What is IRMAA? Understanding Medicare's Income-Related Monthly Adjustment Amount in 2026

What is IRMAA? A Complete Overview

IRMAA stands for Income-Related Monthly Adjustment Amount, a surcharge that higher-income Medicare beneficiaries pay in addition to their standard Medicare Part B and Part D premiums. Introduced in 2007 as part of the Medicare Modernization Act, IRMAA ensures that wealthier Medicare beneficiaries contribute more toward their healthcare coverage based on their ability to pay.

According to the Centers for Medicare & Medicaid Services (CMS), approximately 7% of Medicare beneficiaries pay IRMAA surcharges. While this represents a small percentage, it’s crucial to understand how IRMAA works and whether you may be affected.

How IRMAA Works: The Basics

Income-Based Premium Adjustments

Unlike standard Medicare premiums, which are the same for most beneficiaries, IRMAA creates a sliding scale where higher earners pay progressively higher premiums. The surcharge applies to:

• Medicare Part B (Medical Insurance): Covers doctor visits, outpatient care, and medical equipment
• Medicare Part D (Prescription Drug Coverage): Covers prescription medications

IRMAA is not a separate bill, it’s automatically added to your Part B premium, which is typically deducted from your Social Security benefits. Part D IRMAA is also added to your prescription drug plan premium.

The Two-Year Lookback Period

One critical aspect of IRMAA is its two-year lookback period. Your 2025 IRMAA determination is based on your Modified Adjusted Gross Income (MAGI) from your 2023 tax return, the most recent tax information available to the Social Security Administration.

This creates a lag effect where income changes take two years to reflect in your IRMAA calculation. For example:

• If you retired in 2024, you’ll still pay IRMAA based on your 2023 working income in 2026
• Your 2024 retirement income won’t affect IRMAA until 2026

Learn more about income and Medicare at Social Security Administration.

2025 IRMAA Income Brackets and Surcharges

Standard Premiums (No IRMAA)

For 2026, the standard Medicare Part B premium is $202.90 per month. If your income falls below the IRMAA thresholds, you only pay this standard amount.

IRMAA Brackets for Individual Filers

If your 2024 Modified Adjusted Gross Income (MAGI) was:

2024 Income (Individual)	Part B Monthly Premium	Part D Surcharge	Total Monthly
$109,000 or less	$202.90	$0.00	$202.90
$109,001 - $137,000	$284.10	$14.50	$298.60
$137,001 - $171,000	$405.80	$37.50	$443.30
$171,001 - $205,000	$527.50	$60.40	$587.90
$205,001 - $499,999	$649.20	$83.30	$732.50
$500,000 or above	$689.90	$91.00	$780.90

IRMAA Brackets for Joint Filers

If you’re married filing jointly and your 2024 MAGI was:

2024 Income (Joint)	Part B Monthly Premium	Part D Surcharge	Total Monthly
$218,000 or less	$202.90	$0.00	$202.90
$218,001 - $274,000	$284.10	$14.50	$298.60
$274,001 - $342,000	$405.80	$37.50	$443.30
$342,001 - $410,000	$527.50	$60.40	$587.90
$410,001 - $749,999	$649.20	$83.30	$732.50
$750,000 or above	$689.90	$91.00	$780.90

Calculate Your IRMAA

Use our free IRMAA calculator to see exactly what you’ll pay based on your income: Calculate My IRMAA

Understanding Modified Adjusted Gross Income (MAGI)

What Counts as MAGI?

Modified Adjusted Gross Income for IRMAA purposes includes:

• Wages and salaries: W-2 income from employment
• Self-employment income: Net earnings from business activities
• Interest and dividends: All taxable investment income
• Capital gains: Profits from selling investments, real estate, or other assets
• IRA distributions: Traditional IRA withdrawals (but not Roth qualified distributions)
• 401(k) and pension income: Retirement account distributions
• Rental income: Net rental property income
• Social Security benefits: Taxable portion of Social Security
• Tax-exempt interest: Municipal bond interest (even though it’s not federally taxable)

The IRS provides detailed guidance on income calculations at IRS Publication 525.

What Doesn’t Count?

