Most people know that Medicare Part B has a standard monthly premium. What they don't know is that roughly 7% of Medicare beneficiaries pay significantly more -- sometimes three times the standard rate -- because of a surcharge called IRMAA. If you're planning retirement income, IRMAA is one of the most important and most overlooked variables in the equation.
What IRMAA is
IRMAA stands for Income Related Monthly Adjustment Amount. It's an additional premium added to your Medicare Part B and Part D costs when your income exceeds certain thresholds. The Social Security Administration determines your IRMAA bracket using your Modified Adjusted Gross Income (MAGI) from two years prior.
In 2025, your IRMAA is based on your 2023 tax return. This two-year lookback is why IRMAA catches many new retirees off guard: your income in your final working year (often high with salary, bonuses, and retirement distributions) determines your Medicare premium two years later, when you may be living on a much lower retirement income.
How the brackets work
There are six IRMAA tiers. The standard Part B premium in 2025 is $185/month. Single filers with 2023 MAGI above $106,000 (and married filing jointly above $212,000) pay additional surcharges that can more than triple the standard premium. The highest tier applies to incomes above $500,000 for single filers and $750,000 for joint filers.
Part D works the same way. Whatever Part D plan you're enrolled in, SSA adds a separate IRMAA surcharge based on the same brackets. The Part D surcharge ranges from roughly $13 to $81 per month depending on your tier. Combined with Part B surcharges, high-income retirees can pay $500 or more per month above the standard Medicare cost.
Use the IRMAA calculator on this site to find your exact 2025 bracket and monthly cost based on your MAGI.
The cliff effect
IRMAA brackets are fixed thresholds, not graduated rates. Being $1 over a threshold moves your entire premium to the next tier. Going from $105,999 to $106,001 in MAGI costs you hundreds of dollars per year in extra premiums -- for every additional dollar over the threshold.
This creates a real planning opportunity. If your projected MAGI is close to a threshold, managing income sources can keep you in a lower bracket. Strategies include:
- Timing Roth conversions to stay under a threshold
- Using qualified charitable distributions (QCDs) from an IRA to reduce taxable distributions (QCDs don't count toward MAGI)
- Harvesting capital losses to offset gains in years near a bracket cliff
- Delaying a profitable asset sale to the following year if it would push you over
Roth conversions and IRMAA
Roth conversions add to your MAGI in the year of conversion, which can push you into a higher IRMAA bracket two years later. A $60,000 conversion might move you from the first surcharge tier to the second -- costing $1,500+ per year in extra Medicare premiums for that year. Over several years of conversions, the cumulative IRMAA cost can meaningfully reduce the Roth conversion's tax advantage.
This doesn't mean avoiding conversions. It means modeling the IRMAA impact alongside the income tax savings. Many advisors recommend converting to the top of an IRMAA bracket rather than past it -- getting the Roth conversion tax benefit without triggering the next tier's surcharge.
How to appeal an IRMAA determination
If your income has dropped significantly since the year SSA is using, you can appeal. Qualifying life-changing events include: retirement or reduction in work hours, divorce, death of a spouse, loss of pension income, loss of income-producing property, or an employer settlement payment.
File Form SSA-44 with documentation of the life-changing event. SSA will use a more current year's income estimate instead of the two-year-old IRS data. New retirees often qualify because their income drops sharply in the year after a high-salary final working year.
Planning ahead
The most effective IRMAA management happens before you're on Medicare, not after. In the years before you turn 65, consider modeling your expected MAGI at 65 and 66 based on pension income, Social Security, IRA distributions, and capital gains. Identify which years will have elevated income (conversion years, asset sales, large RMDs) and which can be managed downward. The goal isn't to minimize income -- it's to avoid being $1 over a threshold when planning $50 under it would produce the same lifestyle.