Two retirees living next door can open their Medicare statements in January and see wildly different numbers. One owes $202.90 a month for Part B. The other owes $689.90. Same coverage, same doctors, same hospital network. The only difference is what showed up on their 2024 tax returns.
That gap is the Income-Related Monthly Adjustment Amount, known as IRMAA, and it surprises tens of thousands of retirees every year. A common story on retirement forums: a couple sells a rental property or does a large Roth conversion in their mid 60s, forgets about Medicare entirely, and opens a letter two years later announcing their premiums have tripled. The money is already spent. The surcharge is already locked in.
How a $202.90 premium becomes $689.90
Part B has one standard premium and five surcharge tiers stacked on top of it. For a single filer in 2026, the brackets work like this, based on Modified Adjusted Gross Income (MAGI):
- MAGI up to $109,000: you pay the standard $202.90 a month.
- MAGI $109,000 to $137,000: add $74, bringing the premium to $276.90.
- MAGI $137,000 to $171,000: add $185.20 for a total of $388.10.
- MAGI $171,000 to $205,000: add $295.50, reaching $498.40.
- MAGI $205,000 to $500,000: add $406.10, reaching $609.00.
- MAGI above $500,000: add $487, reaching $689.90, or roughly $8,279 a year for Part B alone.
Married couples filing jointly get double the income thresholds. Part D prescription coverage carries its own IRMAA on top, adding anywhere from $14.50 to $91 a month. A top-tier retiree can pay close to $9,810 a year just for Medicare.
The two-year lookback nobody warns you about
Your 2026 premium is based on your 2024 tax return. Social Security pulls the most recent return the IRS has on file, which is almost always two years stale. Financial moves you made in your mid 60s shape your premiums in your late 60s.
MAGI for IRMAA purposes is broader than the AGI on your 1040. It is AGI plus tax-exempt interest plus the non-taxable portion of Social Security. Municipal bond interest that escapes federal tax still counts here. So does Social Security income you thought was tax-free.
The cliffs are hard. Going one dollar over a bracket bumps you into the next tier for the entire year. A retiree with MAGI of $109,001 pays the same surcharge as one at $136,999.
Why this hits retirees with seven-figure IRAs
Anyone with $1 million or more in traditional retirement accounts should assume IRMAA is in their future. Required minimum distributions start at age 73, and on a seven-figure traditional balance, the forced withdrawal alone can clear the first bracket before you add Social Security, pension income, or dividends. A part-time consulting gig or one-time capital gain can push you up another tier.
Planning levers matter most here. Roth conversions done in low-income years between retirement and age 73 shrink future RMDs. Qualified Charitable Distributions (QCDs) let you send up to $108,000 directly from an IRA to charity without it counting toward MAGI. Harvesting capital losses against gains keeps realized income contained. Spreading a large home sale across tax years, or timing it before Medicare begins, can save thousands.
What to do before the letter arrives
If a life event has dropped your income recently, do not accept the surcharge. The Social Security Administration form SSA-44 lets you appeal IRMAA based on eight qualifying events, including retirement, the death of a spouse, divorce, or loss of a pension. Filing it with documentation can wipe out a surcharge based on a working year you will never repeat.
The hardest mistake to undo is the one made two years before you notice it. A Roth conversion in 2024 cannot be reversed in 2026. Before any large taxable event in your 60s, sketch out the MAGI impact and check where it lands on the bracket chart. Sometimes splitting a conversion across December and January saves a full year of surcharge.
Brackets and surcharge amounts adjust each year. Confirm the rules around appeals and qualifying events with a tax professional before you act. The premium you pay in 2026 was decided in 2024. The premium you pay in 2028 is being decided right now.
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