Medicare IRMAA: the income surcharge nobody warns you about
We see IRMAA surprise more retirees than any other Medicare cost. The rules are simple once you see them, and there are real ways to plan around it.
What IRMAA is
The Income-Related Monthly Adjustment Amount (IRMAA) is an extra charge added to your Medicare Part B and Part D premiums when your income crosses certain thresholds. It's not a tax; it's a Medicare premium adjustment, and it shows up as a separate line item on your Social Security or Medicare bill.
Social Security determines IRMAA using your Modified Adjusted Gross Income (MAGI) from two years ago. So your 2026 IRMAA is based on your 2024 tax return.
How the brackets work
There are five IRMAA tiers above the standard premium. Each tier adds a fixed dollar amount to both your Part B premium and your Part D premium. Brackets are different for single filers and joint filers, and they're indexed annually.
The critical detail: brackets are cliffs, not slopes. One dollar of MAGI over a threshold puts you in the next bracket for the entire year. That's why a planned Roth conversion or a large capital gain can cost far more than the tax on it alone.
What counts as MAGI
For IRMAA, MAGI is your Adjusted Gross Income plus tax-exempt interest. So it includes:
- Wages, self-employment income, pensions, and Social Security (the taxable portion)
- Required Minimum Distributions and other IRA/401(k) withdrawals
- Roth conversions
- Capital gains, including from the sale of a primary residence above the exclusion
- Interest from municipal bonds (tax-exempt interest still counts here)
- Rental income, royalties, business income
What doesn't count: distributions from a Roth IRA, qualified HSA withdrawals, and certain insurance proceeds.
Appealing IRMAA with Form SSA-44
If you've had a life-changing event since the tax year Social Security used, you can request a reduction or removal with Form SSA-44. Qualifying events include retirement (work stoppage), reduced work hours, marriage, divorce, death of a spouse, loss of pension income, or an employer settlement payment.
The most common winning case: someone retired in 2025, their 2024 income looks high, and they want to use estimated 2026 income instead. SSA accepts that with documentation (an employer letter or signed statement, plus an estimate of current income).
File the form at your local Social Security office, by mail, or by fax. Decisions typically come back within a few weeks. If denied, you can appeal to an Administrative Law Judge.
Planning around the brackets
- Time Roth conversions. Do larger conversions in years before Medicare starts, or in years you're already in a higher bracket anyway.
- Spread out big sales. Selling a rental property in installments or across tax years can keep you under a threshold.
- Use Qualified Charitable Distributions. Sending RMDs directly to charity from an IRA keeps that income off your MAGI.
- Watch the household effect. The joint-filer thresholds are not simply double the single thresholds at the top brackets. Filing status can matter.
Frequently asked questions
- What income counts toward IRMAA?
- Social Security uses your Modified Adjusted Gross Income (MAGI) from two years ago. MAGI is your AGI plus tax-exempt interest. Capital gains, IRA conversions, and one-time income events all count, which is why IRMAA often surprises retirees in their first year on Medicare.
- How do I appeal an IRMAA decision?
- File Form SSA-44 if you had a qualifying life-changing event: marriage, divorce, death of a spouse, work stoppage, work reduction, loss of pension income, or employer settlement payment. Include documentation. Most successful appeals come from people who recently retired.
- Does IRMAA last forever?
- No. Social Security re-checks your income every year using your most recent tax return. If your income drops back below the threshold, your IRMAA goes away automatically, usually one to two years after the income drop shows up on your tax return.
- Can a Roth conversion trigger IRMAA?
- Yes. A Roth conversion adds to MAGI in the year of the conversion, and that MAGI determines your IRMAA two years later. Many people coordinate conversions with their Medicare timeline specifically to avoid stacking conversion income on top of their first IRMAA look-back year.
- What is the IRMAA cliff?
- IRMAA is bracket-based, not gradual. Earning one extra dollar over a threshold can push you into the next bracket and cost you hundreds of additional dollars in premiums for the year. This is why year-end tax planning matters so much around the brackets.
Don't let IRMAA decide for you
IRMAA changes the math on Advantage vs Medigap, on when to enroll, and on whether to delay Part B if you're still working. We'll walk you through it.
Educational resource. Not legal, tax, or insurance advice.