IRMAA and Retirement Income: How Medicare Premiums Rise for High Earners

IRMAA (Income-Related Monthly Adjustment Amount) adds a surcharge to Medicare Part B and Part D premiums for beneficiaries whose modified adjusted gross income (MAGI) exceeds thresholds. The surcharge uses the taxpayer’s MAGI from two years prior, so 2026 premiums reflect 2024 income. Both spouses on Medicare may be charged.

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Because the SSA uses a two-year look-back, a spike in 2024 earnings—such as exercising stock options, selling a business, realizing real-estate gains, taking required minimum distributions, or completing a large Roth conversion—can raise 2026 Medicare premiums even if current income is lower.

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For 2026, the base Part B premium is $202.90. Single filers with 2024 MAGI up to $109,000 (joint up to $218,000) pay the base rate. The next tier ($109,001-$137,000 single; $218,001-$274,000 joint) raises Part B to $284.10. Higher tiers raise Part B to $405.80 (plus $14.50 Part D), $527.50 (plus $37.50), $649.20 (plus $60.40) and $689.90 (plus $91.00) for the top bracket.

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Over retirement, IRMAA can add tens of thousands of dollars in premiums, shrinking resources for travel, charitable giving, or family support. Because the surcharge recurs monthly, uncoordinated income decisions can compound costs throughout retirement.

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The SSA issues an initial determination notice when it identifies a potential IRMAA liability. The notice explains the surcharge and how to request a new determination after qualifying life-changing events such as retirement, reduced work, marriage, divorce, spouse death, or loss of income-producing property. Ignoring the notice can lead to continued overpayment.

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Commentators label IRMAA a “wealth tax by another name,” arguing it penalizes high-income retirees. Critics also note abrupt bracket cliffs and frequent failure of affluent retirees to respond to SSA notices, causing inadvertent overpayment.

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• “In plain English, IRMAA is a wealth tax by another name for retirees with substantial taxable income.” — David Rae, Certified Financial Planner

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• “When you start Medicare, the Social Security Administration sends an initial determination notice if it believes you owe IRMAA.” — David Rae

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• “It is added to your monthly Medicare Part B premium and to your Medicare Part D prescription drug plan premium.” — David Rae

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• “The Medicare surcharge may not be the only reason to adjust your plan, but it is one more reason not to make major financial decisions in isolation.” — David Rae

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Advisors counsel retirees to align tax planning with withdrawal strategies to stay below IRMAA thresholds. Tactics include spreading large capital gains, timing Roth conversions, and moderating required minimum distributions. Regularly projecting MAGI helps maintain lower Medicare premiums throughout retirement.

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