Medicare costs in retirement are often treated as a fixed line item in a financial plan. However, Medicare premiums are not necessarily fixed. If your income is above certain thresholds, your premiums are recalculated each year based on income reported from two years prior. As a result, a single high-income year may lead to higher Medicare premiums in later years.
Medicare premiums, IRMAA thresholds, and federal tax figures discussed below are based on 2026 premium-year and tax year 2026 rules available as of October 2026.
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What Is IRMAA?
IRMAA (the Income-Related Monthly Adjustment Amount) is a premium surcharge applied to Medicare Part B (medical coverage) and Medicare Part D (prescription drug coverage) when your income is above certain thresholds. It is assessed separately for each part and added to whatever the standard premium is in a given year.
The surcharge is not a penalty. It is a means-tested adjustment built into the Medicare program. Higher-income beneficiaries pay a larger share of actual Medicare program costs; beneficiaries below the threshold pay the standard premium, which is the same for everyone in that group.
IRMAA is determined by the Social Security Administration, which reviews federal tax data annually and issues premium notices to affected beneficiaries before the start of each year. If you are affected, the notice typically arrives in the fall and reflects your surcharge tier for the coming calendar year.
How Does the IRMAA Two-Year Lookback Work?
The two-year lag is the defining feature of IRMAA from a planning perspective.
The Centers for Medicare & Medicaid Services (CMS) establishes the standard Part B premium and the IRMAA amounts for the coming year, and SSA determines each beneficiary's IRMAA using the most recent federal tax information available from the IRS, which is generally from two years earlier. The result:
Income from two years prior determines the IRMAA tier for the current year.
In concrete terms: income reportable on a 2024 federal tax return determines 2026 Medicare premiums. Income from 2025 will determine 2027 premiums.
This lag has a compounding implication. If you experience a single high-income year (from a large Roth conversion, the sale of a business or property, an unusually large required minimum distribution, or an employer settlement payment), that event may be reflected in your Medicare premiums two years later. Even if your income returns to a lower level the very next year, the elevated premium can persist for one full calendar year before the lower-income year catches up in the lookback window.
| Income Year | IRMAA Year Affected |
|---|---|
| 2024 | 2026 |
| 2025 | 2027 |
| 2026 | 2028 |
This table illustrates the standard two-year lookback timing. In most years, SSA uses the most recently filed return, which is typically two years prior. Verify current SSA procedures with Medicare or a qualified professional.
How Is MAGI Calculated for IRMAA?
The income measure IRMAA uses is Modified Adjusted Gross Income: your federal adjusted gross income plus tax-exempt interest. That second piece is often overlooked. Municipal bond interest is not federally taxed, yet it is added back for IRMAA purposes.
- Roth conversions and traditional IRA or 401(k) distributions, including RMDs, count in full
- Realized capital gains, pensions, and the federally taxable portion of Social Security count
- Tax-exempt municipal bond interest is added back
- Qualified Roth IRA withdrawals generally do not increase IRMAA MAGI, and qualified charitable distributions are generally excluded from income
What Are the 2026 IRMAA Brackets and Thresholds?
IRMAA is not a smooth surcharge that scales proportionally with income. It operates in discrete tiers. One dollar of MAGI above an IRMAA threshold can move you into the next surcharge tier for the months in which the higher premium applies, not just on the income above the line.
The table below illustrates the approximate combined annual IRMAA cost for a married couple where both spouses are enrolled in Medicare Part B and Part D for all 12 months.
| IRMAA Tier | MFJ MAGI Range | Single MAGI Range | Approx. Annual Surcharge (couple, Part B + D) |
|---|---|---|---|
| No surcharge | $218,000 or below | $109,000 or below | $0 |
| Tier 1 | $218,001–$274,000 | $109,001–$137,000 | ~$2,300 |
| Tier 2 | $274,001–$342,000 | $137,001–$171,000 | ~$5,800 |
| Tier 3 | $342,001–$410,000 | $171,001–$205,000 | ~$9,200 |
| Tier 4 | $410,001–$749,999 | $205,001–$499,999 | ~$12,700 |
| Tier 5 | $750,000 or above | $500,000 or above | ~$13,900 |
(2026 premium-year figures based on 2024 MAGI, as published by CMS in November 2025 and current as of October 2026.) Monthly Part B premiums per person range from the $202.90 standard premium to $689.90 at Tier 5; Part D surcharges range from $14.50 to $91.00 per month. Single filers pay roughly half the couple amounts shown. CMS adjusts thresholds and surcharges annually; verify current figures with SSA or a qualified professional.