Some income sources are not included in MAGI:

• Roth IRA qualified distributions: Tax-free withdrawals from Roth accounts
• Qualified charitable distributions (QCDs): Direct IRA-to-charity transfers
• Gifts and inheritances: Money received as gifts or inheritance (not the same as inherited IRA distributions)
• Life insurance proceeds: Death benefits from life insurance
• VA benefits: Veterans Administration benefits
• Workers’ compensation: Injury-related compensation

How IRMAA is Determined and Billed

The Determination Process

1. IRS Data Sharing: The IRS automatically shares your tax return information with the Social Security Administration
2. IRMAA Calculation: SSA calculates your IRMAA based on your MAGI from two years prior
3. Initial Determination Notice: SSA sends you an “Initial IRMAA Determination” letter informing you of your IRMAA amount
4. Premium Collection: Your Part B premium (including IRMAA) is deducted from your Social Security benefits, or you receive a bill if you don’t receive benefits

According to the Social Security Administration, you’ll receive your determination letter before the start of the year when IRMAA will apply.

When and How IRMAA is Paid

Part B IRMAA: Automatically deducted from your Social Security, Railroad Retirement Board, or Office of Personnel Management benefits monthly. If you don’t receive these benefits, Medicare will bill you directly.

Part D IRMAA: Added to your prescription drug plan premium. You’ll see the IRMAA amount on your plan’s monthly bill.

Strategies to Reduce or Avoid IRMAA

Strategic Tax Planning

Roth Conversions in Pre-Medicare Years

Converting traditional IRA funds to Roth IRAs before Medicare eligibility can reduce future IRMAA:

• Increases taxable income in the conversion year
• Creates tax-free Roth withdrawals later that don’t count as MAGI
• Particularly effective in early retirement years (ages 62-65) when income may be lower
• Allows you to control income to stay below IRMAA thresholds after age 65

Consult with a tax advisor about Roth conversion strategies. The IRS Roth IRA page provides detailed rules.

Qualified Charitable Distributions (QCDs)

If you’re 70½ or older, QCDs allow you to:

• Transfer up to $105,000 annually (2024 limit, indexed) directly from your IRA to charity
• Satisfy Required Minimum Distributions (RMDs) without increasing MAGI
• Reduce taxable income and potentially avoid or reduce IRMAA

Learn more about QCDs at IRS QCD Guidelines.

Tax-Loss Harvesting

Strategically selling investments at a loss to offset capital gains can reduce MAGI. This is especially valuable:

• Two years before Medicare eligibility (affects your initial IRMAA)
• Years when you have large capital gains from property sales or stock sales
• When rebalancing portfolios creates taxable events

Timing Income Events

Be strategic about when you realize income:

• Property sales: Consider spreading real estate sales across tax years
• Business sales: Structure installment sales to spread income
• Retirement account withdrawals: Take larger withdrawals before Medicare eligibility
• Stock option exercises: Plan exercises to minimize IRMAA years

Income Minimization Techniques

Delay Social Security

Delaying Social Security benefits until age 70:

• Increases your benefit by 8% per year after Full Retirement Age
• Reduces MAGI in early Medicare years (65-70)
• Potentially keeps you below IRMAA thresholds during those years

Learn about Social Security timing strategies at SSA Delayed Retirement.

Manage Capital Gains

Strategies to minimize capital gains impact on IRMAA:

• Hold appreciated assets until death for step-up in basis
• Donate appreciated securities directly to charity
• Harvest tax losses to offset gains
• Use opportunity zones for tax-deferred reinvestment

Appealing Your IRMAA Determination

Life-Changing Events That Qualify

You can appeal your IRMAA determination if you experienced a life-changing event that reduced your income. Qualifying events include:

• Marriage
• Divorce or annulment
• Death of spouse
• Work stoppage or reduction
• Loss of income-producing property (due to disaster or other event beyond your control)
• Loss or reduction of pension
• Employer settlement payment (because of employer bankruptcy or reorganization)

The SSA Form SSA-44 provides complete details on life-changing events.

How to File an Appeal

Step 1: Complete Form SSA-44

Download and complete the Medicare Income-Related Monthly Adjustment Amount - Life-Changing Event form from the Social Security Administration website or pick one up at your local SSA office.

