. Converting pre-tax retirement dollars to a Roth IRA increases your taxable income in the year of the conversion, which can push you into a higher IRMAA bracket two years later.
- Required minimum distributions (RMDs). Once RMDs begin, they add to your MAGI whether you need the money or not.
- Capital gains from selling investments or property. A large one-time gain, even from something like selling a home or a business, can spike your MAGI for that year.
- Social Security timing. Combined with other income sources, when and how you claim Social Security affects your overall income picture, which in turn affects IRMAA exposure.
None of these decisions are wrong to make. They just deserve to be evaluated with IRMAA in the picture, not as an afterthought.
Can You Appeal or Reduce an IRMAA Surcharge?
Yes, in certain situations. If you've experienced what Social Security calls a "life-changing event," you can request a new determination using Form SSA-44. Qualifying events include retirement or reduction in work hours, marriage, divorce, death of a spouse, loss of income-producing property, or a reduction in pension income.
This matters most for people who retired recently. If your 2024 tax return reflects a full year of salary but you've since retired, filing an SSA-44 with documentation of your current income could reduce or eliminate the surcharge rather than making you wait two years for your lower income to show up in the system automatically.
If you believe the IRS provided outdated or incorrect income information to Social Security, you can also appeal on those grounds. You'll generally have 60 days from the date of your IRMAA determination notice to file an appeal.
What Can You Do Now to Plan Ahead?
Because IRMAA runs on a two-year lookback, the most effective planning happens well before you're staring at the bill. A few areas worth reviewing with your advisor and tax professional:
Time large income events carefully. If you're planning a Roth conversion, a business sale, or a large capital gain, look at where that income will land two years out relative to the IRMAA thresholds, not just this year's tax bracket.
Consider multi-year Roth conversion strategies. Rather than converting a large amount in one year and risking a cliff into a higher bracket, spreading conversions across several years can sometimes help you stay under a threshold while still moving money toward tax-free growth.
Coordinate withdrawals across account types. Pulling from a mix of taxable, tax-deferred, and Roth accounts in retirement gives you more control over your MAGI in any given year than relying on one account type alone.
Watch the years leading up to Medicare eligibility. Income earned at age 63 and 64 becomes the basis for your IRMAA determination at 65 and 66. If you're still working in those years, it's worth understanding how that income will follow you into Medicare.
Review your situation annually. Tax law changes, and so do the IRMAA thresholds. What made sense last year might not make sense this year.
The Bottom Line
IRMAA isn't a penalty for doing well financially, but it is a cost that catches a lot of retirees by surprise simply because they didn't know to look for it two years in advance. Whether you're a few years from Medicare or already enrolled and navigating RMDs and Roth conversions, understanding how these brackets work gives you a real opportunity to plan around them instead of reacting to them.
Sources
- Centers for Medicare & Medicaid Services. "2026 Medicare Parts A & B Premiums and Deductibles." Published November 14, 2025. https://www.cms.gov/newsroom/fact-sheets/2026-medicare-parts-b-premiums-deductibles
- Centers for Medicare & Medicaid Services. "2026 Medicare Parts A & B Premiums and Deductibles" (Part B and Part D Income-Related Monthly Adjustment Amount tables). Published November 14, 2025. https://www.cms.gov/newsroom/fact-sheets/2026-medicare-parts-b-premiums-deductibles
Disclosure
This material is for informational and educational purposes only and does not constitute tax, legal, or investment advice. Medicare premium amounts and IRMAA thresholds are set by CMS and are subject to change annually. Please consult a qualified tax professional or attorney regarding your specific situation before making decisions related to Roth conversions, retirement account withdrawals, or Medicare enrollment. Dreyer Wealth Management does not provide tax or legal advice.