IRMAA stands for Income-Related Monthly Adjustment Amount. It is a surcharge added to your Medicare Part B and Part D premiums when your reported income crosses certain thresholds. For 2026, Medicare beneficiaries who earn over $109,000 as a single filer, or $218,000 as a married couple filing jointly, pay IRMAA on top of their standard Part B and Part D premiums. You cannot always avoid it completely, but with thoughtful income planning, many people reduce their exposure, delay when it kicks in, or prevent being surprised by it.
Key Takeaways
- IRMAA is triggered by income thresholds, not age or account type.
- The income used to determine IRMAA is your Modified Adjusted Gross Income (MAGI) from two years ago. The Finance Buff
- One-time events like a home sale, large IRA withdrawal, or Roth conversion can push you into a higher bracket unexpectedly.
- Planning ahead, ideally years before Medicare enrollment, gives you the most options.
What IRMAA Is (In Simple Terms)
Why Medicare Premiums Can Increase
Most people assume Medicare premiums are fixed. They are not. IRMAA is a surcharge added to Medicare premiums for higher-income retirees with Medicare Part B and Part D. When applicable, it can more than triple standard Medicare premiums. The surcharge applies whether you are on Original Medicare or a Medicare Advantage plan, since everyone on Medicare Advantage still owes the Part B premium, in addition to any applicable IRMAA charges.
The surcharge is structured in tiers. The IRMAA is a “cliff” surcharge, meaning if your modified adjusted gross income exceeds a threshold by as little as a dollar, you pay higher premiums for the entire year. In 2026, Medicare recipients with 2024 incomes exceeding $109,000 (single filers) or $218,000 (married filing jointly) will pay a Part B premium between $284.10 and $689.90.
The "Look-Back" Concept (Income Timing)
This is the part that catches people off guard. IRMAA is based on your income tax returns from two years prior. For your 2026 Medicare premiums, your 2024 income tax return is used to determine whether you are subject to IRMAA.
That two-year lag means decisions you make today show up in your Medicare bill two years from now. Because the income is from two years ago, the impact is delayed, making proactive planning essential. If you sold a rental property in 2024, you may not feel the IRMAA consequence until 2026. This is why many financial advisors refer to IRMAA planning as a long-lead discipline.
Common Reasons IRMAA Gets Triggered
Large IRA Withdrawals
Traditional IRA and 401(k) withdrawals count as ordinary income and flow directly into your MAGI. For IRMAA purposes, a taxpayer’s MAGI generally consists of wages, taxable interest, ordinary dividends, taxable IRA distributions, taxable pension payments, taxable Social Security benefits, capital gains, and tax-exempt interest income. Required Minimum Distributions (RMDs), which begin at age 73, can push retirees into higher IRMAA brackets automatically if they have not planned the distribution sequencing ahead of time.
Capital Gains from Selling Assets
Selling a home, investment property, or concentrated stock position generates capital gains that add to MAGI. Realizing capital gains from investments, such as trimming a concentrated stock position or rebalancing a portfolio, can increase taxable income. Pairing gains with losses or waiting for a lower-income year can reduce exposure.
Roth Conversions
Roth conversions are a widely recommended long-term strategy for reducing taxable income in retirement. But the conversion itself counts as income in the year it happens. Converting traditional IRA funds to a Roth IRA increases MAGI in the conversion year, which could temporarily increase your IRMAA. However, because Roth balances grow tax-free and qualified Roth withdrawals do not count as income, planning conversions years before Medicare eligibility can reduce MAGI at critical IRMAA calculation periods.
The timing matters more than most people realize. If you did a Roth conversion at age 63, that would be included in the IRMAA income calculation at age 65 when you enroll in Medicare, because of the two-year look-back period.
One-Time Income Events
Some income spikes are not part of a long-term strategy. They just happen: an inheritance, an employer settlement, a business sale, or the year a deferred compensation package pays out. Many people do not learn about IRMAA until they get a notice from Social Security. By then, the income decision that triggered it has already been made, which is exactly why awareness matters before the event, not after.
Strategies People Often Use to Manage IRMAA Risk
Spreading Income Over Multiple Years
When a large income event is coming, distributing it across two or more calendar years can prevent a single spike from crossing a threshold. Running the numbers can reveal whether it is more advantageous to bunch income into a single year or spread it over multiple years, particularly when deciding whether to pay IRMAA at a higher level for one year versus being in a lower bracket for several years.
You can avoid hitting the high-income threshold any year by making smaller, incremental Roth conversions over several years rather than a single large one. The same principle applies to capital gains. Selling a large position in pieces across two tax years, if feasible, can keep you under a threshold both years.
Coordinating Taxable and Retirement Account Withdrawals
How you pull income from different accounts has a real impact on your MAGI. Withdrawals from taxable brokerage accounts, traditional IRAs, Roth IRAs, and Social Security all carry different tax treatment. Qualified Charitable Distributions (QCDs) from IRAs send dollars directly to charity and exclude the amount from taxable income, which also reduces MAGI. Donor-advised fund contributions will reduce your taxable income but will not reduce your MAGI for IRMAA purposes.
