Medicare IRMAA Surcharges Explained: Lookback and Appeals

Most people expect Medicare to cost the same for everyone. Then a letter arrives from Social Security in the fall before they turn 65, or in the year after a big income event, announcing that their Part B and Part D premiums will be several hundred dollars a month higher than the standard amount. That extra charge is the Medicare IRMAA, the income-related monthly adjustment amount, and it catches high earners, business owners who just sold a company, and retirees who did a large Roth conversion.

IRMAA is not a tax on your Medicare benefits; it is a higher premium based on income from two years earlier. It is assessed per person, so a couple can pay it twice. And it works on cliffs: one extra dollar of income can add thousands of dollars in premiums for the year.

This guide explains how IRMAA is calculated, what the two-year lookback means for your planning, how the tiers work, how to appeal when your income has dropped, and the strategies that keep income under the thresholds. It is educational rather than individualized advice. The official figures are published each fall by Medicare and Social Security, and our tax planning team monitors them for clients approaching 65.

What Medicare IRMAA Is and Who Pays It

Medicare Part B (doctor visits and outpatient care) and Part D (prescription drugs) are financed partly by premiums. For most enrollees, the standard Part B premium covers about a quarter of the program's cost, and the government pays the rest. IRMAA reduces that subsidy for higher-income beneficiaries by adding a surcharge to the premium. For 2026, the standard Part B premium is $202.90 per month, and beneficiaries in the highest IRMAA tier pay more than three times that.

The surcharge applies to Part B and separately to Part D, including drug coverage embedded in a Medicare Advantage plan. It is paid to Medicare, not to your Part D insurer, and is usually deducted from your Social Security check. If you are not yet collecting Social Security, you are billed directly. The Social Security Administration determines who owes IRMAA using tax data from the IRS, and it explains the process on its Medicare premiums page.

How the Two-Year Lookback Works

IRMAA for a given year is based on the modified adjusted gross income shown on your tax return from two years earlier. Your 2026 premium is based on your 2024 return, which was filed in 2025 and is the most recent one the IRS had fully processed when Social Security made its determinations. If you turn 65 in 2026, your first Medicare premiums reflect what you earned at 63.

For working professionals, this creates a predictable but unwelcome result. A physician who retires in June 2026 at 65 will pay IRMAA in 2026 and 2027 based on full working-year income from 2024 and 2025, even though retirement income is far lower. That is exactly the situation the appeal process was built for, and we cover it below.

Modified adjusted gross income for IRMAA purposes is your adjusted gross income plus tax-exempt interest. It therefore includes wages, business income, taxable Social Security, pension income, IRA and 401(k) distributions, Roth conversions, capital gains, dividends, rental income, and municipal bond interest. It does not include Roth IRA withdrawals, HSA distributions for medical expenses, qualified charitable distributions, or the return of basis on a sale.

Medicare IRMAA Tiers for 2026

IRMAA has five surcharge tiers above the base level. For 2026, the surcharge begins when 2024 MAGI exceeded $109,000 for a single filer or $218,000 for a married couple filing jointly. Each higher tier adds a larger surcharge to both Part B and Part D, and the top tier begins at $500,000 single or $750,000 joint, thresholds that are not indexed for inflation. Married people who file separately face a compressed schedule in which the surcharge starts at the same $109,000 but jumps quickly to the highest tiers.

The exact premium at each tier changes annually. Medicare publishes the current schedule on its Medicare costs page, and that is the figure to use rather than a table in an article that may be out of date. Two features are worth memorizing, though, because they do not change.

It is a cliff

IRMAA is not marginal. If the first threshold is $218,000 for a couple and your MAGI is $218,001, both spouses pay the full first-tier surcharge for the entire year. At the first tier, that is roughly $1,000 to $1,100 per person per year for Part B and a smaller amount for Part D, or well over $2,000 for the couple. At the higher tiers, one dollar over can cost more than $6,000 for a couple. This is why year-end income planning near a threshold is worth the effort.

It resets every year

IRMAA is recalculated annually from the return two years prior. A single high-income year, such as the year you sell a rental property or convert a large IRA balance, produces one year of higher premiums, not a permanent increase. That makes IRMAA a cost to be weighed against the benefit of the income event, not a reason to avoid it altogether.

