The Medicare Surcharge Nobody Warns You About
You did everything right. You saved, you planned, and you finally signed up for Medicare. Then a letter from Social Security arrives saying your premium will be hundreds of dollars higher than your neighbor's.
That's IRMAA. Most people have never heard of it until it shows up on their bill, and by then it's based on income from two years earlier. The good news: once you understand how it works, much of it can be planned around.
The short version:
- IRMAA is an extra Medicare charge that kicks in when your income crosses certain lines, starting at $109,000 single or $218,000 married (2026).
- It's based on your income from two years ago, so a big year at 63 can raise your bill at 65.
- Tax-free Roth income, smart timing and the right paperwork can help keep it from catching you off guard.
What IRMAA Is
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 passes certain levels. For 2026, the standard Part B premium is $202.90 a month. Cross the first income line, and you pay more. Every month. For the whole year. If you're collecting Social Security, the extra amount comes right out of your check.
Here are the 2026 brackets from CMS. They're based on your modified adjusted gross income from 2024:
Swipe the table to see all columns →
| Income: single filer | Income: married filing jointly | Total Part B premium / month | Part D surcharge / month | Extra cost per person / year |
|---|---|---|---|---|
| Up to $109,000 | Up to $218,000 | $202.90 | $0 | $0 |
| $109,001 to $137,000 | $218,001 to $274,000 | $284.10 | $14.50 | $1,148 |
| $137,001 to $171,000 | $274,001 to $342,000 | $405.80 | $37.50 | $2,885 |
| $171,001 to $205,000 | $342,001 to $410,000 | $527.50 | $60.40 | $4,620 |
| $205,001 to $499,999 | $410,001 to $749,999 | $649.20 | $83.30 | $6,355 |
| $500,000 or more | $750,000 or more | $689.90 | $91.00 | $6,936 |
For a married couple, both spouses pay it. In the second bracket alone, that's about $2,300 a year in extra premiums for the household.
How It Sneaks Up on You
The two-year lookback
Social Security sets your premium using your tax return from two years earlier. Your 2026 premium is based on 2024 income. So a big income year at 63 can raise your Medicare bill at 65, long after you've forgotten about it.
The usual triggers
- Required minimum distributions (RMDs). Once they start, withdrawals from traditional IRAs and 401(k)s are added to your income whether you need the money or not.
- A large Roth conversion. The converted amount counts as income in the year you convert.
- Selling a home, a business or investments at a large gain.
- A big one-time IRA withdrawal for a car, a roof or helping family.
- Pension and Social Security income stacking on top of everything else.
Here's how quickly RMDs alone can add up. A $500,000 traditional IRA at age 73 requires a first-year withdrawal of about $18,868, using the IRS Uniform Lifetime Table (a divisor of 26.5). That amount typically rises each year, and it's generally taxable income stacked on top of Social Security and any pension. (RMDs start at 73, or 75 if you were born in 1960 or later.)
The cliff
IRMAA doesn't phase in gradually. Go one dollar over a bracket line and you pay the full surcharge for that bracket. For a married couple, $1 of extra income at the first line can cost about $2,300 in extra premiums for the year.
Ways to Plan Around It
You can't make IRMAA disappear, but you can often keep it from catching you off guard.
- Build tax-free income. Qualified Roth IRA withdrawals aren't counted in the income Social Security uses for IRMAA. An annuity held inside a Roth can turn that into a tax-free paycheck for life that won't push your Medicare premiums higher. One catch: for Roth withdrawals, including annuity income, to be fully tax-free, you generally need to be 59½ or older and have had your first Roth IRA open at least five years. That clock starts January 1 of the year of your first Roth contribution or conversion, so starting sooner matters. (Read more about Roth annuities here.)
- Time your Roth conversions. Because of the two-year lookback, conversions done before the year you turn 63 generally won't affect your Medicare premiums. After that, many people spread conversions over several years to stay under a bracket line.
Is a conversion worth it close to retirement? Not always. You pay the tax now, so it tends to pay off when:
- your tax rate today is the same as or lower than what you expect later
- the money has years to grow tax-free
- you can pay the tax from savings outside the IRA
For many people, the best time is the years after work stops but before Social Security and required withdrawals begin. Just keep an eye on the IRMAA lines from age 63 on.
- Plan your withdrawals around the bracket lines. Knowing where the cliffs are lets you decide which account to pull from, and how much, each year.
- Give from your IRA. At age 70½ or older, a qualified charitable distribution sends money straight from your IRA to a charity. It can count toward your RMD and isn't included in your income.
- Appeal if your life changed. If your income dropped because of a life-changing event such as retiring, losing a spouse, divorce or losing a pension, you can ask Social Security to use your more recent income with Form SSA-44. Many new retirees qualify the year they stop working and never know to ask.
The right mix depends on your full tax picture, so coordinate any of these with your tax professional.
Ask Yourself These Questions
- Do you know which IRMAA bracket your income will put you in two years from now?
- When your RMDs start, how close will they push you to the first bracket line?
- If you're planning a Roth conversion, home sale or large withdrawal, have you checked what it does to your Medicare premiums?
- How much of your retirement income is tax-free today?
- What would an extra $2,300 a year in Medicare premiums mean for your household, every year, for the rest of retirement?
If any of those made you pause, it's worth mapping out before it shows up on your Medicare bill. I appreciate you taking the time to look ahead; most people don't until the letter arrives. My free video, How to Create Your Own Pension-Style Paycheck That Lasts for Life, shows how guaranteed income, including tax-free income from a Roth, can fit into your plan. No cost, no obligation, and no pressure.
Watch the Free Video →Aaron Wilhelm, President, Wilhelm Wealth
Aaron Wilhelm is a licensed insurance agent (FL License #W557952, CA License #0M57473). IRMAA brackets and premiums shown are 2026 figures from CMS and change each year. Annuity guarantees are backed by the claims-paying ability of the issuing insurance company. Tax-free treatment of Roth IRA withdrawals depends on meeting IRS requirements. This article is educational information, not tax, investment or legal advice; consult a tax professional about your situation.
Sources
- 2026 Medicare Parts A & B Premiums and Deductibles, CMS
- What Is Modified Adjusted Gross Income (MAGI)?, Social Security Handbook §2501
- 20 CFR §418.1205, Major life-changing events, Social Security Administration
- Form SSA-44, Life-Changing Event, Social Security Administration
- Seniors can reduce their tax burden by donating to charity through their IRA, IRS
- Publication 590-B, Distributions from IRAs, IRS