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 a retiree can do before the bills start arriving.
IRMAA stands for Income-Related Monthly Adjustment Amount, and it is a surcharge added on top of the standard Medicare Part B and Part D premiums for enrollees whose income exceeds certain thresholds.
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 affect your 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, and 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 becomes a starting point, not the final number.
The brackets escalate quickly as a single filer with 2024 MAGI between $109,000 and $137,000 pays $284.10 per month for Part B rather than the standard $202.90. If you move into the next bracket, from $137,000 to $173,000, the premium climbs to $405.80.
At the top of the scale, single filers with income above $500,000 and married couples above $75,000 pay $689.90 per month for Part B alone. This is nearly $487 more per person per month than the base premium, or almost $5,844 per year.
For a married couple where both spouses are assessed at the higher tier, the combined surcharge adds close to $11,688 per year in Medicare costs that most retirement budgets never anticipated. Part D surcharges apply on top of this at each income tier, and the combined effect means a high-income retired couple can end up paying well over $12,000 per year in added Medicare premiums relative to a retiree 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, and once a retiree turns 73, RMDs from traditional IRAs and 401(k) accounts are mandatory and count toward MAGI in full.
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 thinking about Medicare costs when managing investment accounts in their mid-to-late 60s.
Five Strategies That Can Reduce the Surcharge
The good news is that IRMAA is not a fixed fate, and thoughtful income planning in the years before and during retirement can reduce or eliminate exposure. 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, smooths taxable income over more years and can keep MAGI below the thresholds that trigger surcharges.
Roth conversions can also work alongside this strategy, and converting portions of a traditional IRA to a Roth account in lower-income years, particularly before Social Security begins and before RMDs kick in, reduces the future balance subject to mandatory withdrawals. Because Roth distributions are not counted in MAGI, they create tax-free income that does not push toward an IRMAA bracket.
The 0% long-term capital gains rate is worth considering for retirees with lower taxable income in early retirement. Realizing gains while income qualifies for the 0% rate reduces the future embedded gains in a portfolio, lowering the MAGI impact of eventual sales.
Qualified charitable distributions, available to retirees aged 70 and a half or older, allow direct transfers from a traditional IRA to a qualified charity of up to $108,000 per year. A QCD satisfies all or part of an RMD without counting the amount as taxable income, which directly reduces MAGI and can keep a retiree below a bracket they would otherwise cross.
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 is the starting point for the process.
For retirees who have spent years building a portfolio, IRMAA can feel like an arbitrary tax on doing things right. The brackets are not going away, but with enough advance planning, most retirees have more control over their exposure than they realize.
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