Health Savings Account (HSA) distributions used for qualified medical expenses also do not count toward MAGI, which makes them a useful tool for retirees who built HSA balances during their working years. Roth IRAs and health savings accounts add flexibility because qualified Roth withdrawals and HSA payments for medical bills do not increase MAGI.
Planning Around Large Sales
If you are planning to sell a home, business, or investment property, the timing of that sale relative to your other income for the year matters significantly. Controlling the timing of large moves, such as selling appreciated positions, exercising options, or taking distributions, during years when other income is lighter, and staggering sales or splitting withdrawals across tax years, can keep you below a higher tier.
One caution: even a slight change in income could push you into a higher bracket and raise your premiums dramatically. This is why running projections before executing a large transaction is worth the effort.
When IRMAA Can Be Appealed
Life-Changing Events Overview
IRMAA is not always permanent, and it is not always fair. If your income was high two years ago but has since dropped due to a major life event, you may have grounds to appeal.
You can generally appeal if your income dropped due to a life-changing event such as retirement (work stoppage), work reduction, marriage, divorce, death of a spouse, loss of pension, or loss of income-producing property. You have 60 days from receiving the IRMAA notice to file an appeal. The form used is SSA-44, titled “Medicare Income-Related Monthly Adjustment Amount, Life-Changing Event.”
It is worth noting what typically does not qualify. Examples that typically do not qualify for an appeal include a one-time sale of an investment or real estate resulting in a capital gain. If the income spike came from a voluntary financial move rather than a life disruption, SSA generally does not recognize it as a qualifying event.
What Documentation Typically Helps
The stronger your documentation, the better your odds. In the case of a drop in income due to retirement, you should include a copy of the tax return for the year your income declined, along with a letter from your former employer stating that you have retired. If your income declined because your spouse died, include a copy of the death certificate.
About 50% of appeals result in lower premiums when proper documentation is provided. Filing promptly matters. Delays can mean months of overpaying higher IRMAA charges, since adjustments are generally retroactive for the current year but not for prior years.
If your appeal is approved, the reduction applies to both Part B and Part D. If it is denied, you have the right to escalate to the Office of Medicare Hearings and Appeals and, if needed, further levels of review.
FAQs
MAGI is your adjusted gross income found on line 11 of IRS Form 1040, plus your tax-exempt interest income found on line 2a of IRS Form 1040. This includes wages, taxable Social Security benefits, capital gains, IRA and pension distributions, and tax-exempt interest such as municipal bond income. Qualified Roth IRA withdrawals and HSA distributions for medical expenses generally do not count.
Yes. A Roth conversion counts as taxable income in the year it is executed. A staged Roth conversion strategy, spreading conversions over several years, can help avoid pushing income into higher IRMAA brackets. The long-term benefit of converting can still outweigh the short-term premium increase, but the timing should be coordinated with your overall income plan.
Yes. Both short-term and long-term capital gains are included in MAGI. This includes gains from selling stocks, real estate, or a business. Planning the timing of asset sales, including pairing gains with available losses when possible, is one of the most effective ways to manage your MAGI before a Medicare surcharge year.
If you are currently enrolled in Medicare and IRMAA has been applied, your options depend on the reason. You can appeal your IRMAA determination by filling out an SSA-44 form to file an appeal with the Social Security Administration if your income has changed dramatically in the past two years. Without a qualifying life event, you will generally need to wait for the two-year look-back to catch up with your lower income.
For someone applying for Medicare in 2026, they would have needed to complete Roth conversions or significant income adjustments by 2024 because of the two-year look-back period. As a general guide, IRMAA planning should begin at least two to three years before you expect to enroll in Medicare, and it should be revisited annually once you are enrolled.
Social Security benefits can affect IRMAA, but only the taxable portion counts toward MAGI. The MAGI for IRMAA includes taxable Social Security benefits, but it does not include untaxed Social Security benefits. Delaying Social Security can keep your MAGI lower in the early years of retirement, which may help during critical IRMAA calculation windows.
Qualifying life-changing events include retirement or reduced work hours, loss of income-producing property, loss or reduction of pension income, death of a spouse, marriage, and divorce or annulment. Each event must have resulted in a meaningful reduction in your MAGI. Voluntary financial decisions, such as a large investment sale or a Roth conversion, typically do not qualify.
IRMAA sits at the intersection of income planning, tax strategy, and healthcare costs. It is not a Medicare-only question and it is not purely a tax question. A fee-only financial advisor who coordinates your retirement income plan, tax projections, and Medicare enrollment together is best positioned to catch IRMAA risks before they show up on your bill. At Bauman Wealth Advisors, we build IRMAA awareness directly into each client's retirement income strategy, because the decisions that affect your Medicare costs are often made years before the premium notice ever arrives.
Keep Medicare Costs Predictable
IRMAA surprises usually come from one bad income year. A clear plan can help you avoid that. If you want help mapping your withdrawals, conversions, and income targets, a second set of eyes can make the numbers easier to manage.
If you want a clean plan with income targets, Roth conversion ceilings, withdrawal sequencing, and IRMAA tier monitoring, schedule a complimentary consultation with one of our CFP® professionals at Bauman Wealth Advisors. We’ll help you build a forward-looking income strategy so your Medicare costs stay as steady as possible.
