Sebastian Frey( Seasoned Professional )

Seb Frey is a REALTOR® and founder of Team Sixty Plus, a curated network connecting older adults and their families with trusted professionals across California. With decades of experience helping homeowners 60+ navigate major life transitions—like downsizing, aging in place, or passing on a legacy—Seb brings deep market knowledge, a compassionate approach, and a commitment to simplifying complex decisions. When he’s not advising clients, he’s sharing expert insights on real estate, retirement strategies, and quality-of-life resources for the 60+ community.

You did everything right. You saved for decades, built a healthy nest egg, and finally retired. Then a letter arrives from Social Security saying your Medicare premiums are going up, not by a few dollars, but by hundreds or even thousands of dollars a year. No one warned you. You didn’t change your plan or your doctors. The reason is a little-known rule called IRMAA, and it quietly catches thousands of retirees every year, often because of one smart financial move they made two years earlier, like selling a house, converting to a Roth IRA, or taking a large withdrawal.

IRMAA is one of the most frustrating costs in retirement because it feels like a penalty for being responsible with your money. But it’s also one of the most predictable, which means it’s often avoidable. With a little planning, many retirees can stay under the income limits, reduce how long they pay the surcharge, or get it removed altogether when their income drops. Here’s how IRMAA works, the moves that trigger it, and the strategies that can keep more of your retirement cash in your pocket.

Timing note: The official 2027 Medicare Part B premium and IRMAA brackets are usually announced in November. This article uses the official 2026 figures and treats the 2027 thresholds as projections. We’ll update this post once CMS announces the final numbers.

What Is IRMAA?

IRMAA stands for Income-Related Monthly Adjustment Amount. It’s an extra charge added to your Medicare Part B and Part D premiums when your income is above a certain level. Most people pay the standard Part B premium, which is $202.90 a month in 2026. If your income is higher, you pay that standard premium plus an IRMAA surcharge for Part B, and a separate surcharge on top of your Part D drug plan premium.

A few key points make IRMAA different from most retirement costs:

• It applies whether you have Original Medicare or Medicare Advantage. Everyone with Part B pays the Part B surcharge, and everyone with drug coverage through Medicare pays the Part D surcharge, regardless of which plan you choose.
• It’s charged per person. If both spouses are on Medicare, each spouse pays the surcharge, so a married couple pays it twice.
• It’s recalculated every year. Paying IRMAA one year doesn’t mean you’ll pay it forever. If your income drops, the surcharge can go away the following year.
• It’s set by Social Security, not your plan. Social Security determines whether you owe IRMAA using information from the IRS, then sends you a notice explaining the amount.

The Medicare.gov costs page notes that Part B premiums can be “higher depending on your income,” but it’s easy to overlook until the bill arrives.

The Two-Year Lookback That Surprises Everyone

Here’s the part that catches most people off guard: IRMAA is based on your income from two years earlier. Your 2026 Medicare premiums are based on the income on your 2024 tax return. Your 2027 premiums will be based on your 2025 tax return.

That lag creates two common surprises. First, many people get hit with IRMAA in their first year on Medicare because the lookback captures their final, highest-earning working years. Second, a one-time income spike, like selling a rental property or doing a big Roth conversion, can show up as a higher Medicare bill two years later, long after you’ve forgotten about it.

What counts as income for IRMAA?

IRMAA uses a specific measure called modified adjusted gross income (MAGI). For IRMAA purposes, it’s your adjusted gross income (AGI) from your tax return plus any tax-exempt interest, such as interest from municipal bonds. That means MAGI includes things like:

• Wages and self-employment income
• Traditional IRA and 401(k) withdrawals, including required minimum distributions (RMDs)
• Roth conversions
• Pension and annuity income
• The taxable portion of your Social Security benefits
• Interest, dividends, and capital gains, including gains from selling a home above the exclusion amount
• Rental income
• Tax-exempt municipal bond interest

Just as important is what doesn’t count. Qualified withdrawals from a Roth IRA, the non-taxable portion of Social Security, and the return of your own principal from savings don’t add to your IRMAA income.

The 2026 IRMAA Brackets

Here are the 2026 income brackets and what you’d pay each month, per person. Remember, these are based on your 2024 income.

Source: Kiplinger’s 2026 IRMAA brackets. The Part D surcharge is added to whatever premium your drug plan charges. Married couples filing separately have different, stricter thresholds.

At the top bracket, a single person pays an extra $578 a month, or about $6,936 a year, compared with someone paying the standard premium. For a married couple both on Medicare, that’s nearly $14,000 a year.

What about 2027?

The 2027 brackets, which will be based on your 2025 income, are adjusted for inflation and are expected to be announced along with the 2027 Part B premium in November. Early projections suggest the first threshold will rise to roughly $112,000 for single filers and $224,000 for married couples filing jointly, but those figures aren’t official yet. Check Medicare.gov or your Social Security notice for the final numbers before making big income decisions.