If your combined income is just above the first tier threshold, you would pay roughly $2,300 more per year than a couple just below it. A Roth conversion that pushes MAGI across a higher tier line could add several thousand dollars more annually, two years later, on top of the income tax paid in the conversion year. Because surcharge amounts and thresholds change each year, the planning value is in understanding the structure and order of magnitude, not in memorizing any specific figure.
Can a Roth Conversion Trigger an IRMAA Surcharge?
Yes, and so can several other income events that are common in the years around retirement.
Roth Conversions. Converting traditional IRA assets to a Roth IRA increases MAGI in the year of conversion. If you are executing partial conversions to reduce future RMD exposure, you may want to evaluate each conversion year not only for its immediate income tax cost but also for its effect on IRMAA two years out. A conversion that crosses a tier threshold by a small margin may not be tax-efficient: the IRMAA surcharge two years later is part of the total cost of that conversion. For more on sizing conversions, see The Roth Conversion Trap.
Required Minimum Distributions. For most owners of traditional IRAs and participants in employer retirement plans, RMDs generally begin at age 73 for individuals born from 1951 through 1959 and at age 75 for individuals born in 1960 or later (SECURE 2.0, under federal law as of October 2026), subject to exceptions and plan-specific rules. RMD amounts generally depend on the prior year-end account balance and applicable IRS life expectancy tables. If you hold substantial tax-deferred balances, RMDs alone may push MAGI above IRMAA thresholds, and those RMDs are not discretionary.
Asset Sales. Selling a business, investment property, concentrated stock position, or a second home generates capital gain income that is included in MAGI. Installment sales that spread proceeds over multiple years may offer some control over when the income appears, but lump-sum dispositions can move MAGI by hundreds of thousands of dollars in a single year, with direct IRMAA consequences two years later.
Employer Settlement Payments. Lump-sum payments from employer deferred compensation plans, litigation settlements, or executive severance arrangements may produce large one-time MAGI increases in the year of receipt.
What Is the IRMAA Cliff?
The step structure of IRMAA brackets is qualitatively different from how ordinary income tax brackets work. In the income tax system, a dollar of income above a bracket threshold is taxed at the higher rate: only that dollar, not the dollars below it. IRMAA is not marginal in that sense. The surcharge applies to the entire premium, not to the last dollar of income.
The practical consequence: in a year when an income event brings your MAGI near an IRMAA threshold, the difference between landing $1 below versus $1 above the line can be thousands of dollars in additional Medicare premiums for the months in which the higher premium applies.
This makes income precision near IRMAA thresholds more consequential than precision near income tax bracket thresholds, where the incremental rate applies only to the marginal dollar.
Income control strategies (sizing a Roth conversion to stay below a threshold, timing year-end distributions, or deferring income to the following year) may therefore be more valuable near IRMAA lines than they appear from a tax-bracket perspective alone.
How Do I File an IRMAA Appeal With Form SSA-44?
The two-year lag can create real hardship when income decreases significantly after the lookback year. If you earned substantial income in 2024 and then retired in 2025, your 2026 IRMAA surcharge would still be based on the higher 2024 income, even if your current retirement income is well below the threshold.
SSA provides a mechanism for relief: Form SSA-44, Medicare IRMAA Life-Changing Event. This form allows you to request that SSA use a more recent year's income, or an estimate of the current year's expected income, to recalculate your IRMAA tier.
Qualifying Life-Changing Events
To use Form SSA-44, the reduction in income must be tied to one of the following qualifying events:
- Retirement (work stoppage) or significant reduction in work hours (work reduction)
- Marriage
- Divorce or annulment
- Death of a spouse
- Loss of income-producing property due to a disaster or other event beyond the individual's control
- Loss of pension income due to termination or reorganization
- Employer settlement payment received in the base year that inflated reported income
Voluntary income reductions, such as deciding to draw less from investment accounts in a given year, generally do not qualify as life-changing events for SSA-44 purposes. A Roth conversion is a voluntary income event; if it pushed your MAGI above a threshold in the lookback year, an SSA-44 appeal based on lower current income is generally available only if a separate qualifying life event has also reduced your income. An amended tax return may provide a separate basis for requesting a recalculation when applicable, for example to correct a reporting error. However, a completed Roth conversion cannot be recharacterized (undone) under federal law as of October 2026, so amending a return generally cannot remove conversion income from the lookback year.
