Higher Income, Higher Medicare Premiums.
Here's What You Need to Know.
If your income exceeds certain thresholds, Medicare charges you more for Parts B and D. It's called IRMAA — and most people don't find out about it until the bill arrives.
What Is IRMAA?
IRMAA stands for Income-Related Monthly Adjustment Amount. It's a surcharge added on top of your standard Medicare Part B and Part D premiums if your income is above a certain threshold. It's not a penalty — it's a means-tested premium adjustment that roughly 7% of Medicare enrollees pay.
The surcharge is determined by Social Security using your tax return from two years prior. So your 2026 Medicare premiums are based on your 2024 income. That two-year lag catches a lot of people off guard — especially those who just retired and had a high-income year.
The Two-Year Lookback Rule
Social Security looks back two years at your Modified Adjusted Gross Income (MAGI) to set your Medicare premium for the current year.
(tax return filed)
MAGI in 2025
premium is set
MAGI = Adjusted Gross Income + tax-exempt interest income
2025 IRMAA Income Brackets & Surcharges
Brackets and surcharge amounts are adjusted annually by Medicare. The figures below apply to 2025 coverage based on 2023 income. Confirm current-year amounts with us or at Medicare.gov.
| Individual MAGI | Married Filing Jointly | Part B Monthly Premium | Part D Surcharge |
|---|---|---|---|
| $106,000 or less Base | $212,000 or less | $185.00 | $0 |
| $106,001 – $133,000 | $212,001 – $266,000 | $259.00 | + $13.70/mo |
| $133,001 – $167,000 | $266,001 – $334,000 | $370.00 | + $35.30/mo |
| $167,001 – $200,000 | $334,001 – $400,000 | $480.90 | + $57.00/mo |
| $200,001 – $500,000 High | $400,001 – $750,000 | $591.90 | + $78.60/mo |
| Above $500,000 Highest | Above $750,000 | $628.90 | + $85.80/mo |
ⓘ Part D surcharges are added on top of your plan's existing premium. Married filing separately has different thresholds. Amounts shown are per person, per month.
Your Income Dropped? You Can Appeal.
If you experienced a significant reduction in income due to a qualifying life event, you can ask Social Security to use a more recent year's income instead of the two-year lookback. This is done using Form SSA-44.
Qualifying life events that allow an appeal:
RetirementYou stopped working or reduced your hours significantly.
Spouse's DeathYour filing status or household income changed due to the loss of a spouse.
Divorce or AnnulmentYour marital status changed and affected your income.
Loss of Income-Producing PropertyProperty was lost due to a disaster or other involuntary event.
Loss of PensionPension income was reduced or ended due to termination or reorganization.
Employer SettlementYou received a settlement from an employer due to bankruptcy or closure.
Planning Strategies to Minimize IRMAA
IRMAA is manageable with the right planning. These strategies are worth discussing with your financial advisor — Bryan can help coordinate the Medicare side of the picture.
📈 Roth Conversions Before Medicare Eligibility
Converting traditional IRA funds to a Roth IRA before age 63 can reduce your future MAGI in retirement. Roth distributions in retirement are not counted toward MAGI, which means they don't trigger IRMAA surcharges. The key is timing conversions in the years before you enroll in Medicare.
Discuss with your CPA or financial advisor — Roth conversions create taxable income in the conversion year.
🏦 Qualified Charitable Distributions (QCDs)
If you're 70½ or older, you can donate up to $105,000 per year directly from your IRA to a qualified charity. This satisfies your Required Minimum Distribution (RMD) without the distribution counting as taxable income — which can keep you in a lower IRMAA bracket.
Confirm eligibility and rules with your financial advisor or tax professional.
📅 Managing Capital Gains Timing
Large capital gains — from selling a business, investment property, or stock portfolio — can spike your MAGI in a single year and push you into a higher IRMAA bracket two years later. Where possible, spreading gains across multiple tax years or using installment sales can help smooth the impact.
Work with your financial planner on timing — Medicare planning should be part of any major liquidity event.
📋 Health Savings Accounts (HSAs)
If you're still working and enrolled in a high-deductible health plan, maximizing HSA contributions reduces your MAGI for that year. Note: once you enroll in Medicare, you can no longer contribute to an HSA — but you can still spend down existing HSA funds tax-free on Medicare premiums and medical costs.
HSA contribution rules are complex around Medicare enrollment. We can help you time your Medicare enrollment to avoid compliance issues.
🔎 Appeal Every Year Income Drops
IRMAA is recalculated annually. If your income dropped significantly in the prior year — due to retirement, required distributions ending, selling fewer assets — your surcharge should decrease automatically. File SSA-44 if you had a qualifying life event and don't want to wait for the two-year lookback to catch up.
Does IRMAA Affect Which Medicare Plan You Should Choose?
It can — here's why. If you're already paying a significant IRMAA surcharge on top of your Part B premium, adding a Medicare Supplement (Medigap) plan means you're paying three separate premiums: Part B, IRMAA surcharge, and the Medigap premium. For some high-income enrollees, a Medicare Advantage plan with low or $0 premium may make the overall cost picture more attractive.
On the other hand, high-income retirees often have significant health needs and value the freedom to see any specialist nationwide without a referral — which points toward Medigap. There's no universal right answer. BCS Insurance Group evaluates both paths with you based on your actual doctors, prescriptions, travel habits, and total out-of-pocket exposure.
IRMAA Is Manageable With the Right Guidance.
Bryan works with high-income retirees and their advisors to navigate Medicare in a way that fits the full financial picture — not just the insurance piece. If IRMAA is a factor in your situation, a conversation now is worth far more than a surprise bill later.
Free, no obligation, no pressure.