IRMAA: The Medicare Surcharge Most Retirees Don't See Coming

Most people know Medicare Part B has a monthly premium. In 2026 it's $185.00/month — about $2,220/year for a single person. Manageable. But what most people don't know is that if your income exceeds certain thresholds, that premium can more than triple.

This is IRMAA — the Income-Related Monthly Adjustment Amount — and it's one of the most significant (and most commonly overlooked) tax-like costs in retirement planning.

What Is IRMAA?

IRMAA is a surcharge added to your Medicare Part B (outpatient care) and Part D (prescription drug) premiums when your income exceeds certain levels. The Social Security Administration calculates it each year based on your Modified Adjusted Gross Income (MAGI) from two years prior.

That two-year lookback is critical — it means the Medicare premiums you pay at 67 are based on your income at 65.

The 2026 IRMAA Tiers

IRMAA uses a tiered structure. Once your MAGI crosses a threshold, your entire premium jumps to the next level — not just the income above the threshold.

For single filers (2026):

MAGI	Part B Monthly Premium
≤ $106,000	$185.00 (base)
$106,001 – $133,000	$259.00
$133,001 – $167,000	$370.00
$167,001 – $200,000	$481.00
$200,001 – $500,000	$592.00
> $500,000	$628.90

For married filing jointly (MFJ), thresholds are doubled. So the first tier kicks in at $212,000 for a couple.

Part D surcharges add additional costs on top — ranging from roughly $13 to $81 per person per month depending on the tier.

Why Roth Conversions Are the Main Trigger

For most retirees, MAGI is relatively predictable — Social Security, pension income, and portfolio withdrawals. But Roth conversions are a wildcard.

A large Roth conversion in 2024 can push your 2026 Medicare premiums up by thousands of dollars. Many people execute a major conversion without realizing the two-year-delayed IRMAA bill that's coming.

Income sources that count toward IRMAA MAGI:

• Wages and self-employment income
• Traditional IRA / 401(k) withdrawals
• Roth conversions
• Required Minimum Distributions (RMDs)
• Social Security (the taxable portion)
• Rental income
• Capital gains
• SPIA/QLAC annuity payments

What does NOT count:

• Roth IRA withdrawals (qualified distributions)
• Health Savings Account (HSA) withdrawals for medical expenses
• Reverse mortgage proceeds
• Life insurance proceeds

Planning Strategies

1. Fill to the IRMAA threshold — not past it

If your MAGI is, say, $95,000 as a single filer, you have $11,000 of headroom before hitting the first IRMAA tier. That's $11,000 you can convert from a Traditional IRA to Roth, or realize as capital gains, without triggering a surcharge.

Conversely, if a Roth conversion would push you $500 past a threshold, the IRMAA cost of that conversion is real and should factor into your analysis.

2. Account for the two-year lag in sequence

If you're doing a large Roth conversion at 63 to reduce your IRA balance before RMDs hit at 73, that conversion won't show up in Medicare premiums until you're 65. Plan the sequence carefully.

3. Roth withdrawals as the escape valve

Once your Roth balances are large enough, you can cover spending from Roth rather than pre-tax accounts in high-IRMAA-risk years. A large RMD year, for example, might be offset by reducing other taxable income through Roth spending.

4. IRMAA appeals for life-change events

If your income has dropped significantly (retirement, job loss, divorce, death of spouse), you can appeal your IRMAA determination using Form SSA-44. The SSA can use a more recent tax year if you've had a qualifying life event.

How IRMAA Interacts With Roth Conversion Strategy

This is where the planning gets nuanced. Aggressive Roth conversion strategies — converting large amounts in your early 60s to reduce future RMDs — can inadvertently trigger IRMAA at 65–67 when those conversions show up in the lookback window.

The optimal strategy isn't always "convert as much as possible." It's often convert to the top of your target bracket, but stop before the IRMAA cliff.

For a married couple, that might mean:

• Converting $50,000–$80,000/year in the 22–24% bracket
• Staying below the $212,000 MFJ IRMAA threshold
• Accepting a slightly longer conversion timeline in exchange for avoiding IRMAA surcharges

Modeling IRMAA in Your Plan

ModernRetire models IRMAA year-by-year in every projection. For each year of your drawdown phase, it computes your projected MAGI (including Roth conversions, RMDs, and all income sources), applies the two-year lookback, and adds the corresponding surcharge to your annual spending.

The Tax Strategy panel shows IRMAA-trigger years as warning markers on your conversion roadmap — so you can see exactly which years a planned conversion would push you into the next tier.

The Optimizer uses lifetime IRMAA costs as part of its tax minimization objective, automatically backing off conversions that would produce more IRMAA cost than tax benefit.

Key Takeaways

• IRMAA is a surcharge on Medicare Part B and D premiums that kicks in above income thresholds
• The two-year lookback means today's income affects premiums two years from now
• IRMAA is "cliff-based" — crossing a threshold by $1 raises your premium for the entire year
• Roth conversions and RMDs are the primary IRMAA triggers in retirement
• The optimal strategy is to fill toward the IRMAA threshold each year, not past it
• Appeal via Form SSA-44 when a life event dramatically reduces your income

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