IRMAA: when Medicare costs more because of your income

IRMAA is one of the more confusing surprises in Medicare, mostly because of its timing: it’s based on income from two years before the year it’s applied, which means a single high-income year — even one that’s already over — can quietly raise Medicare premiums well after the fact.

How IRMAA works

IRMAA adds a surcharge to the standard Part B premium (and Part D premium) for higher-income beneficiaries, based on modified adjusted gross income reported on a tax return from two years prior. The surcharge is tiered — income above several increasing thresholds triggers progressively larger add-ons. The Medicare.gov IRMAA page has the current income brackets and corresponding surcharge amounts. Both the income thresholds and the surcharge amounts adjust annually — the specific dollar figures from any prior year, including those in other guides, should be verified against current-year SSA or Medicare.gov tables before they inform any planning decision.

The two-year lookback is the detail that catches people most off guard: someone’s Medicare premium in a given year is determined by their tax return from two years earlier — meaning a large one-time event (a Roth conversion, a big capital gain, a final year of high salary) can trigger an IRMAA surcharge that arrives well after the income event itself, sometimes when income has already dropped.

What can trigger it unexpectedly

A few common situations that surprise people: a large Roth conversion (see Roth conversions in retirement), selling a home or other asset for a significant capital gain, a final bonus or severance in the last year of work, or simply higher-than-usual retirement account withdrawals in a single year. Because the lookback is two years, none of these show up as a Medicare cost until well after the decision that caused them.

The appeal process — for life-changing events

IRMAA isn’t necessarily fixed if your income has genuinely dropped since the lookback year due to a qualifying life-changing event — retirement, divorce, the death of a spouse, or a significant income reduction, among others. The SSA’s Form SSA-44 allows beneficiaries to request a reconsideration using more current income, rather than the two-year-old figure, in these specific circumstances. This is the mechanism most relevant to someone whose income genuinely dropped after retiring, even though their IRMAA was initially calculated on a pre-retirement income year.

Why this matters for planning withdrawals and conversions

Because IRMAA operates on cliff-edge thresholds rather than a smooth scale, crossing a bracket by even a small amount can trigger a disproportionately larger surcharge relative to the income increase that caused it. This is one of the concrete reasons withdrawal sequencing and Roth conversion timing often get modeled with IRMAA brackets specifically in mind, not just income tax brackets.

Related reading: Roth conversions in retirement: is it worth it? and Withdrawal strategy basics.