The Steward's Desk · Healthcare and Medicare
Higher income can raise your Medicare premiums through a surcharge called IRMAA. Here's the mechanism in plain words, and the levers that help.
Jesse Plunkett, CEPA®, CRPC®
July 12, 2026 · Meet your advisor · 
IRMAA stands for income-related monthly adjustment amount. It's a surcharge added to Medicare Part B and Part D premiums for households above certain income levels. Most Medicare enrollees never pay it: CMS estimates that roughly 8% of Part B beneficiaries owe an income-related amount in a given year. If your income lands above the thresholds, you pay the standard premium plus an extra amount set by your tier.
The acronym makes it sound more complicated than it is. Think of IRMAA as Medicare's sliding scale: higher-income households pay more for the same Part B and Part D coverage. The design is more logical than the acronym suggests. Under the CMS premium rules, a standard Part B premium covers about 25% of what the program actually costs to run, with taxpayers picking up the other 75%. IRMAA simply raises the share you cover, to 35%, 50%, 65%, 80%, or 85% depending on your tier. You aren't being fined for earning well; you're being asked to fund more of your own coverage. The dollar thresholds adjust most years, so I won't print figures that would be stale by the time you read this; the Social Security Administration publishes the current levels each fall.
Social Security determines IRMAA using the most recent tax return the IRS has on file, which is generally from two years earlier. Your premium this year reflects the income you reported two years back. That lag is the whole planning story: income decisions you make today reach your premiums two years later.
The income measure is your adjusted gross income plus tax-exempt interest, which the rules call modified adjusted gross income. The lag exists for a mundane reason: when Medicare sets premiums each January, the newest complete return the IRS can supply is usually two years old. Mundane cause, meaningful effect. A Roth conversion, a large capital gain, a big IRA withdrawal, or the sale of a property this year shows up in your premium two years from now.
The surcharge comes in tiers, and crossing a tier's threshold by even one dollar of income moves you to that tier's full surcharge for the entire year. There is no gradual phase-in. That's why year-end income decisions, like the size of a Roth conversion, are often made with IRMAA in view.
If that sounds harsh, two things soften it. The surcharge is recalculated every year, so one high-income year buys one surcharged year, not a permanent penalty. And the tiers are public, which means income can often be planned around them on purpose: a conversion sized to stop below a threshold, or a gain split across two calendar years instead of one.
Yes, when your income has dropped because of a life-changing event. Retirement itself counts, and so do reduced work hours, marriage, divorce, and the death of a spouse. You file Form SSA-44 with the Social Security Administration and ask them to use your more recent, lower income instead.
The appeal comes up constantly in the first year or two of retirement, for an understandable reason: the return Medicare is looking at shows your final working salary, while your actual income has fallen. Form SSA-44 exists exactly for this situation. It's a short form and a routine request, not a court case.
You manage the income Medicare sees, year by year. The main levers are the timing and size of Roth conversions, qualified charitable distributions from an IRA after age 70 1/2, and which accounts your withdrawals come from. Because of the two-year lookback, the planning starts earlier than you might expect.
| Planning lever | How it helps | Worth a look when... |
|---|---|---|
| Roth conversion timing | Sizing conversions to stay inside a chosen tier, or doing larger ones before Medicare's lookback window opens. | You're converting in the years between retiring and required minimum distributions. |
| Qualified charitable distributions | Gifts sent directly from an IRA to charity after age 70 1/2 never appear in your income, unlike a withdrawal you donate afterward. | You give to charity anyway and are taking IRA withdrawals. |
| Withdrawal order | Choosing which account each dollar comes from changes your reported income; qualified Roth withdrawals, for example, don't count. | You have a mix of pre-tax, Roth, and taxable accounts to draw from. |
One caution against overcorrecting: IRMAA is a cost, not a catastrophe, and avoiding it isn't automatically the winning move. A Roth conversion that triggers one surcharged year can still be the better long-term decision, which is exactly the trade-off we weigh before choosing a conversion amount. The goal is to make the choice with open eyes, two years ahead of when the bill arrives.
Conversion sizing, withdrawal order, and Medicare premiums are one connected decision. A short call is the place to start.
IRMAA is an income-related surcharge added to Medicare Part B and Part D premiums for households above certain income levels, based on your tax return from two years earlier. Most enrollees never pay it. It's recalculated annually, and you can appeal it when a life event like retirement has lowered your income.
It can. Roth conversions count as income in the year you convert, and Medicare premium surcharges (IRMAA) are based on your income from two years earlier, so a large conversion can trigger a temporary increase. We weigh that cost against the long-term tax benefit before recommending a conversion amount.
No. It's set one year at a time, based on each year's two-year-old tax return. A single high-income year, from a conversion or a home sale for example, raises your premium for one year and then rolls off when a lower-income return takes its place. Nothing about it compounds or sticks.
The Social Security Administration publishes them, and Medicare.gov carries the same tables. The dollar amounts adjust most years, which is why I describe the mechanism here instead of printing numbers that would go stale. If you're planning a conversion or a large withdrawal, check the current table for the year in question first.