The Little Known IRMAA Rule That Lets Medicare Take a Bigger Bite Out of Social Security

Social Security is important to a lot of retirees. Without those benefits, many seniors would not be able to pay their bills.

If you have a lot of non-Social Security income, though, then your benefits may not play quite the same role. In that case, they might serve as supplemental income. For example, if you have a $3 million IRA you can draw from plus other investments, the money Social Security pays you each month may be secondary.

Still, that money may be nice to have. But if you’re a Medicare enrollee with a higher income, your Social Security benefits could be reduced to very little all because of a lesser-known rule. 

How Medicare surcharges can shrink your monthly checks

Medicare charges a standard monthly premium for Part B that changes every year. But higher earners can face surcharges on their Part B premiums known as income-related monthly adjustment amounts, or IRMAAs. 

What makes IRMAAs particularly frustrating is that they’re based on modified adjusted gross income from two years prior. Also, the IRMAA thresholds can change from one year to the next. So it’s not always easy to know ahead of time whether you’ll face an IRMAA and exactly how much that IRMAA will cost you.

How does this impact your Social Security benefits? People who are enrolled in both Social Security and Medicare have their Part B premiums taken out of their monthly benefits automatically.

Most Medicare beneficiaries pay the standard monthly amount for Part B. However, if you have a higher income, you could see your Social Security benefits shrink if you’re subject to an IRMAA. That’s because those surcharges are tacked on to your premium costs.

This year, the standard monthly Part B premium is $202.90. But if you’re subject to the highest IRMAA tier possible in 2026, you could see yourself paying $689.90 per month for Medicare.

That $689.90 could get deducted from your Social Security checks each month, leaving you with much smaller benefits. 

Make sure to plan ahead

IRMAAs can catch retirees off guard because they’re based on income from two years prior. A sudden windfall could make it so you’re subject to IRMAAs, and you may not know what to expect until you look at your Social Security benefits and notice they’re a lot smaller than they should be.

It’s important to understand how IRMAAs work, what the income thresholds are, and how they might impact your Social Security benefits. Even if you have income outside of those benefits to live on, it’s still a good thing to know how much money you can expect to see hit your bank account each month.

There may also be strategic steps you can take to avoid IRMAAs, like doing Roth conversions so retirement plan withdrawals don’t necessarily count as taxable income or simply withdrawing from traditional IRAs and 401(k)s more carefully. 

It’s smart to work with a financial advisor or tax professional to see if it’s possible to avoid IRMAAs or at least keep them to a minimum. The less of an IRMAA you have to pay, the more Social Security you get to hang onto.