Medicare Costs and IRMAA
How income-related Medicare surcharges work, the IRMAA brackets, and planning strategies to stay below thresholds.
TL;DR
- 01Expect IRMAA to add up to $487 monthly to Part B premiums.
- 02Know that IRMAA uses your MAGI from two years prior.
- 03Time Roth conversions and QCDs to avoid crossing IRMAA brackets.
Tips
- 01Appeal IRMAA using Form SSA-44 if a life-changing event like retirement or divorce lowered your income after the look-back year.
- 02Run income projections two years ahead before any large taxable event to see whether it will trigger a higher IRMAA bracket.
- 03Use qualified charitable distributions to satisfy your RMD while keeping the withdrawal out of your MAGI calculation.
Warnings
- 01A one-time income spike, like a Roth conversion or home sale, can push you into a higher IRMAA bracket two years later.
- 02Crossing a bracket threshold by even one dollar can cost a couple over $2,000 a year in higher premiums.
- 03IRMAA is calculated automatically from your tax return, so you can be surprised by a surcharge you never elected into.
Medicare Part B and D Premiums
Medicare Part B covers outpatient services and medical equipment. Part D covers prescription drugs. Both have monthly premiums that most enrollees pay directly from their Social Security benefit or by invoice.
| Coverage | Standard 2026 Premium | Notes |
|---|---|---|
| Part A (hospital) | $0 for most | Free if you paid Medicare taxes 40+ quarters |
| Part B (medical) | $202.90/month | Higher-income enrollees pay more via IRMAA |
| Part D (drugs) | Varies by plan (~$34.50 avg) | IRMAA adds a surcharge on top of plan premium |
| Part B deductible | $257/year | Applies before Medicare begins paying |
Most Medicare enrollees pay only the standard premium. However, higher-income beneficiaries face the Income-Related Monthly Adjustment Amount (IRMAA), which adds a surcharge on top of the standard premium.
What IRMAA Is
IRMAA (Income-Related Monthly Adjustment Amount) is an additional premium surcharge applied to Medicare Part B and Part D for beneficiaries whose income exceeds certain thresholds. It was designed so that higher-income retirees pay a greater share of the actual cost of Medicare coverage.
- IRMAA is not means-tested at enrollment — it is calculated automatically by the Social Security Administration (SSA) based on your IRS tax return.
- The SSA uses your Modified Adjusted Gross Income (MAGI) from two years prior (the look-back period). Your 2026 premiums are based on your 2024 MAGI.
- IRMAA affects you whether you have Original Medicare or a Medicare Advantage plan.
2026 IRMAA Income Brackets
IRMAA brackets are adjusted for inflation annually. The table below shows 2026 monthly Part B premiums by income bracket based on 2024 MAGI.
| 2024 MAGI (Individual) | 2024 MAGI (MFJ) | Part B Monthly | Part D Monthly Surcharge |
|---|---|---|---|
| ≤ $109,000 | ≤ $218,000 | $202.90 | $0 |
| $109,001–$137,000 | $218,001–$274,000 | $284.10 | $14.50 |
| $137,001–$171,000 | $274,001–$342,000 | $405.80 | $37.50 |
| $171,001–$205,000 | $342,001–$410,000 | $527.50 | $60.40 |
| $205,001–$500,000 | $410,001–$750,000 | $649.20 | $83.30 |
| Above $500,000 | Above $750,000 | $689.90 | $91.00 |
A married couple both on Medicare in the top bracket could pay over $1,379/month in Part B premiums alone — roughly $11,700 per year more than the standard premium.
How IRMAA Is Calculated
The SSA calculates IRMAA using your MAGI, which for Medicare purposes is your AGI plus tax-exempt interest income (the same definition used for ACA subsidy calculations).
Income included in Medicare MAGI:
- Wages, salaries, self-employment income
- Taxable Social Security benefits
- IRA and 401(k) distributions (including RMDs)
- Capital gains (short and long-term)
- Tax-exempt municipal bond interest
- Roth conversions
Income not counted: Roth IRA withdrawals (after the account is 5 years old and owner is 59½), health savings account (HSA) distributions for qualified expenses, and life insurance proceeds.
Planning Strategies to Avoid Surcharges
The cliff structure of IRMAA brackets means that one dollar over a threshold can cost thousands per year. Managing income strategically in the years before Medicare enrollment (age 65) and each year afterward is essential.
| Strategy | Effect on MAGI | Best Used |
|---|---|---|
| Roth conversions in early retirement | Raises MAGI now, lowers future RMDs | Ages 60–64 before Medicare |
| Qualified Charitable Distributions (QCDs) | Reduces AGI (satisfies RMD) | Age 70½+, on Medicare |
| Harvest capital losses | Offsets capital gains | Any year with gains |
| Delay asset sales to straddle years | Spreads large gain across two years | Real estate, business sales |
| HSA contributions | Reduces AGI (above-the-line deduction) | Pre-Medicare enrollment |
Run income projections two years forward when planning large taxable events. Crossing a bracket threshold by just $1 can cost a couple $2,000 or more per year in higher premiums.
FAQ
IRMAA, the Income-Related Monthly Adjustment Amount, is a surcharge added to Medicare Part B and Part D premiums for higher-income beneficiaries. The Social Security Administration calculates it automatically from your IRS tax return, so you never apply for it directly. It applies whether you have Original Medicare or a Medicare Advantage plan.
The Social Security Administration uses a two-year look-back because that's the most recent tax return data available when premiums are set. Your 2026 premiums are based on your 2024 MAGI. This lag means a single high-income year, like a large Roth conversion, can raise your premiums two years later even after your income drops.
Yes. File Form SSA-44 if a life-changing event, such as retirement, divorce, or the death of a spouse, lowered your income after the look-back year. The Social Security Administration will use your more recent income estimate instead of the outdated tax return figure.
Medicare MAGI includes wages, self-employment income, taxable Social Security benefits, IRA and 401(k) distributions, capital gains, and tax-exempt municipal bond interest. It excludes Roth IRA withdrawals taken after age 59½ from an account open at least 5 years, along with HSA distributions for qualified expenses.