The Medicare IRMAA Surcharge Can Add Thousands to Your Retirement Costs. Here’s How to Avoid It

Most retirees assume their Medicare premiums are fixed, budget for the standard Part B cost, and move on. What catches higher-income retirees off guard is a separate charge that can quietly add thousands of dollars a year to healthcare costs. It is called IRMAA, and understanding how it works is one of the more valuable things any retiree can do before the bills start arriving.

IRMAA stands for Income-Related Monthly Adjustment Amount. It is a surcharge layered on top of the standard Medicare Part B and Part D premiums for enrollees whose income exceeds certain thresholds. The Centers for Medicare and Medicaid Services estimates that roughly 7% to 8% of Part B beneficiaries pay it, a share that grows each year as investment account balances and required distributions push more retirees above the cutoffs.

The surcharge is not based on what you earn this year. It is based on your modified adjusted gross income from two years earlier, which means the retirement income decisions you make today can surface as Medicare costs two years down the road.

How IRMAA Brackets Work in 2026

The standard Part B premium in 2026 is $202.90 per month, a 9.7% jump from the 2025 rate of $185.00. For retirees whose 2024 modified adjusted gross income exceeded $109,000 as a single filer, or $218,000 for a married couple filing jointly, that standard premium is a floor, not the final number.

The brackets escalate quickly across five tiers. A single filer with 2024 MAGI between $109,001 and $137,000 pays $284.10 per month for Part B. The next tier, covering income from $137,001 to $171,000, pushes that figure to $405.80. The third tier, for income between $171,001 and $205,000, raises the monthly premium to $527.50. Single filers earning between $205,001 and $499,999 pay $649.20. IRMAA operates as a cliff system: exceeding any income threshold by even one dollar triggers the full surcharge for that entire bracket. A retiree with $137,001 in 2024 MAGI pays the same 2026 premium as someone with $165,000 in income, because both fall inside the same tier.

At the top of the scale, single filers with income at or above $500,000 and married couples at or above $750,000 pay $689.90 per month for Part B alone. That is nearly $487 more per person per month than the base premium, translating to roughly $5,844 per year in additional costs. Part D surcharges, ranging from $14.50 to $91.00 per month depending on income tier, apply on top of Part B at each bracket.

For a married couple where both spouses are assessed at the highest tier, the combined Part B surcharge adds close to $11,688 per year in Medicare costs that most retirement budgets never anticipated. Factor in Part D at that tier ($91.00 per person per month), and a high-income retired couple can end up paying well over $13,600 per year in added Medicare premiums relative to a household just below the lowest IRMAA threshold.

Why Retirees Get Surprised

The two-year lookback is where most retirees run into trouble. A person who retires at 63 with significant income from a final working year, or who takes a large Roth conversion, sells appreciated property, or receives a required minimum distribution that pushes income higher, can find themselves paying IRMAA surcharges at 65 based on income that no longer reflects their actual financial situation.

Required minimum distributions are a particularly common trigger. Once a retiree turns 73, RMDs from traditional IRAs and 401(k) accounts become mandatory and count toward MAGI in full. As portfolio balances grow through decades of tax-deferred compounding, those mandatory withdrawals can be far larger than the retiree ever expected, sometimes pushing into a bracket the retiree had no reason to anticipate.

Combined with Social Security income and other taxable distributions, RMDs can push income into an IRMAA bracket even for retirees who consider themselves to have modest means. The surprise is compounded by the fact that most people are not actively thinking about Medicare costs while managing investment accounts in their mid-to-late 60s.

Five Strategies That Can Reduce the Surcharge

IRMAA is not a fixed fate. Thoughtful income planning in the years before and during retirement can reduce or eliminate exposure. The five levers below are the most widely used tools, and several of them work best in combination.

Managing RMDs before they become unavoidable is the first and most impactful lever. Because traditional IRA balances grow tax-deferred for decades, many retirees arrive at 73 with a far larger RMD than expected. Taking voluntary distributions earlier, before RMDs are required, spreads taxable income over more years and can keep MAGI below the thresholds that trigger surcharges. This approach requires some discipline in the years between retirement and age 73, but the long-term premium savings can more than justify the planning effort.

Roth conversions work alongside that early-distribution strategy. Converting portions of a traditional IRA to a Roth account in lower-income years, particularly before Social Security begins and before RMDs kick in, shrinks the future balance subject to mandatory withdrawals. Because Roth distributions are excluded from MAGI, they produce tax-free income that does not push toward an IRMAA bracket. The key is sizing each conversion carefully to avoid crossing a bracket cliff in the conversion year itself.

The 0% long-term capital gains rate offers a third option for retirees with lower taxable income in early retirement. Realizing gains while income qualifies for that 0% rate reduces the future embedded gains in a portfolio, lowering the MAGI impact of eventual sales. Combined with Roth conversions, strategic gain harvesting in low-income years can meaningfully shrink future IRMAA exposure.

Qualified charitable distributions are the fourth tool, and their relative value has grown considerably in 2026. Available to retirees aged 70 and a half or older, a QCD allows direct transfers from a traditional IRA to a qualified charity of up to $111,000 per individual for the 2026 tax year, up from $108,000 in 2025. That limit is indexed for inflation annually under SECURE 2.0. Married couples where each spouse holds an eligible IRA can together direct up to $222,000 to charity this way. A QCD satisfies all or part of an RMD without the amount counting as taxable income, which directly reduces MAGI and can keep a retiree below a bracket they would otherwise cross.

The One Big Beautiful Bill Act, signed into law on July 4, 2025, introduced changes that make QCDs even more attractive by comparison. Starting in 2026, itemized charitable deductions are deductible only to the extent they exceed 0.5% of AGI, and for taxpayers in the top 37% bracket, the value of each dollar deducted is capped at 35 cents rather than the full 37 cents. Because a QCD is an exclusion from income rather than a deduction, it sidesteps both of those new restrictions entirely. For charitably inclined retirees managing Medicare costs, the QCD is now one of the most tax-efficient tools available.

Finally, IRMAA surcharges can be appealed when a significant life change has reduced income. Marriage, divorce, death of a spouse, retirement, or loss of income are all qualifying events that allow a retiree to request an adjustment using a more recent year’s income. Filing Form SSA-44 with the Social Security Administration starts the process, and approval rates for legitimate life-changing events are high.

For retirees who have spent years building a portfolio, IRMAA can feel like an arbitrary penalty for doing things right. The brackets are not going away, but with enough advance planning, most retirees have considerably more control over their exposure than they realize.

Editor’s note: This update adds the two IRMAA brackets previously omitted from the article ($527.50 for single filers with 2024 MAGI of $171,001 to $205,000, and $649.20 for $205,001 to $499,999), revises the top-tier married couple annual surcharge estimate to reflect both Part B and Part D costs, adds the $222,000 combined QCD figure for eligible married couples, and expands the One Big Beautiful Bill Act section to include the specific 0.5% AGI deduction floor and the 35% cap on deduction value for top-bracket filers, both effective in 2026.

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