A Retired Teacher and Firefighter Earn $140,000 in Combined Pensions. It Put Both of Them in an IRMAA Tier.

Picture a married couple, both around 67, both newly enrolled in Medicare. She taught middle school for three decades. He spent his career as a firefighter. Between them, two solid public-sector pensions bring in roughly $140,000 a year. No million-dollar 401(k), no rental empire, no big stock sales. So when the Medicare letter arrived showing higher Part B premiums for both of them, the reaction was the one you see in retirement forums constantly: we don’t even have a big nest egg, how are we considered high income?

The answer is the Income-Related Monthly Adjustment Amount, known as IRMAA, and it does not care where the income comes from. Pension dollars count exactly like portfolio withdrawals. After the Social Security Fairness Act, signed into law on January 5, 2025, repealed the Government Pension Offset and Windfall Elimination Provision, roughly 3.2 million retired teachers, police officers, and firefighters gained access to Social Security checks they had previously been denied or sharply reduced. Restored Social Security stacked on top of two pensions is precisely the combination that pushes a household over the IRMAA threshold.

The Two-Year Lookback That Catches People Off Guard

Medicare premiums for 2026 are set using 2024 tax returns, not what a retiree earns today. As Suze Orman put it on her Women & Money podcast, “IRMAA is based on your modified adjusted gross income from two years prior. So they’re always looking back two years.” Income from a couple’s final working years can cast a long shadow over their first years of Medicare enrollment, and there is no way to undo it retroactively.

For a married couple filing jointly in 2026, IRMAA kicks in once modified adjusted gross income tops $218,000. Below that line, each spouse pays the standard Part B premium of $202.90 a month. Cross it by a dollar and each spouse pays an extra $81.20, bringing each Part B premium to $284.10. There is no phase-in. The system functions as a cliff: one dollar over the threshold triggers the full surcharge for the entire year, assessed per person and deducted from each Social Security check.

For this couple, $140,000 in pensions alone does not reach the threshold. Add restored Social Security (up to 85% of which becomes taxable at higher incomes) and some savings account interest, and joint MAGI can clear $218,000 without anyone doing anything unusual or extravagant. Once it does, both Medicare premiums rise.

The Part D Dimension Most Retirees Miss

IRMAA applies to Medicare drug coverage as well, adding $14.50 per month per person in the first surcharge tier on top of whatever the plan itself charges. For a two-person household in Tier 1, the combined IRMAA exposure across Parts B and D runs roughly $191 a month before accounting for any plan premiums. To put the scale in context, about 5.1 million Medicare beneficiaries paid Part B IRMAA surcharges in 2025, roughly 7% of all enrollees. About 4.4 million paid Part D IRMAA surcharges. The Social Security Fairness Act is likely adding more households to both counts with each passing year.

A New Wrinkle: The Retroactive Payment Problem

The SSA began issuing retroactive WEP and GPO payments starting February 25, 2025, covering benefit increases back to January 2024. For many retirees, those lump sums were substantial. As of July 7, 2025, the agency had completed sending over 3.1 million payments totaling $17 billion to eligible beneficiaries, finishing five months ahead of its original schedule. Any retroactive payment received in 2024 landed directly on the 2024 tax return as taxable income, and that is the very return Medicare uses when setting 2026 premiums. A household with no prior IRMAA exposure could find itself in a surcharge tier in 2026 purely because of a one-time SSA catch-up payment, even if ongoing monthly income sits comfortably below the threshold.

Why the Sting Outlasts the Dollar Amount

The combined Part B surcharge in the first tier runs roughly $162 a month for the household, close to $1,950 a year. The harder issue is permanence. Pensions do not turn off. Social Security does not turn off. Unless a spouse passes away or a genuine income drop occurs, the surcharge tends to repeat year after year, functioning less like a one-time penalty and more like a structural feature of the retirement income picture.

The situation also compounds in a way most retirees do not anticipate. As provisional income climbs, more of Social Security becomes taxable, which raises AGI, which raises MAGI, which is the figure IRMAA reads. The pieces reinforce each other in a cycle that is already fully in motion by the time the Medicare letter arrives.

What You Can Actually Control

Pensions are fixed, so the standard MAGI-trimming strategies mostly do not apply here. A few approaches still offer meaningful leverage:

1. Spend from the right buckets. Withdrawals from a Roth account or from taxable savings principal do not add to MAGI. Cash needed for a large purchase is better pulled from those sources than from a traditional IRA, which adds dollar-for-dollar to the MAGI that IRMAA reads.
2. Avoid stacking discretionary income into a single year. Selling a long-held stock, cashing a savings bond, or taking a lump-sum distribution can push a household into the next IRMAA tier, where the per-person Part B surcharge jumps to $202.90 on top of the standard premium. Spreading those moves across two calendar years often keeps a household a tier lower and saves thousands.
3. Know what Form SSA-44 will and will not fix. The Life-Changing Event form allows a reduction in IRMAA after a qualifying event such as retirement, a spouse’s death, divorce, or loss of income-producing property. It does not apply to ordinary pension income that simply keeps arriving each month, and it does not address a retroactive payment that boosted a prior year’s return.
4. Do not count on the new senior deduction for IRMAA relief. The One Big Beautiful Bill Act, signed July 4, 2025, created a $6,000 federal tax deduction per person for Americans 65 and older, meaning a qualifying couple can claim up to $12,000 combined. For joint filers, the deduction begins to phase out once MAGI exceeds $150,000 and disappears entirely at $250,000. It can reduce taxable income and the tax bill itself, but it does not reduce MAGI. Because IRMAA is calculated on MAGI, this deduction will not lower a household’s IRMAA tier or trim the monthly surcharge.

The Realistic Takeaway

For a two-pension household with restored Social Security, some IRMAA exposure may simply be the cost of having reliable, lifetime income from two full careers in public service. The practical goal shifts from eliminating IRMAA to avoiding making it worse by accident, particularly in years involving a large capital gain, a sizable IRA withdrawal, or a Roth conversion made without modeling the tax ripple effect first.

Anyone nearing 65 with a similar income profile should pull their prior two years of tax returns now. Those are the returns that set Medicare premiums for the next two years, and a single unexpected line item can shift which tier a household lands in. Every household’s facts differ, which is why a careful review before reaching Medicare age carries far more weight than an appeal filed after the fact.

Editor’s note: This pass clarifies that the One Big Beautiful Bill Act’s new senior deduction is $6,000 per person (up to $12,000 for a qualifying couple), with the phase-out for joint filers beginning at $150,000 MAGI and disappearing entirely at $250,000. It also adds that approximately 4.4 million Medicare beneficiaries paid Part D IRMAA surcharges in 2025, alongside the existing 5.1 million Part B IRMAA figure.

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