Medicare IRMAA: Why Retirement Income Can Change Your Premium

What IRMAA is

IRMAA stands for Income-Related Monthly Adjustment Amount. It is an additional amount some higher-income Medicare beneficiaries pay for Part B and Part D.

The important planning point is that Medicare premiums can depend on income from an earlier tax year. That means a retirement-income decision today can affect Medicare costs later.

The 2026 baseline

For 2026, CMS lists the standard full Part B premium at $202.90 per month.

For beneficiaries above the 2026 income thresholds, Part B premiums rise through several IRMAA tiers. Part D also has separate income-related monthly adjustment amounts added to the underlying drug-plan premium.

For 2026, the first IRMAA tier begins above modified adjusted gross income of:

• $109,000 for an individual return; and
• $218,000 for a joint return.

Those numbers are specific to 2026. Thresholds and premiums can change each year.

Why there is a lookback

Social Security generally determines IRMAA using tax-return information from an earlier year. For 2026 premiums, the published SSA tables generally reference 2024 MAGI when available.

That creates a planning lag.

A large income event in one year — such as a Roth conversion or realized capital gain — can therefore show up later as a higher Medicare premium.

A simplified example

Imagine a married retired couple normally has MAGI of $190,000.

They are below the first 2026 joint IRMAA threshold of $218,000.

Now imagine they add a $75,000 taxable Roth conversion in the income year used for the Medicare lookback. Their modeled MAGI becomes $265,000.

Under the 2026 published joint thresholds, that could move them into an IRMAA tier.

The wrong conclusion would be:

“Never do the Roth conversion because IRMAA is bad.”

The right comparison is:

“Does the long-term tax and retirement value of this conversion exceed the current tax plus any later Medicare surcharge it creates?”

IRMAA is a cost of the decision, not automatically a veto.

Income events that can matter

Depending on the tax situation, MAGI can be affected by items such as:

• Traditional IRA or 401(k) withdrawals;
• Roth conversions;
• realized capital gains;
• business income;
• taxable interest;
• certain other income items.

That is why retirement tax planning and Medicare premium planning should not live in separate spreadsheets.

What if income fell because of a life change?

Social Security has procedures for certain qualifying life-changing events that can support an IRMAA redetermination when current income is materially lower than the older tax return suggests.

Examples can include retirement or loss of work, depending on the facts and current SSA rules.

Do not assume every income decline qualifies. Use the current SSA process and documentation requirements.

Common mistakes

• Looking only at the standard Part B premium.
• Using last year's IRMAA thresholds for the current premium year.
• Forgetting the income lookback.
• Treating a tax-efficient Roth conversion as automatically efficient after Medicare costs.
• Avoiding useful income simply to stay below a threshold without measuring the dollars involved.
• Ignoring Part D IRMAA because the drug-plan premium is billed separately.
• Assuming a temporary high-income year can never be appealed after a qualifying life event.

A practical retirement-income workflow

For a household approaching Medicare age:

1. Estimate Social Security and pension income.
2. Estimate baseline Traditional-account withdrawals.
3. Add expected capital gains, interest and other taxable income.
4. Compare that MAGI with the current IRMAA thresholds.
5. Test discretionary Roth conversions in smaller increments rather than one giant all-or-nothing number.
6. Compare added federal/state tax plus potential IRMAA with the projected long-term benefit.
7. Recheck CMS/SSA thresholds every year.

Bottom line

IRMAA turns Medicare into part of retirement tax planning. It should be modeled explicitly, especially around Roth conversions and large gains, but it should not control the entire plan. The goal is to optimize total household economics, not simply minimize one premium line.