The $1 Cliff: Why One Dollar Can Cost You Over $2,000

IRMAA isn’t a gradual increase. It works like a series of cliffs. If your income goes even $1 over a threshold, you pay the full surcharge for that entire bracket for the whole year.

Here’s what that looks like for a married couple, both on Medicare, in 2026:

• With a 2024 MAGI of $218,000, they each pay the standard $202.90 for Part B and no Part D surcharge.
• With a 2024 MAGI of $218,001, they each pay an extra $81.20 for Part B and $14.50 for Part D, or $95.70 more per month.

That single dollar of extra income costs this couple $2,296.80 a year ($95.70 x 12 months x 2 people). Higher brackets have even steeper cliffs. That’s why knowing exactly where the thresholds are, and where your income will land, matters so much in the years leading up to and during retirement.

Common Moves That Trigger IRMAA

Most retirees who get hit with IRMAA aren’t high earners year after year. They have one unusual year. These are the most common triggers.

1. Selling your home

Most homeowners can exclude up to $250,000 of gain from the sale of a primary home ($500,000 for married couples filing jointly). But long-time homeowners in high-cost areas often have gains far above that. Any gain beyond the exclusion becomes taxable income and counts toward IRMAA.

For example, a married couple with a normal MAGI of $150,000 sells the family home they bought decades ago, realizing a $700,000 gain. After the $500,000 exclusion, $200,000 is taxable, pushing their MAGI to $350,000. Two years later, they would each pay an extra $324.60 a month for Part B and $60.40 for Part D, about $9,240 in total for the year, based on the 2026 brackets.

If you’re thinking about selling, How to Minimize Taxes on Your Retirement Income covers strategies for managing big income years, including when to take gains and how to time withdrawals.

2. Roth conversions

Converting money from a traditional IRA to a Roth IRA can be a great long-term strategy, since future Roth withdrawals are tax-free and don’t count toward IRMAA. But the amount you convert is added to your income in the year of the conversion. A large conversion can easily push you into a higher IRMAA bracket two years later.

3. Required minimum distributions (RMDs)

Once you reach the age for required minimum distributions, you must withdraw a certain amount from traditional retirement accounts each year. For people with large IRA or 401(k) balances, those required withdrawals can push income over IRMAA thresholds every year, and the amount grows as you age.

4. Selling investments with large gains

Selling stocks, mutual funds, a business, or a rental property can create large capital gains. Even mutual fund capital gains distributions you didn’t plan for count toward your income.

5. Your final working year

Many people retire mid-year, but their last tax return before Medicare still includes a full or partial year of salary, plus bonuses, unused vacation payouts, or severance. That high income becomes the basis for their first Medicare premiums.

6. Inherited retirement accounts

Under current rules, most non-spouse beneficiaries must empty an inherited IRA within 10 years. Taking large withdrawals from an inherited account can create unexpected IRMAA years.

Smart Ways to Avoid or Reduce IRMAA

The good news is that IRMAA is predictable, so it can often be managed. Here are the most effective strategies.

Know your number before year-end

The simplest step is to estimate your MAGI each fall, before the year ends. If you’re just under a threshold, you may want to delay a sale, a withdrawal, or a Roth conversion until January. If you’re just over one, you may be able to reduce your income with the strategies below. Because the brackets are cliffs, staying even a few dollars under the line can save thousands.

Plan Roth conversions around the brackets

Instead of doing one large Roth conversion, many retirees convert smaller amounts over several years, filling up income only to just below the next IRMAA threshold. The best window is often the years between retirement and when RMDs begin, when income may be lower. Conversions done before age 63 won’t affect Medicare premiums at all, because Medicare looks back only two years from when you enroll at 65.

Use qualified charitable distributions (QCDs)

If you’re 70½ or older and give to charity, a qualified charitable distribution lets you send money directly from your IRA to a qualified charity, up to $111,000 in 2026. The donation counts toward your required minimum distribution, but it isn’t included in your income. That makes QCDs one of the most powerful ways to lower MAGI for IRMAA.

Spread out large gains

If you’re selling investments or property, consider spreading the sales over more than one tax year when possible. An installment sale may also let you spread the gain from selling a business or real estate across several years. Tax-loss harvesting, selling investments at a loss to offset gains, can also reduce your taxable income.

Draw from the right accounts

Having money in different types of accounts gives you flexibility. In a year when your income is close to a threshold, you can take cash from a Roth IRA, a savings account, or a taxable account with little gain instead of a traditional IRA. This is sometimes called tax diversification, and it can be one of the most useful tools for controlling IRMAA.

Watch for hidden income

Municipal bond interest, while free from federal income tax, still counts for IRMAA. Mutual funds that pay large year-end capital gains distributions can also push you over a threshold. Reviewing these items each year can help you avoid surprises.