Step 2: Gather Documentation

Provide proof of your life-changing event and current income:

• Tax returns showing reduced income
• Marriage certificate or divorce decree
• Death certificate
• Documentation of work stoppage or reduction
• Pension statements showing reduction

Step 3: Submit Your Appeal

You have 60 days from receiving your IRMAA determination letter to appeal. Submit your appeal:

• Online at SSA.gov
• By mail to your local Social Security office
• In person at your local SSA office

Step 4: SSA Review

Social Security will review your appeal and typically respond within 60-90 days. If approved, your IRMAA will be adjusted retroactively to the beginning of the year.

If your initial appeal is denied, you can request a hearing before an Administrative Law Judge. Learn more at SSA Appeals Process.

IRMAA and Medicare Supplement vs. Medicare Advantage

IRMAA Applies to Both Coverage Types

Whether you choose Original Medicare with a Medigap supplement or a Medicare Advantage plan, you’ll pay IRMAA if your income exceeds the thresholds. However, how IRMAA affects your total costs differs:

Original Medicare + Medigap

With this option, you pay:

• Part B premium + IRMAA (deducted from Social Security)
• Medigap supplement premium (separate bill)
• Part D premium + IRMAA (if applicable)

Total predictability: Your costs are fixed and predictable regardless of healthcare utilization.

Medicare Advantage

With Medicare Advantage, you pay:

• Part B premium + IRMAA (deducted from Social Security)
• Medicare Advantage plan premium (often $0, but can vary)
• Copays and coinsurance for services (variable based on usage)

Variable costs: While base premiums may be lower, out-of-pocket costs vary based on healthcare usage.

Read our detailed comparison: All About Medicare Supplement Insurance

Common IRMAA Scenarios and Examples

Scenario 1: Recent Retiree

Situation: John retired in December 2024 at age 64. He earned $180,000 in 2023 from his job. He’ll enroll in Medicare when he turns 65 in June 2025.

IRMAA Impact:

• 2025 (age 65): Pays IRMAA based on 2023 income ($180,000), likely $481/month Part B premium
• 2026 (age 66): Still pays IRMAA based on partial 2024 working income
• 2027 (age 67): IRMAA reduced or eliminated based on 2025 retirement income

Strategy: John could file an SSA-44 appeal based on work stoppage after his first IRMAA year to get relief sooner.

Scenario 2: One-Time Capital Gain

Situation: Mary sold her rental property in 2023, creating a $150,000 capital gain. Her normal income is $80,000.

IRMAA Impact:

• 2025: Her MAGI of $230,000 triggers high IRMAA ($592/month Part B premium)
• 2026: Returns to normal income, no IRMAA

Strategy: Mary cannot appeal since property sales don’t qualify as life-changing events. Better planning would have been to sell the property after enrolling in Medicare or use a 1031 exchange to defer gains.

Scenario 3: Married Couple with One Spouse Working

Situation: Tom (66) is retired with pension income of $60,000. His wife Jane (63) still works earning $120,000. Combined MAGI: $180,000.

IRMAA Impact:

• As a married couple filing jointly, their combined income determines Tom’s IRMAA
• At $180,000, Tom pays no IRMAA (below $218,000 threshold)
• When Jane enrolls in Medicare at 65, she’ll need to consider filing separately if her income continues

Strategy: They should evaluate whether married filing separately would reduce their combined IRMAA, though this often results in other tax disadvantages.

IRMAA and High-Income Planning

For Ultra-High Net Worth Individuals

If your income consistently exceeds the highest IRMAA bracket ($500,000+ individual/$750,000+ joint), consider:

• Accept IRMAA as unavoidable: At the highest income levels, the maximum IRMAA ($487.00/month Part B + $91.00 Part D) represents a small percentage of income
• Focus on tax efficiency: Rather than avoiding IRMAA, optimize overall tax strategy
• Charitable giving strategies: Use QCDs, donor-advised funds, and charitable trusts
• Estate planning coordination: Coordinate Medicare planning with estate tax strategies

Business Owners and IRMAA

Business owners have unique opportunities and challenges:

• S-Corp distributions: K-1 income counts toward MAGI
• Business sale timing: Plan business sales to minimize IRMAA years
• Installment sales: Spread income over multiple years
• Retirement of debt: Cancellation of debt income triggers IRMAA
• Compensation timing: Consider deferring bonuses or distributions

IRMAA Myths and Misconceptions

Myth 1: “I can avoid IRMAA by not filing taxes”

Truth: The IRS automatically shares tax data with SSA. Not filing (if required) creates legal problems without avoiding IRMAA. Additionally, SSA may use other income information available to them.

