You retired last year and your income has dropped sharply. Then a letter arrives from Social Security saying your Medicare Part B and Part D premiums will be higher because of your income. The income they are using is from two years ago, when you were still working full time and sold some investments.
This surcharge is called IRMAA — the income-related monthly adjustment amount. It catches many new retirees by surprise, but in some cases it can be reduced.
Key Takeaways
- IRMAA adds surcharges to Medicare Part B and Part D premiums for people with higher incomes.
- It is based on modified adjusted gross income (MAGI) from your tax return two years earlier.
- Income spikes from Roth conversions, capital gains or property sales can push you into a higher bracket for a year.
- If your income dropped because of a life-changing event such as retirement, you can ask Social Security to use more recent income with Form SSA-44.
Thresholds and surcharge amounts change each year. Check the current figures at medicare.gov or ssa.gov.
How IRMAA works
Most people pay the standard Part B premium. If your income exceeds certain thresholds, you pay the standard premium plus an IRMAA surcharge. A separate surcharge applies to Part D, added to your drug plan premium and paid to Medicare.
There are several income brackets. Each higher bracket brings a larger surcharge. Thresholds differ for individuals and married couples filing jointly, and are adjusted annually for inflation.
Which income counts
IRMAA uses modified adjusted gross income (MAGI): your adjusted gross income plus tax-exempt interest income.
It typically uses your tax return from two years earlier. For example, premiums for 2026 are generally based on 2024 income.
Income that can push MAGI up includes:
- Wages and self-employment income
- Pension and annuity income
- Traditional IRA and 401(k) withdrawals
- Roth conversions
- Capital gains, including from selling a home above the exclusion amount
- Taxable Social Security benefits
- Tax-exempt municipal bond interest (added back for MAGI)
The cliff effect
IRMAA brackets work like cliffs. Exceeding a threshold by even $1 means paying the full surcharge for that bracket for the year. This makes planning around thresholds worthwhile, especially for one-time income such as Roth conversions or asset sales.
Life-changing events and appeals
If your income has gone down because of certain life-changing events, you can ask Social Security to use a more recent year’s income. Qualifying events include:
- Work stoppage or reduction (including retirement)
- Marriage
- Divorce or annulment
- Death of a spouse
- Loss of income-producing property
- Loss or reduction of certain kinds of pension income
- Employer settlement payment
To request a reduction, file Form SSA-44 (Medicare Income-Related Monthly Adjustment Amount — Life-Changing Event) with Social Security. Include documentation, such as a letter from your employer confirming your retirement date, and an estimate of your current-year income.
Selling investments or doing a Roth conversion is not a qualifying life-changing event.
If your tax return information is incorrect, or you amended your return, you can also ask Social Security to update the information.
Planning to reduce IRMAA
- Watch the two-year lookback. Large income events at 63 or later can affect premiums at 65 and beyond.
- Spread out Roth conversions to stay under thresholds, weighing tax savings against potential surcharges.
- Time capital gains where possible.
- Consider qualified charitable distributions (QCDs) from IRAs after age 70½, which can satisfy giving goals without adding to MAGI.
- File SSA-44 promptly after retirement if your income has dropped.
Frequently Asked Questions
Is IRMAA permanent? No. It is recalculated each year based on your income.
Does IRMAA apply to Medicare Advantage? Yes. The Part B IRMAA applies regardless of whether you have Original Medicare or Medicare Advantage, and the Part D IRMAA applies to drug coverage.
How much can IRMAA cost? Surcharges range from moderate to substantial in the highest brackets. Check current amounts.
Can a married couple both pay IRMAA? Yes. Each spouse enrolled in Medicare pays the surcharge based on joint income if filing jointly.
The bottom line
IRMAA is based on income from two years earlier, which often surprises new retirees. Plan large income events with the brackets in mind, and if retirement has reduced your income, ask Social Security to use your current income instead.
