What is IRMAA?
The Income-Related Monthly Adjustment Amount (IRMAA) is a surcharge added to your standard Medicare Part B (medical insurance) and Medicare Part D (prescription drug coverage) premiums if your income is above a certain threshold. You can easily check if this applies to you using a Medicare IRMAA Calculator.
Unlike standard Medicare premiums which are flat rates, IRMAA is progressive: the higher your income, the more you pay.
How the IRS and Medicare Determine Your IRMAA
Your IRMAA surcharge is calculated using your Modified Adjusted Gross Income (MAGI) from your federal tax return two years prior.
For example, your 2026 IRMAA surcharge is based on the MAGI you reported on your 2024 tax return. This two-year lag is because tax returns are not fully processed when the new Medicare year begins.
📖 Real-Life Scenario
A Property Sale Triggering a Higher Premium Two Years Later
Richard sold a rental property in 2024 for a net capital gain of $90,000, pushing his 2024 MAGI to $168,000. Medicare uses income data from two years prior, so in 2026, SSA calculated his Part B premium using his 2024 return. His 2026 Part B premium became $244.60 per month (IRMAA Tier 1) instead of the standard $202.90. His Part D IRMAA surcharge added another $12.90 monthly. However, Richard had retired fully at the end of 2024, and his 2025 income was approximately $68,000. He filed Form SSA-44 with the SSA documenting his retirement as a life-changing event. SSA recalculated his premium using a more recent tax year, reducing it toward the standard rate effective the following month.
- 2024 MAGI that triggered IRMAA: $168,000 (one-time property sale)
- 2026 Part B premium at IRMAA Tier 1: $244.60/month vs. standard $202.90
- 2026 Part D IRMAA surcharge at Tier 1: $12.90/month additional
- Form SSA-44 submitted: documented 2024 retirement as a qualifying life event
- Result: premium recalculated using lower 2025 retirement income
For a complete breakdown of all four parts, enrollment deadlines, and 2026 costs, see our master guide on Medicare explained.
Standard Medicare Part B vs. IRMAA Levels
The standard Part B premium covers approximately 25% of the program’s costs, with the government covering the remaining 75%. If you trigger IRMAA, you are required to cover a larger portion of the program’s costs (from 35% up to 85%), which can lower your net Social Security monthly benefits:
- Standard Level: Income under $106,000 (Single) or $212,000 (Joint). You pay only the standard base premium.
- Tier 1 Surcharge: Income between $106,000–$133,000 (Single) or $212,000–$266,000 (Joint).
- Highest Surcharge Tier: Income above $500,000 (Single) or $750,000 (Joint).
Note: Surcharge thresholds are adjusted annually for inflation.
What If Your Income Dropped? (Life-Changing Events)
Because IRMAA uses tax returns from two years ago, it might not reflect your current financial reality (especially if you recently retired or lost a spouse).
If you experience a Life-Changing Event that causes your income to drop, you can file a dispute using Form SSA-44 to request a reduction in your surcharge. Qualifying events include:
- Retirement or work reduction
- Loss of income-producing property
- Loss of pension income
- Marriage, divorce, or death of a spouse
⚠️ Common Mistakes to Avoid
❌ Mistake 1: Not Filing Form SSA-44 After a Major Income-Reducing Life Event
IRMAA uses your tax return from two years ago to set your premium, meaning a spike in income from a one-time event can cause elevated premiums for two full years afterward. Many beneficiaries accept the higher premium without knowing they can appeal by documenting that their current income is significantly lower. Filing Form SSA-44 can reduce the surcharge to zero or to a lower bracket starting the month SSA processes your request.
- Download Form SSA-44 at ssa.gov/forms or pick one up at your local SSA office.
- Attach documentation of the life-changing event: a retirement letter, final pay stub, pension award letter, or recent tax estimate.
- Submit the form in person at your SSA office with a copy for your records — phone submissions are not accepted for SSA-44.
❌ Mistake 2: Not Planning Roth Conversions or IRA Withdrawals to Avoid Crossing IRMAA Thresholds
Many retirees manage their income carefully for tax purposes but forget that Roth conversions, large IRA withdrawals, or the sale of appreciated assets can push their MAGI above an IRMAA threshold — triggering a premium increase two years later. The IRMAA income brackets jump in discrete steps, so a single dollar of income above a threshold can cost hundreds of dollars in additional annual premiums.
- Review the current IRMAA income brackets (published annually at cms.gov) before making any large financial transactions: Roth conversions, portfolio rebalancing, or real estate sales.
- Work with a CPA or fee-only financial advisor to model your MAGI across the current and next two tax years before executing large income-generating transactions.
- Consider spreading Roth conversions over multiple years to stay under IRMAA thresholds rather than converting in one large transaction.
❌ Mistake 3: Not Knowing That IRMAA Applies to Both Part B AND Part D Separately
Many beneficiaries receive notification of their Part B IRMAA surcharge but do not realize that a separate, additional IRMAA surcharge also applies to their Part D drug plan premium. Both charges appear on the same Medicare billing statement but are calculated and applied independently. Missing this dual structure leads to budget surprises.
- When you receive your annual Medicare premium notice (usually in November or December), look for both the "Part B IRMAA" and "Part D IRMAA" line items.
- The Part D IRMAA surcharge is paid directly to Medicare, not to your Part D plan insurer — it appears as a deduction from your Social Security check, separate from your plan premium.
- If you are appealing with SSA-44, confirm with SSA that your appeal will reduce both the Part B and Part D surcharges, as both require separate processing.