Myth 2: “IRMAA is a separate bill I can choose not to pay”

Truth: IRMAA is part of your Medicare premium and is mandatory. It’s automatically deducted from Social Security benefits. Failure to pay can result in loss of Medicare coverage.

Myth 3: “Married filing separately always reduces IRMAA”

Truth: Married filing separately has its own IRMAA brackets with very low thresholds. This status only helps in specific situations where one spouse has significantly lower income. Consult a tax professional.

Myth 4: “I can appeal IRMAA every year”

Truth: You can only appeal based on qualifying life-changing events. Regular income fluctuations don’t qualify for appeals.

Myth 5: “Roth IRA contributions avoid IRMAA”

Truth: While qualified Roth distributions don’t count as MAGI, Roth contributions don’t reduce your current MAGI. Converting traditional IRAs to Roth actually increases MAGI in the conversion year.

IRMAA Planning Checklist

Two Years Before Medicare (Age 63)

• Review your projected MAGI for the year
• Consider Roth conversions while not yet on Medicare
• Plan timing of major income events (property sales, business sales)
• Consult with tax advisor about IRMAA planning strategies
• Understand how your income will affect future Medicare costs

Year Before Medicare (Age 64)

• Finalize income strategies to minimize MAGI
• Consider accelerating deductions
• Plan retirement date carefully if still working
• Review investment portfolio for tax efficiency
• Establish relationship with Medicare advisor

First Year on Medicare (Age 65)

• Review IRMAA determination letter carefully
• Determine if you qualify for any life-changing event appeals
• Calculate total Medicare costs including IRMAA
• Plan ongoing income strategies to manage future IRMAA
• Set up tracking system for income and IRMAA thresholds

Annual Review (Every Year)

• Monitor MAGI relative to IRMAA brackets
• Plan income realization to stay below next bracket if possible
• Review appeal opportunities if life-changing events occur
• Coordinate IRMAA planning with overall tax strategy
• Update projections for future IRMAA years

Working with Professionals on IRMAA Planning

Tax Professionals

A CPA or tax advisor can help with:

• Projecting MAGI and IRMAA exposure
• Tax planning strategies to minimize IRMAA
• Roth conversion analysis
• Timing of income events
• Filing strategy (joint vs. separate)

Financial Advisors

A financial planner can assist with:

• Long-term retirement income planning
• Investment location strategies (tax-efficient account placement)
• Withdrawal strategies from retirement accounts
• Social Security timing optimization
• Overall financial planning that incorporates IRMAA

Medicare Advisors

A licensed Medicare advisor can help with:

• Understanding how IRMAA affects total Medicare costs
• Comparing coverage options with IRMAA factored in
• Coordinating Medicare decisions with income planning
• Appeals process and documentation
• Annual review of Medicare costs including IRMAA

Conclusion: Taking Control of IRMAA

While IRMAA can significantly increase your Medicare costs, understanding how it works and implementing strategic planning can help minimize its impact. The key is to think ahead, your income today affects your Medicare premiums two years from now.

Key Takeaways:

• IRMAA is based on income from two years ago
• Strategic tax planning can reduce or avoid IRMAA
• Life-changing events may qualify you for an appeal
• Roth conversions before Medicare can provide long-term benefits
• QCDs offer a powerful strategy for those 70½ and older
• Professional guidance helps optimize your approach

For personalized guidance on managing IRMAA and optimizing your Medicare strategy, schedule a free consultation with our licensed Medicare advisors.

Additional Resources

• Medicare.gov Part B Costs
• Social Security Administration - Medicare Premiums
• IRS Publication 525 - Taxable and Nontaxable Income
• Free IRMAA Calculator
• Working Past 65: Medicare Enrollment Guide
• Medicare Enrollment Timeline Calculator