You did the right things. You saved. You invested. You planned your retirement income carefully. T
hen the Medicare bill arrived and it was nothing like what you expected.
The number on the page was hundreds of dollars higher per month than the standard premium you had budgeted for.
What hit you is called IRMAA, short for Income-Related Monthly Adjustment Amount. It is a surcharge on top of Medicare Part B and Part D premiums, and it is triggered by income you earned two years ago.
For a couple where both spouses land in a higher IRMAA tier, the surcharge can run close to $12,000 per year in added Medicare costs, 247 Wall St. reported. Most people find out about it the hard way.
What IRMAA costs and how Medicare calculates your bracket
The standard Part B premium in 2026 is $202.90 per month. That is the number for retirees whose 2024 income came in below $109,000 as a single filer or $218,000 as a married couple. Over those lines, Medicare charges more.
A single filer with 2024 income between $109,000 and $137,000 pays $284.10 per month for Part B. Between $137,000 and $173,000, Part B costs $405.80.
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At the top, single filers above $500,000 pay $689.90 per month. That top rate adds nearly $5,844 per year to your Part B bill alone, Kiplinger reported.
Part D carries its own IRMAA surcharge at every tier on top of Part B. A couple where both spouses are assessed at a higher tier pays close to $11,688 per year in combined surcharges. With Part D layered on, total added costs can run well over $12,000 per year.
Why you may not see the bill coming until it’s too late
Your 2026 IRMAA is set by your 2024 income. Your 2027 IRMAA is set by your 2025 income.
The year that put you in a higher bracket may be completely behind you by the time you see the bill.
Maybe you did a large Roth conversion. Maybe you had a one-time capital gain, a high-earning final year before retirement, or an RMD that came in bigger than you planned. Any of those can push your MAGI over a threshold.
The income gets spent or converted. The surcharge runs for the rest of that Medicare year regardless.
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Once you hit age 73, required minimum distributions from traditional IRAs and 401(k)s are mandatory. They count fully toward MAGI. Add Social Security income on top of that and your total can cross an IRMAA threshold faster than you think.
Plenty of retirees who consider themselves middle-income end up in a higher bracket and don’t see it coming.
The timing problem is real. IRMAA planning has to happen years before the bill. At age 65 or 67, most people are thinking about retirement income, not Medicare premiums. By the time a Medicare notice arrives with a surcharge, some of the decisions that caused it are already two years in the past.
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5 moves that reduce how much IRMAA you pay:
- Take IRA distributions before you have to. The IRS sets your RMD at 73 based on your balance and life expectancy at that point. The bigger the balance, the bigger the withdrawal. If you pull money out earlier, in smaller amounts over several years, you keep each year’s taxable income lower. Lower income each year means a better chance of staying below an IRMAA threshold.
- Run Roth conversions in lower-income years. Converting part of a traditional IRA to a Roth in years before Social Security starts and before RMDs kick in reduces your future mandatory withdrawal balance. Roth distributions do not count toward MAGI. That is money you can spend without it pushing you into a higher bracket.
- Sell appreciated assets when your income qualifies for the 0% capital gains rate. Retirees in lower-income years in early retirement may qualify. Selling appreciated positions at 0% removes embedded gain from your portfolio. Future sales from that same portfolio carry less tax and less MAGI impact.
- Give to charity through your IRA instead of your bank account. If you are 70½ or older, you can transfer up to $108,000 per year directly from a traditional IRA to a qualified charity. That satisfies all or part of your RMD without counting as taxable income. Your charitable goals get met and your MAGI stays lower.
- Harvest tax losses in your taxable accounts. When you sell an investment at a loss, that loss offsets capital gains. It can also offset up to $3,000 of ordinary income per year. That brings your MAGI down. Wash-sale rules apply. You cannot buy the same security back within 30 days. If your income is sitting near a bracket line, a few thousand dollars in harvested losses could be the difference between paying the surcharge and not paying it.
What to do if IRMAA already hit you
If your income has dropped significantly because of a life change, you can appeal. Qualifying events include retirement, marriage, divorce, death of a spouse, and loss of income from work or a pension.
File Form SSA-44 with the Social Security Administration. The form lets you give SSA a more recent year’s income to work from. They recalculate the surcharge based on that number instead of the two-year-old figure.
It won’t erase IRMAA going forward, but it can bring the bill down for the period when your income was lower.
IRMAA brackets shift over time but do not always keep up with rising incomes. A retiree with even modest income growth can drift into a higher tier over several years. The surcharge funds part of Medicare and is built into the program.
Knowing it exists and planning around it before you hit 65 is one of the more valuable things you can do for your retirement budget.
