How does Medicare IRMAA work?

Medicare premiums increase each year. Those recipients whose income exceeds certain thresholds may see their premiums move even higher due to the IRMAA surcharge.

IRMAA stands for Income Related Monthly Adjustment Amount, according to the Motley Fool. The Social Security Administration determines which Medicare recipients are subject to the IRMAA surcharges for the current year based on their income two years prior.

How the Medicare IRMAA surcharge works

A Medicare recipient would be subject to IRMAA for 2026 based on their modified adjusted gross income (MAGI) for 2024. MAGI is adjusted gross income (AGI) with certain tax-exempt items added back in.

IRMAA is a surcharge added to an eligible Medicare recipient’s Part B (medical insurance) and Part D (prescription drug coverage) monthly premiums for the appropriate year. For 2026, the impact of IRMAA on Medicare premiums as outlined by the Social Security Administration based on 2024 MAGI is:

Single filers MAGI/Married filing jointly MAGI

Part B premium

Part D premium IRMAA

$109,000 or less/$218,000 or less

$202.90

$0

$109,001 to $137,000/$218,001 to $274,000

$284.10

$14.50

$137,001 to $171,000/$274,001 to $342,000

$405.80

$37.80

$171,001 to $205,000/$342,001 to $410,000

$527.50

$60.40

$205,001 to $499,999/$410,001 to $749,999

$642.20

$83.30

$500,000 or more/$750,000 or more

$689.90

$91.00

What type of income triggers IRMAA?

Since IRMAA is calculated based on your MAGI, virtually all types of income can trigger the IRMAA surcharge. This includes:

Earnings from employment or self-employmentInvestment income such as capital gains, interest, and dividendsA pension or the taxable portion of Social Security benefitsTax-exempt income, as this is added back in to calculate MAGIIncome from required minimum distributions (RMDs)Annuity paymentsRoth conversionsIncome from retirement account distributionsHow will you know if you are subject to IRMAA?

The Social Security Administration (SSA) is responsible for reviewing the tax returns of Medicare recipients and informing them if they will be subject to IRMAA for the current year based on their income from two years prior.

SSA will generally send a notice in the November or December prior to the year to which the IRMAA surcharge applies.

Appealing an IRMAA decision

You can appeal the notice sent by the Social Security Administration. Appeals are often based on a life-changing situation that will impact your income going forward. Or in some cases, the SSA based the IRMAA calculation on incorrect or outdated information.

Appeals can be made:

In person by visiting a Social Security officeBy mail using form SSA-44By phone at 1-800-772-1213

Examples of life-changing situations that might qualify to reverse an IRMAA assessment include:

Death of a spouseMarriageDivorce or the annulment of a marriageLoss of a job or reduced hours for you or a spouseLoss of an income producing property for reasons beyond your control, such as a natural disasterLoss of a pension benefitReceipt of a settlement payment from a former employer due to that employer declaring bankruptcy or their closure

An appeal can also be made if you determine that the SSA used incorrect or outdated information in making its IRMAA determination.

You filed an amended tax return for that tax year that was not used by SSA in making their IRMAA determination.You filed a more recent return with a lower level of income than the one used by the SSA.

A doctor speaks with a Medicare patient at a hospital.

Image source: Shutterstock

Reducing IRMAA for future years

You can reduce or eliminate the impact of IRMAA in future years by taking these steps:

If you are able to itemize deductions on your tax return, charitable deductions can be an excellent way to reduce your income. This can include cash donations, donations of appreciated stock, ETFs, and other securities as well as gifts to a donor advisor fund.Those who are at least age 70-and-a-half can take qualified charitable distributions (QCDs) from a traditional IRA. These are tax-free distributions that will reduce the amount of future RMDs. If taken in a year when you must take an RMD, the QCD can be used to offset some or all of your RMD, reducing your income from the RMD.Roth conversions can reduce the amount of future RMDs and the income from them. It’s important to note, however, that Roth conversions will be taxed in the year of the conversions.If you are working and drawing Medicare benefits, be sure to contribute to your employers retirement plan on a pre-tax basis into a traditional option. The same holds true for those who are self-employed with their self-employed retirement plan.

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