The Hidden Medicare Surcharge That Hits Retirees With Over $109,000 in Income

Many seniors who are 65 and over rely on Medicare for their healthcare coverage, and for good reason. Medicare is available regardless of health status, covers a broad array of services typically without requiring pre-approval, and generally comes with affordable premiums.

The operative word there is generally.

The standard Medicare Part B premium for most seniors is $202.90 per month in 2026, a jump of $17.90 from $185.00 in 2025. For a meaningful share of retirees, however, that figure is just the starting point. An unexpected surcharge can significantly strain a retirement budget. Here is how it works and what you can do about it.

If your income is $109,000 or higher, expect a surprise Medicare bill

The surcharge is called the Income-Related Monthly Adjustment Amount, or IRMAA. Once your income crosses a specific threshold, IRMAA raises both your Medicare Part B and Part D premiums substantially. For 2026, those thresholds are $109,000 for single filers and $218,000 for married couples filing jointly, up from $106,000 and $212,000, respectively, in 2025.

The mechanism that makes IRMAA so disorienting is the two-year lookback. The Social Security Administration (SSA) determines your IRMAA using your Modified Adjusted Gross Income (MAGI) from two years earlier, pulling that figure directly from your IRS tax return. So if your 2024 MAGI exceeded those thresholds, you are paying higher premiums in 2026. For retirees who had an unusually high-income year due to capital gains from selling appreciated assets, a large IRA withdrawal, or a Roth conversion, the lookback can feel like a ticking time bomb that detonates well after the fact. It is worth noting that a Roth conversion executed in 2026 sets your 2028 premiums, which means income decisions made this year carry consequences two years down the road.

IRMAA is also what experts call a “cliff” surcharge. Earning just one dollar over a bracket threshold triggers the full surcharge for that entire tier, not a prorated amount. A single retiree with $109,001 in 2024 MAGI pays the same higher premium as someone who earned $136,999, even though their incomes differ by nearly $28,000.

How much higher will your Medicare premiums go?

The premium increases IRMAA can produce are significant. The table below shows the monthly Part B premium you will owe based on your MAGI and the corresponding adjustment amount for 2026:

At the highest tier, a single retiree pays $487 extra per month for Part B alone, lifting their total Part B premium to $689.90. IRMAA does not stop there, though. The same income thresholds apply to Medicare Part D prescription drug coverage, where surcharges add another $14.50 to $91.00 per month on top of a beneficiary’s plan premium. A top-tier retiree with both Part B and Part D exposure could owe close to $6,936 in additional annual premiums because of a single high-income year.

IRMAA affects a minority of Medicare enrollees: roughly 7% to 8% of all beneficiaries. According to the Medicare Trustees Report, about 5.1 million people paid Part B IRMAA surcharges in the most recently reported year. That minority status, however, is part of why IRMAA catches so many people off guard. Most retirees never encounter it until a determination letter arrives from the SSA. Retirees with persistently high income face the surcharge every year they remain on Medicare, and the stakes may grow: the Medicare Trustees Report notes that IRMAA surcharges are projected to increase more rapidly beginning in 2030, following language inserted by the Inflation Reduction Act of 2022.

What can you do about the IRMAA adjustments?

The most effective strategy is to plan ahead, ideally well before you turn 65. Saving for retirement in a Roth IRA or Roth 401(k) rather than a traditional pre-tax account keeps future withdrawals out of your MAGI calculation. Being deliberate about when you sell appreciated assets, the timing of large IRA withdrawals, and the size of any Roth conversions can keep a single year’s income from triggering surcharges two years later. The passage of the One Big Beautiful Bill Act, which made the Tax Cuts and Jobs Act rates permanent, has removed some of the uncertainty that previously complicated multi-year Roth conversion planning.

Retirees aged 70 and a half or older have an additional tool available: Qualified Charitable Distributions (QCDs). A QCD allows you to transfer money directly from an IRA to a qualifying charity, with up to $111,000 eligible in 2026. Because a QCD is excluded from gross income, it can satisfy all or part of a required minimum distribution without adding to MAGI, helping a retiree stay below an IRMAA threshold that a taxable distribution would have breached.

If your income has already dropped significantly due to a qualifying life-changing event, such as retirement, the death of a spouse, or a divorce, you do not have to wait for the two-year lookback to catch up. The SSA allows beneficiaries to appeal their IRMAA determination by filing Form SSA-44, the Medicare Income-Related Monthly Adjustment Amount Life-Changing Event form. A successful appeal prompts the SSA to recalculate your premiums using more recent income data, which can eliminate or substantially reduce the surcharge right away rather than two years down the road.

Looking further ahead, early projections suggest the first-tier IRMAA threshold for single filers could rise to approximately $112,000 to $113,000 in 2027, though CMS does not release official figures until late fall. That means income decisions made in 2025 will determine your 2027 surcharge exposure, and the planning window for those choices has already closed. For retirees still working through a multi-year income strategy, the window that matters now is 2026, which feeds directly into 2028 premiums.

For situations that do not involve a qualifying life-changing event, a financial advisor who specializes in retirement income planning can help you manage your MAGI across multiple years, so that more of your savings stays in your pocket instead of flowing toward higher Medicare premiums.

Editor’s note: This article was updated to add context on the Inflation Reduction Act of 2022 provision that is projected to accelerate IRMAA surcharge growth beginning in 2030, projected 2027 first-tier IRMAA thresholds of approximately $112,000 to $113,000 for single filers, the Qualified Charitable Distribution strategy and its 2026 annual limit of $111,000, and the relevance of the One Big Beautiful Bill Act’s permanent extension of TCJA tax rates to multi-year Roth conversion planning.

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