Income-Related Monthly Adjustment Amount (IRMAA) is a surcharge added to some Original Medicare premiums for people with higher incomes. The thresholds are established for each new year.
The Medicare premiums affected by IRMAA are:
- Medicare Part B (doctor visits, outpatient care)
- Medicare Part D (prescription drug plans)
To determine if an individual or couple owes an IRMAA, Medicare looks at your income from 2 years ago (a 2-year look back). For example, your 2026 Medicare premiums are based on your 2024 tax return. They look specifically at your Modified Adjusted Gross Income (MAGI) from your IRS filing. Next, they compare this MAGI to the IRMAA brackets to determine your particular surcharge. The brackets are broken down into income tiers much like tax brackets. The higher your income, the higher the surcharge.
There are different brackets or thresholds for Single filers, Married filing jointly, and Married filing separately and these thresholds change slightly each year.
If you are over a threshold, you pay the Original Medicare Part B monthly premium, plus an added surcharge based on the tier structure. In addition, you will pay your Part D plan premium, plus a separate IRMAA surcharge for (paid to Medicare, not your drug plan).
IRMAA is typically deducted from your Social Security check, however, if you’re not collecting Social Security yet, Medicare sends you a bill.
Next, we’ll cover some common situations that trigger IRMAA. If that two-year look back was a year that you had a one-time income spike—this can cause IRMAA, such as: selling a business or property, large capital gains, Required Minimum Distributions (RMDs), ROTH conversions, and bonuses or severance pay to name a few.
The good news is that if it was a one-time occurrence causing the spike in income, you can appeal IRMAA for the next year of that 2-year look back.
In addition, you may be able to get IRMAA reduced or removed if your income dropped due to a life-changing event, such as: Retirement or reduced work hours; Death of a spouse; Divorce; Loss of income-producing property; and Employer settlement payout that is ending.
The appeal needs to be filed by both spouses if you are filing a joint return. You utilize Form SSA-44 from Social Security—and you can fax it into your local SS office.
Keep in mind that IRMAA is not a penalty—it’s an income-based surcharge. It is based on old tax data (2 years back). It can be appealed if your current income is lower. And most importantly, planning income in retirement can help avoid or reduce IRMAA, so working closely with a CFP or CPA is advisable.
Nanette Makrauer is an independent insurance broker and Certified Medicare Advisor residing in Bluffton. nanette@health-wealth-insurance.com (www.health-wealth-insurance.com)