Most people budget for their Medicare premium and assume that's the number they'll pay. Then a letter arrives from Social Security saying the premium is going up — sometimes by hundreds of dollars a month — because of income they earned two years ago.
That surcharge is called IRMAA, and it surprises people every year. Here's how it works, who pays it, and what you can do if it hits you unfairly.
IRMAA stands for Income-Related Monthly Adjustment Amount. It's an extra charge added on top of your standard Medicare Part B and Part D premiums when your income is above a certain level.
It isn't a penalty and it isn't optional. If your income crosses the threshold, Social Security applies it automatically and deducts it from your benefit check.
IRMAA is not based on what you earn today. It's based on your modified adjusted gross income (MAGI) from your federal tax return two years earlier.
So your 2026 Medicare premiums are calculated from your 2024 tax return.
This is why the surcharge feels like it comes out of nowhere. A one-time income spike — selling a house, cashing out a retirement account, receiving a severance package — raises your income for that year, and the consequence lands on your Medicare bill two years later, long after the money has been spent.
For 2026, IRMAA begins when MAGI on your 2024 return exceeded:
Below those numbers, you pay the standard Part B premium of $202.90 per month in 2026 and no Part D surcharge.
Above them, there are five brackets. At the highest tier — income above $500,000 single or $750,000 joint — Part B rises to $689.90 per month, with an additional Part D surcharge of up to $91.00 per month.
A useful way to think about the range: the difference between the lowest and highest bracket is roughly $487 per month per person, or about $5,800 a year.
This detail matters more than almost any other: IRMAA works on a cliff system. Exceeding a threshold by even one dollar moves you into the entire next bracket.
There is no partial surcharge and no gradual phase-in. Someone whose MAGI came in at $109,001 pays the same surcharge as someone at $136,000. For anyone near a threshold line, a small planning decision can be worth thousands of dollars.
Most people who get hit by IRMAA aren't high earners — they had one unusual year. Common causes:
That last one is especially common. You retire, your income drops to a fraction of what it was — and then Medicare bills you based on your last full working year.
Here's the part most people never hear about. If your income has gone down since the tax year Social Security used, you can ask them to use your current income instead.
The appeal is filed on Form SSA-44, and it applies when you've had a qualifying life-changing event:
You complete the form, state the event and its date, provide documentation of your reduced income, and submit it to your local Social Security office. If approved, they recalculate using the more recent year.
Important limit: a one-time capital gain by itself — like selling a house — is not on the list of qualifying events. If the gain was your only change, the surcharge generally stands for that year and drops off the following year once the spike leaves the lookback window.
The best time to think about IRMAA is before the transaction, not after the letter arrives:
IRMAA stands for Income-Related Monthly Adjustment Amount — a surcharge added to Medicare Part B and Part D premiums for people whose income exceeds annual thresholds. It's calculated from your tax return two years prior.
Social Security uses the modified adjusted gross income reported on your federal tax return from two years earlier. For 2026 premiums, that's your 2024 return.
Yes. If your income dropped due to a life-changing event such as retirement, marriage, divorce, or the death of a spouse, you can file Form SSA-44 with the Social Security Administration to request a recalculation using your current income.
It can. A large capital gain raises your MAGI for that tax year, which may push you over a threshold two years later. Note that a capital gain alone is not a qualifying life-changing event for an appeal, so the surcharge usually applies for that one year and then falls away.
No. It's recalculated every year using the most recent tax return on file. A one-time income spike generally affects a single year of premiums.
IRMAA sits at the intersection of Medicare and taxes, which is exactly why it catches people off guard. I help New Jersey retirees understand how their Medicare costs are calculated and what their options are — before a big financial decision, not after.
Call or text (848) 313-6723, or reach out through the contact form. No pressure, no sales pitch — just clarity on where you stand.
For decisions about when and how to take income, always consult your CPA or tax advisor. I handle the Medicare side.
Not connected with or endorsed by the U.S. government or the federal Medicare program.
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