Medicare IRMAA: How High Earners Pay More for Medicare and How to Appeal

The Income-Related Monthly Adjustment Amount (IRMAA) is a Medicare surcharge applied to beneficiaries whose income exceeds certain thresholds. Introduced in 2007 for Part B and 2011 for Part D, IRMAA uses your Modified Adjusted Gross Income (MAGI) from two years prior to determine your current year surcharge. This means your 2024 Medicare premiums are based on your 2022 tax return. About 7% of Medicare beneficiaries pay IRMAA, but the surcharges can be substantial, adding up to $419.30/month to Part B and $81.00/month to Part D in 2024. Understanding the brackets and your options is essential for retirement income planning.

2024 IRMAA Brackets (Part B)

• Standard: ≤$103,000 individual / ≤$206,000 joint

  Standard Part B premium: $174.70/month. No IRMAA surcharge. This covers approximately 93% of all Medicare beneficiaries.

• Tier 1: $103,001–$129,000 / $206,001–$258,000

  Total Part B premium: $244.60/month (+$69.90 surcharge). Part D IRMAA: +$12.90/month.

• Tier 2: $129,001–$161,000 / $258,001–$322,000

  Total Part B premium: $349.40/month (+$174.70 surcharge). Part D IRMAA: +$33.30/month.

• Tier 3: $161,001–$193,000 / $322,001–$386,000

  Total Part B premium: $454.20/month (+$279.50 surcharge). Part D IRMAA: +$53.80/month.

• Tier 4: $193,001–$500,000 / $386,001–$750,000

  Total Part B premium: $559.00/month (+$384.30 surcharge). Part D IRMAA: +$74.20/month. At the highest tier (>$500K individual), premium reaches $594.00/month.

Because IRMAA uses income from two years ago, it can create an unfair surcharge if your income dropped significantly, due to retirement, job loss, divorce, death of a spouse, or a reduction in work hours. SSA Form SSA-44 (Medicare Income-Related Monthly Adjustment Amount, Life-Changing Event) allows you to request a reduction using more recent income. Qualifying events include marriage, divorce or annulment, death of a spouse, loss of income-producing property, loss of pension income, and employer settlement payments. File the form at your local Social Security office or online.

For retirement income planning, be aware that Roth conversions, sale of property, and required minimum distributions (RMDs) from traditional IRAs all count toward MAGI for IRMAA purposes. Working with a financial planner to manage income in the years before Medicare enrollment can prevent unexpected surcharges. Qualified Opportunity Zone investments and strategic charitable contributions through Qualified Charitable Distributions (QCDs) from IRAs are two tools that can reduce MAGI without reducing actual wealth.

IRMAA is determined using your modified adjusted gross income (MAGI) from the tax return filed 2 years prior to the current year. For 2026 premiums, Social Security uses your 2024 tax return. Your MAGI includes adjusted gross income plus tax-exempt interest income. For individuals with MAGI above $103,000 (or $206,000 for married couples filing jointly), the Part B premium surcharge ranges from approximately $70 to $395 per month above the standard premium, depending on income level. Part D IRMAA adds $13 to $81 per month to your prescription drug plan premium at the same income thresholds. The highest IRMAA tier applies to individuals earning above $500,000 (or $750,000 for couples), resulting in total Part B premiums exceeding $560 per month. IRMAA is determined annually and adjusts as your income changes, meaning a one-time spike in income (from selling a property or taking a large retirement account distribution) triggers higher premiums for only one year.

Several legitimate strategies can help reduce your IRMAA surcharges. If you experienced a qualifying life-changing event that reduced your income since the tax year used for the IRMAA calculation, you can request a new determination using more recent income data. Qualifying events include marriage, divorce, death of a spouse, work stoppage or reduction, loss of income-producing property, and loss of pension. File Form SSA-44 with Social Security along with documentation of the qualifying event and your current income. Proactive income planning strategies include managing the timing of retirement account withdrawals, Roth IRA conversions, and capital gains realization to avoid crossing IRMAA thresholds. Converting traditional IRA funds to Roth IRA accounts over several years before age 63 (2 years before Medicare eligibility) can reduce future required minimum distributions that push income into IRMAA brackets. Charitable contributions from IRA accounts through Qualified Charitable Distributions (QCDs) after age 70.5 satisfy required minimum distributions without increasing MAGI. Working with a financial advisor who understands the interaction between retirement income planning and Medicare costs can save thousands of dollars annually in IRMAA surcharges.

Many Medicare beneficiaries are surprised by IRMAA because they do not realize that Medicare premiums are income-dependent or that the determination uses income data from 2 years prior. A common misconception is that IRMAA applies only to wealthy individuals; in reality, moderate-income retirees can trigger IRMAA surcharges through one-time income events like selling a home, taking a large distribution from a retirement account, or receiving an inheritance with taxable income. Another mistake is failing to appeal when a life-changing event has reduced income, as many eligible beneficiaries simply accept the higher premium without realizing they can request a reassessment. Timing large financial transactions to avoid crossing IRMAA thresholds can produce significant savings: the difference between being just below and just above the first IRMAA threshold is approximately $840 per year in additional premiums for Part B alone. For married couples, both spouses may be subject to IRMAA if both are Medicare beneficiaries, doubling the impact. Planning for IRMAA should be an integral part of retirement income strategy alongside tax planning and Social Security optimization.

The financial impact of IRMAA extends beyond the immediate premium increase because these surcharges are not tax-deductible for most beneficiaries, making the effective cost even higher. For a married couple with both spouses on Medicare, IRMAA surcharges at the highest tier can add over $12,000 per year in additional Medicare premiums. This significant ongoing cost makes proactive income planning especially important during the years immediately before and after Medicare enrollment. Consider the timing of major financial events carefully: selling an investment property, exercising stock options, taking a large 401k distribution, or completing a Roth conversion should ideally be planned to minimize the impact on your two-years-ahead IRMAA calculation. Working with both a tax professional and a financial advisor who understand the Medicare IRMAA rules ensures that your retirement income strategy accounts for this often-overlooked cost.