How to Appeal an IRMAA Determination

Social Security will use a more recent year's income if you have experienced a qualifying life-changing event. The request is made on Form SSA-44, which you can file online, by mail, or in person at a local office.

Qualifying life-changing events

The recognized events are:

• Marriage, divorce or annulment, or death of a spouse.
• Work stoppage (retirement) or work reduction.
• Loss of income-producing property due to a disaster or other event beyond your control.
• Loss or reduction of a pension.
• Receipt of a settlement from an employer due to the employer's closure, bankruptcy, or reorganization.

What does not qualify

A large Roth conversion, a capital gain from selling a business or investment, a one-time bonus, or an RMD do not qualify. If your income was high two years ago because of one of those events, and you have not retired or had another qualifying event, the surcharge stands for that year. The good news is that it will fall away automatically in a later year when the lower-income return becomes the lookback year.

Filing the SSA-44

The form asks for the event, the date, and your estimated MAGI for the year you want Social Security to use, which can be the current year. You attach evidence such as a retirement letter from your employer, a signed statement, or a copy of a more recent tax return. Retirees who file promptly after retiring often see the reduction applied within a couple of months, with any overpayment refunded. The form is available on ssa.gov. If you estimated income and it turns out higher, Social Security will adjust later, so estimate honestly.

Planning to Reduce Medicare IRMAA

Because IRMAA is driven by MAGI, the tools are the same ones you use to manage taxable income, with the twist that the relevant year starts at 63, two years before Medicare begins.

Time Roth conversions carefully

Large conversions are best done before 63, while the lookback still points to years that do not affect Medicare premiums, or in years where you accept one year of surcharge for a large long-term benefit. After 65, conversions sized to stay under a chosen IRMAA threshold are the norm. Our Roth conversion guide covers how to fill a bracket while watching the cliffs.

Use qualified charitable distributions

After 70½, giving directly from an IRA to charity satisfies part or all of your RMD without adding to MAGI. For a charitable retiree with a large IRA, QCDs are often the single most effective IRMAA tool, because an RMD taken and then donated still counts as income for IRMAA even though it is deductible.

Manage capital gains and asset location

Spread the sale of an appreciated asset across two tax years when possible, harvest losses to offset gains, and hold high-yield bonds in IRAs rather than taxable accounts so their interest does not hit MAGI. Municipal bond interest counts for IRMAA even though it is not taxed, which surprises many investors.

Draw from the right accounts

Roth withdrawals and HSA reimbursements do not count toward MAGI. A retiree with money in taxable, traditional, and Roth accounts can often fund the same spending with less MAGI by adjusting the mix. Our article on retirement withdrawal order explains the sequencing, and our guide to healthcare costs in retirement puts IRMAA in the broader budget.

IRMAA in Special Situations

A few situations produce IRMAA surprises.

• The year a spouse dies. The survivor files jointly for that year but as a single filer afterward, and the single thresholds are half the joint thresholds. Income that was comfortably under the joint limit can trigger surcharges for a widow or widower.
• The year of a business sale. Even an installment sale can spread gains across years, but a lump sum typically means one year at the top tier two years later. The premium cost is usually small relative to the sale, but it should be in the projection.
• Amended returns. If you amend a return that Social Security used, send the amended return and a letter so the determination is corrected.
• Working past 65 with employer coverage. If you delay Part B while covered by a large employer, IRMAA does not apply until you enroll, but the lookback will still use the return from two years before enrollment.

Medicare IRMAA is a manageable cost once you understand the two-year lookback, the cliffs, and the appeal process. Begin watching MAGI at 63, treat the thresholds as planning targets rather than surprises, and file Form SSA-44 promptly when retirement or another qualifying event lowers your income. If you want help projecting your IRMAA exposure alongside Roth conversions and withdrawals, reach out to Attend Wealth.

Tony Colunga · Founder, Attend Wealth

Tony leads Attend Wealth, a fee-based wealth management firm in Atlanta serving professionals, families, physicians, and business owners. Advisory services are held to a fiduciary standard. More about Attend