By Marc Gilman
(800) 927-9326 |
If you’ve heard the term IRMAA and assumed it only applies to the very wealthy, it’s worth a closer look. The income thresholds are lower than most people expect, the way they’re calculated has a real “cliff” effect that catches people off guard, and there are legitimate planning strategies that can reduce or avoid it entirely — if you know about them early enough.
Key Takeaways
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IRMAA (Income-Related Monthly Adjustment Amount) is a surcharge on Medicare Part B and Part D premiums that kicks in once your income crosses certain thresholds — $109,000 for individuals or $218,000 for couples in 2026.
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It’s not a gradual increase — crossing a threshold by even $1 triggers the full surcharge for that entire bracket, adding over $1,100 a year in the lowest tier alone.
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Your IRMAA is based on tax returns from two years earlier, so 2026 premiums are based on 2024 income.
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A surviving spouse can jump several IRMAA brackets the year after their spouse dies, even without any actual increase in income, simply by switching from a joint to a single filing status.
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Certain income sources — Roth distributions, HSA withdrawals, life insurance proceeds — don’t count toward the income IRMAA is based on, which creates real planning opportunities.
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If your income drops due to retirement, divorce, or the death of a spouse, you can appeal your IRMAA determination using Form SSA-44.
What Is IRMAA, Exactly?
IRMAA stands for Income-Related Monthly Adjustment Amount, and it’s the mechanism Medicare uses to have higher-income beneficiaries cover a larger share of their own Part B and Part D costs. Normally, the government covers roughly 75% of Part B’s cost, with beneficiaries paying the remaining 25%. If you’re subject to IRMAA, that split shifts — you end up covering 35%, 50%, 65%, 80%, or 85% of the total cost, depending on which bracket you fall into. Medicare Part A isn’t affected at all; IRMAA only applies to Part B and Part D.
What Are the 2026 IRMAA Brackets?
These are added on top of the standard 2026 Part B premium of $202.90/month and your regular Part D plan premium. The top bracket adds up to $6,936 a year, per person, on top of what you’d otherwise pay.
Why Does $1 of Extra Income Cost You Over $1,000?
This is the detail that catches people off guard. IRMAA doesn’t work like an income tax bracket, where only the amount above the threshold gets taxed at a higher rate. It works like a cliff: cross the line by even a dollar, and your entire premium jumps to the next tier’s rate. Someone with $109,000 in MAGI pays the standard premium; someone with $109,001 pays the full second-tier surcharge — an extra $1,148.40 for the year ($974.40 for Part B, $174 for Part D), triggered by a single dollar of additional income.
Over a full retirement, that adds up fast. A healthy 65-year-old man could pay somewhere between $55,000 (second bracket) and $332,000 (sixth bracket) in IRMAA surcharges alone over a 24-year retirement — a massive range driven entirely by which side of a series of income lines he falls on.
One more quirk worth knowing: IRMAA is based on a tax return from two years earlier. Your 2026 premiums are determined by your 2024 income. That lag means a high-income year — a big capital gain, a large retirement account withdrawal, the year you sold a business — can trigger a surcharge two years later, well after the income event itself is behind you.
What Income Actually Counts Toward IRMAA?
IRMAA is based on your Modified Adjusted Gross Income (MAGI) — broadly, your adjusted gross income plus certain tax-exempt interest. This includes wages, pensions, the taxable portion of Social Security, interest, dividends, rental income, capital gains, and distributions from traditional 401(k)s, 403(b)s, and IRAs. It also includes some income you might not expect: tax-exempt interest from municipal bonds, and certain foreign or U.S. territory income.
What does not count is just as important:
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Distributions from Roth accounts
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Distributions from Health Savings Accounts (HSAs)
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Proceeds from life insurance
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Portions of Qualified Longevity Annuity Contract (QLAC) payments
This is where legitimate planning comes in — the mix of accounts you draw from in retirement directly affects whether you cross an IRMAA threshold, not just how much total income you generate.
What Happens to a Surviving Spouse’s IRMAA?
This is one of the more overlooked consequences of IRMAA, and it disproportionately affects women, who on average live longer than their spouses. When one spouse dies, the survivor becomes a single tax filer — but often keeps a similar overall income to what the couple had together. Since the single-filer thresholds are roughly half the married thresholds, a surviving spouse can jump several IRMAA brackets in the following year, even though nothing about their actual income changed. It’s worth planning for this possibility specifically if there’s a meaningful income or life-expectancy gap between spouses.
Can You Appeal an IRMAA Determination?
Yes, in specific circumstances. If your income has dropped since the tax year IRMAA is based on — due to retirement, divorce, the death of a spouse, or certain other “life-changing events” recognized by the Social Security Administration — you can file Form SSA-44 to request a redetermination using more current income information rather than the two-year-old tax return IRMAA would otherwise use. This is worth doing promptly after a qualifying event rather than waiting, since you could otherwise overpay for a year or more based on outdated income.
How Can You Plan Around IRMAA Before It Happens?
A few approaches worth discussing with a financial or tax professional:
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Roth conversions, timed carefully. Converting a traditional IRA to a Roth IRA creates taxable income in the year of conversion, which could itself trigger IRMAA — so the timing matters. Completing conversions at least three years before you plan to enroll in Medicare is a commonly cited approach, since it keeps the conversion year’s income out of the two-year lookback window entirely.
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Being deliberate about which accounts you draw from. Since Roth and HSA distributions don’t count toward MAGI, the order in which you tap different account types in retirement can meaningfully affect your IRMAA exposure.
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Watching for one-time income spikes. A large capital gain, a big retirement account withdrawal, or a business sale can push you into a higher bracket two years later — worth factoring into the timing of major financial decisions as you approach Medicare eligibility.
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Filing Form SSA-44 promptly after a life-changing event, rather than assuming the surcharge will just resolve itself.
Where Does Insurance Planning Fit In?
IRMAA isn’t something Gilman Agency calculates or files appeals for directly — that’s a conversation for your CPA or financial advisor. But how IRMAA affects your total Medicare costs is directly relevant to how we help you think through Part D and Medicare Advantage coverage decisions, since your actual out-of-pocket Medicare costs depend on both your coverage choices and what you’re paying in surcharges.
What To Do Next
If you’re within a few years of Medicare eligibility, or you’ve had a significant income event recently, it’s worth understanding where you sit relative to these thresholds before your coverage decisions are locked in. If you’ve had a life-changing event that dropped your income, don’t assume the IRMAA surcharge will adjust on its own — file the appeal.
Call (800) 927-9326, or email to talk through your situation. TTY: 711.
By Marc Gilman, Gilman Agency
Sources: HealthView Services, “2026 Retirement Healthcare Costs Data Report” (February 2026); Kiplinger, “What Is the IRMAA (Income-Related Monthly Adjustment Amount)?”; Centers for Medicare & Medicaid Services (CMS), 2026 Medicare Parts B Premiums and Deductibles fact sheet; Social Security Administration.