How the Appeal Works
When an appeal is approved, SSA recalculates the IRMAA tier using the more recent income (or current-year estimate) and adjusts premiums accordingly. Depending on timing and processing, this may include a credit for surcharges already paid during that premium year.
Submitting SSA-44 requires documentation: a statement of the qualifying event, relevant supporting documentation (retirement letter, death certificate, divorce decree, etc.), and income information for the more recent year. The form and instructions are available through SSA.
How Does IRMAA Interact With Other Retirement Taxes?
IRMAA does not operate in isolation. It shares a MAGI-based calculation with other income-related thresholds in retirement, so multiple consequences can activate from a single income event.
The Social Security Tax Torpedo. The torpedo occurs when additional income causes more Social Security benefits to phase into federal taxable income, creating an elevated effective marginal rate. California does not tax Social Security benefits at the state level, so the torpedo is a federal effect only. An income increase that fires the torpedo and also crosses an IRMAA threshold compounds the cost of that income: the torpedo effect applies in the year the income is received, and the IRMAA surcharge applies two years later. See The Social Security Tax Torpedo for detail on that interaction.
Net Investment Income Tax. The 3.8% Net Investment Income Tax (NIIT) applies to net investment income above a MAGI threshold of $200,000 single or $250,000 MFJ (tax year 2026; these thresholds are not indexed for inflation). A Roth conversion is not itself net investment income, but a large asset sale or Roth conversion can increase MAGI enough to cause some otherwise applicable net investment income to become subject to the NIIT.
Estimated Taxes. A large conversion or asset sale may also call for an estimated tax payment in the year of the event. See Estimated Tax Safe Harbor Rules for how the safe harbor thresholds work.
State Income Taxes. IRMAA is a federal Medicare surcharge with no state counterpart. However, the income event that triggers IRMAA, such as an IRA distribution, capital gain, or Roth conversion, is generally taxable at the state level in most states. California, for example, taxes IRA distributions and Roth conversions as ordinary income and provides no exclusion for retirement income, so the same distribution may carry federal and California income tax as well as an IRMAA surcharge two years later.
What Coordinated Planning Addresses
Managing IRMAA involves knowing, in advance, where your MAGI is projected to land in each year, and mapping that figure against the tier thresholds for the year two years later.
If you are executing a multi-year Roth conversion strategy, this means modeling not just the income tax on each year's conversion but the IRMAA tier that conversion may produce two years later. A conversion that appears efficient from a bracket perspective may not be efficient when IRMAA surcharges are included in the total cost calculation.
If you are approaching RMD age with large IRA balances, projecting your IRMAA tier at age 73 or 75 (depending on your birth year) based on current account growth assumptions provides a long-range estimate of Medicare costs that may help inform the pace of pre-RMD conversions.
If you experience a qualifying life event that reduces income, an SSA-44 appeal is worth evaluating promptly, since filing sooner may shorten the period of elevated premiums.
The variable most often misunderstood is the cliff structure. The goal is not simply to minimize income; it is to keep income in an appropriate tier relative to your planning objectives. Converting too little each year to stay below a threshold may leave a larger future RMD burden than accepting a higher tier in exchange for a significantly reduced future RMD, depending on the account balance, return assumptions, life expectancy, and other income sources. There is no universal answer; the appropriate amount depends on the full picture.
Related Reading
- The Social Security Tax Torpedo How the Social Security benefit phase-in creates an elevated effective marginal rate, and how IRMAA surcharges can stack on top of it. Read →
- Roth IRA Conversion Strategies for High-Net-Worth Investors How partial Roth conversions can reduce future RMD exposure, and why IRMAA thresholds factor into conversion sizing decisions. Read →
- Smart Tax Strategies for Retirement A broader look at account types, withdrawal order, RMD planning, and multi-year tax projection in retirement. Read →