Your Medicare costs also go beyond IRMAA, and Medicare Part D 2027: Switch Plans Before December 7 and Keep Hundreds More explains how to cut your drug plan costs during Open Enrollment, which ends December 7.

How to Appeal IRMAA When Your Income Drops

If your income has dropped since the tax year Social Security used, you don’t have to wait two years for your premiums to go down. You can ask Social Security to use a more recent year’s income if you’ve had a life-changing event. Qualifying events include:

• Stopping work or reducing your work hours (this is the most common reason)
• Marriage, divorce, or annulment
• Death of a spouse
• Loss of income from income-producing property, such as from a disaster
• Loss or reduction of a pension
• An employer settlement payment due to an employer’s closure or bankruptcy

To request a reduction, you complete Form SSA-44 and provide proof of the event and your new, lower income estimate. You can submit it online, by mail or fax, or by calling Social Security. Social Security’s IRMAA page explains each option. If you filed an amended tax return or believe Social Security used incorrect information, you can also ask them to correct it.

Retiring is the single biggest reason people successfully appeal. If you’re turning 65 shortly after leaving your job, it’s worth filing the SSA-44 as soon as you receive your IRMAA notice. Note that a one-time income spike you chose, like selling a home or doing a Roth conversion, generally doesn’t qualify as a life-changing event.

Social Security income has tax rules of its own, and What You Need to Know About Taxes and Social Security explains when your benefits become taxable and how that affects your overall income picture.

Is IRMAA Ever Worth Paying?

Sometimes, yes. IRMAA is a cost, but it shouldn’t be the only factor in a financial decision. A large Roth conversion that triggers one year of IRMAA could still save you far more in taxes over the rest of your life, especially if it reduces your future RMDs and the IRMAA they would cause year after year. Selling a property at the right time might matter more than the surcharge.

The key is to make the trade-off on purpose. Before any big income decision in your 60s, estimate the IRMAA cost alongside the tax cost. A fee-only financial planner or tax professional can run the numbers for your situation and help you decide whether paying IRMAA for a year makes sense.

Everyone Needs a Little Help Sometimes

There’s so much to know when it comes to lifestyle choices for Older Adults, it’s hard to know even where to begin. One way is to simply click on the button below and let one of our coaches give some guidance – at no cost to you.

Get Help Now

Your IRMAA Checklist

Use this short checklist each year to stay ahead of IRMAA:

• Every fall: Estimate your MAGI for the current year and compare it with the IRMAA thresholds. Remember that this year’s income sets your premiums two years from now.
• Before a big financial move: Estimate both the tax and the IRMAA impact of selling a home, converting to a Roth, selling investments, or taking a large withdrawal.
• Before December 31: Consider delaying income into January, harvesting tax losses, or making a qualified charitable distribution if you’re close to a threshold.
• When your IRMAA notice arrives: Check that Social Security used the right tax year and the right numbers.
• After a life-changing event: If you retired, cut back on work, divorced, or lost a spouse, file Form SSA-44 as soon as possible.
• When you’re married: Remember that both spouses on Medicare pay the surcharge, so the cost of crossing a threshold doubles.

If you’re not sure where you stand, bring your last two tax returns and your Social Security notice to a tax professional or fee-only financial planner. A one-hour review can reveal whether you’re near a cliff and which moves could keep you on the right side of it.

Plan Two Years Ahead and Keep More of Your Retirement Cash

IRMAA rewards people who plan ahead and penalizes those who don’t. Because Medicare looks back two years, the decisions you make about home sales, Roth conversions, investment gains, and IRA withdrawals today will shape your Medicare bills in the future. A single dollar over a threshold can cost a couple more than $2,000, while smart timing, qualified charitable distributions, and the right withdrawal strategy can keep you below the line year after year.

Start by checking your most recent Social Security notice and estimating where your income will land this year. If you’re close to a threshold, talk with a tax professional before December 31. And if your income has dropped because you retired or lost a spouse, file Form SSA-44 right away. A little planning now can free up hundreds or even thousands of dollars a year to spend on the things that make life after 60 worth living.

This article is for educational purposes and isn’t personalized tax, insurance, or financial advice. Medicare premiums and IRMAA thresholds change every year; confirm current figures with Social Security, Medicare.gov, or a qualified professional before making decisions.

Sebastian Frey Seasoned Professional

Seb Frey is a REALTOR® and founder of Team Sixty Plus, a curated network connecting older adults and their families with trusted professionals across California. With decades of experience helping homeowners 60+ navigate major life transitions—like downsizing, aging in place, or passing on a legacy—Seb brings deep market knowledge, a compassionate approach, and a commitment to simplifying complex decisions. When he's not advising clients, he's sharing expert insights on real estate, retirement strategies, and quality-of-life resources for the 60+ community.

See Full Bio