IRMAA: The Medicare Surcharge That Can Surprise Retirees

When planning for retirement, most people think about Social Security, investment withdrawals, taxes, and healthcare expenses. But there is another cost that can catch retirees by surprise: IRMAA.

IRMAA stands for Income-Related Monthly Adjustment Amount. It is an additional amount that higher-income Medicare beneficiaries may pay for Medicare Part B and Part D.

Understanding IRMAA is particularly important because decisions you make today—such as taking a large IRA withdrawal, completing a Roth conversion, or realizing investment gains—could potentially affect your Medicare premiums two years later.

How IRMAA Works

For 2026, the standard Medicare Part B premium is $202.90 per month, and the annual Part B deductible is $283. However, Medicare beneficiaries with income above certain thresholds pay an additional premium known as IRMAA.

One of the most important things to understand is that Medicare generally looks back two years when determining IRMAA. That means your 2026 Medicare premiums are generally based on the modified adjusted gross income (MAGI) reported on your 2024 federal income tax return.

For IRMAA purposes, MAGI generally includes your adjusted gross income plus tax-exempt interest. This is important because even income that is exempt from federal income tax, such as certain municipal bond interest, may still affect IRMAA.

For most taxpayers, the 2026 Part B premiums are:

2024 MAGI — Individual 2024 MAGI — Married Filing Jointly

2026 Monthly Part B Premium

$109,000 or less $218,000 or less $202.90 per month

Above $109,000 thru $137,000 Above $218,000 through $274,000 $284.10 per month

Above $137,000 thru $171,000 Above $274,000 through $342,000 $405.80 per month

Above $171,000 thru $205,000 Above $342,000 through $410,000 $527.50 per month

Above $205,000 up to $499,999 Above $410,000 up to $749,999 $649.20 per month

$500,000 or more $750,000 or more $689.90 per month

These amounts are per person, which can make IRMAA especially significant for married couples when both spouses are enrolled in Medicare.

For example, a married couple with 2024 MAGI of $300,000 would fall into the third 2026 IRMAA tier. Each spouse enrolled in Part B would pay $405.80 per month instead of the standard $202.90.

That is an additional $405.80 per month for the couple, or approximately $4,870 per year, just for the Part B IRMAA adjustment. And that doesn't include the additional IRMAA that may apply to Medicare Part D.

Medicare Part D IRMAA

Medicare Part D has a separate IRMAA surcharge. Unlike Part B, there isn't one standard Part D premium because premiums vary by prescription drug plan.

For 2026, the additional monthly Part D IRMAA amounts are:

2024 MAGI — Individual

2024 MAGI — Married Filing Jointly

2026 Monthly Part D IRMAA

$109,000 or less

$218,000 or less $0

Above $109,000 thru $137,000

Above $218,000 thru $274,000 $14.50 per month

Above $137,000 thru $171,000

Above $274,000 thru $342,000 $37.50 per month

Above $171,000 thru $205,000

Above $342,000 thru $410,000 $60.40 per month

Above $205,000 up to $499,999

Above $410,000 up to $749,999 $83.30 per month

$500,000 or more $750,000 or more $91.00 per month

The Part D IRMAA is paid in addition to your prescription drug plan's premium.

Why IRMAA Matters in Retirement Planning

IRMAA creates an interesting retirement-planning challenge because crossing an income threshold can increase Medicare premiums.

Suppose a retired married couple is close to one of the IRMAA thresholds. They may be considering a Roth conversion to reduce future required minimum distributions.

The Roth conversion might make sense from a long-term tax perspective—but it also increases MAGI in the year of the conversion. That additional income could move the couple into a higher IRMAA bracket two years later.

That doesn't necessarily mean they shouldn't do the Roth conversion. It means the Medicare impact should be included in the analysis.

Other financial decisions that can potentially affect MAGI and IRMAA include:

• Roth conversions

• Traditional IRA and 401(k) withdrawals

• Required minimum distributions

• Realizing capital gains

• Selling appreciated investments or property

• Taxable interest and dividends

• Tax-exempt municipal bond interest

This is why tax planning, investment planning, retirement-income planning, and Medicare planning shouldn't be viewed as completely separate decisions.

Can You Appeal an IRMAA Surcharge?

If your income has fallen significantly because of certain life-changing events—such as retirement, marriage, divorce, death of a spouse, or loss of income-producing property—you may be able to ask Social Security to reconsider the income it is using to determine your IRMAA.

This can be particularly relevant for someone who had a high income while working but has recently retired. Their tax return from two years earlier may no longer accurately reflect their current financial situation.

Planning Ahead Can Make a Difference

IRMAA is a good example of why retirement planning involves more than simply deciding how much money to withdraw from an investment account.

A decision that saves taxes today could affect Medicare premiums later. At the same time, avoiding income solely to stay below an IRMAA threshold isn't always the best long-term strategy.

The better question is:

How do taxes, Medicare premiums, Social Security, investment withdrawals, and future required distributions work together over the course of retirement?

Looking at these decisions together can help retirees make more informed choices about when and where to generate retirement income.

At Saaga Wealth Planning, we help clients evaluate these interconnected decisions as part of a comprehensive retirement plan.