How to Avoid IRMAA: The Hidden Medicare Tax That Catches Retirees Off Guard

You saved diligently for 35 years. You maxed your 401(k), lived within your means, and paid every tax bill on time. Retirement arrives and you're feeling good about it.

Then Medicare sends you a bill.

Not the standard premium. A bigger one. Several hundred dollars more per month than your neighbor pays — even though you're both on Medicare, both receiving the same coverage.

The reason? One particularly good year of income, two years ago. Maybe you did a large Roth conversion. Maybe you sold a rental property. Maybe you just had a strong year before you retired. Medicare looked back at that income, decided you were wealthy, and has been charging you a surcharge ever since.

That surcharge is called IRMAA. And for retirees who didn't see it coming, it's one of the most frustrating surprises in the entire retirement system.

IRMAA stands for Income-Related Monthly Adjustment Amount. It's a surcharge on top of standard Medicare Part B and Part D premiums, applied to people whose income exceeds certain thresholds.

The standard Medicare Part B premium in 2026 is $202.90 per month per person. If you're subject to IRMAA, you pay the standard premium plus a surcharge that increases with income. At the highest income tier, the surcharge alone adds $487 per month per person, which works out to roughly $5,844 extra per year, per person.

For a married couple both on Medicare, crossing IRMAA thresholds costs twice as much.

Here's the detail that catches most people off guard: Medicare doesn't use your current income to set your premiums. It uses your income from two years ago.

This is called the two-year lookback. In 2026, your Medicare premiums are based on your 2024 Modified Adjusted Gross Income (MAGI).

What counts as MAGI for IRMAA purposes? Almost everything:

What does not count: Roth IRA withdrawals (after the account is established) and qualified charitable distributions (QCDs).

The two-year lag means that decisions you make today about Roth conversions, capital gains, or property sales will affect your Medicare premiums in two years — not this year. Most people don't realize the connection until the bill arrives.

The thresholds below are for 2026. They adjust slightly each year with inflation.

Single filers

Joint filers (married filing jointly)

Part D (prescription drug) coverage also has IRMAA surcharges. Add roughly 20–30% to the above figures for a combined Part B + Part D impact.

Note: These are approximate figures. Actual premiums are set annually by CMS and may differ slightly.

Large Roth conversions

This is the most common trigger for retirees who are otherwise managing their income carefully. A $100,000 Roth conversion in a year when your other income is $120,000 (as a couple) lands you comfortably under the $218,000 joint threshold. But add another $30,000 in dividends and capital gains, and suddenly you're in the first IRMAA tier — costing you close to $2,000 per year in extra Medicare premiums two years later.

Required Minimum Distributions

Once RMDs begin at age 73, they add taxable income you can't avoid. A large IRA balance produces large RMDs. If you haven't been drawing down your pre-tax accounts earlier, you may find yourself permanently above the IRMAA threshold once RMDs kick in.

Capital gains events

Selling a business, selling a rental property, or realizing large gains from a concentrated stock position can push income well above IRMAA thresholds in a single year. Even if income returns to normal the following year, the two-year lookback means you pay higher premiums for two future Medicare years.

Social Security

Once Social Security starts, up to 85% of your benefit counts as taxable income. Adding Social Security to RMDs and other income can push people over IRMAA thresholds without any "event" triggering it — just the accumulation of retirement income sources.

Strategy 1: Stay under the thresholds with careful conversion planning

The most powerful IRMAA-avoidance tool is doing your Roth conversions in the years before RMDs and Social Security begin — while your income is low and you have room below the IRMAA thresholds.

If you retire at 63 and delay Social Security until 70, you have several years where your income might be low enough to do substantial Roth conversions without crossing IRMAA thresholds. Converting $100,000 per year at the 22% bracket is often a much better outcome than paying IRMAA surcharges on top of higher RMDs later.

For a full walkthrough of how to build this strategy, see our post on Roth conversion ladders.

Strategy 2: Qualified charitable distributions (QCDs)

If you're 70½ or older, you can make a Qualified Charitable Distribution directly from your IRA to a qualified charity. This satisfies your RMD but does not count as income on your tax return — and therefore doesn't count toward your MAGI for IRMAA purposes.

For 2026, the QCD limit is $111,000 per person per year. This is a powerful tool for charitably inclined retirees with large RMDs.

Strategy 3: Manage capital gains timing

Avoid large capital gains events in years when your other income is already elevated. If you're planning to sell an appreciated asset, model how that gain interacts with your other income and the IRMAA thresholds before you execute.

In some cases, spreading gains across two calendar years rather than one can keep you below a threshold both years.

Strategy 4: Coordinate Social Security timing

Delaying Social Security reduces the number of years you receive benefits — but it increases each payment and can reduce the years when combined income (Social Security + RMDs + conversions) pushes you over IRMAA thresholds.

For many high-balance retirees, delaying Social Security to 70 while doing aggressive Roth conversions in the gap years is the optimal sequence. You use the low-income window to convert, then start Social Security from a lower pre-tax account balance with smaller RMDs.

Strategy 5: File an IRMAA appeal if circumstances changed

IRMAA is based on your income from two years ago, but life changes. If you had high income in the lookback year due to a one-time event — a property sale, a retirement lump-sum distribution, or stopping work — and your income has since dropped significantly, you can appeal your IRMAA determination.

The SSA allows appeals when a "life-changing event" occurred, including retirement, divorce, or death of a spouse. This won't help with ongoing income levels, but it can provide relief after an unusual year.

Here's the tension at the heart of IRMAA planning: the best way to reduce future IRMAA exposure (shrink your Traditional IRA before RMDs begin) is to do Roth conversions — but large Roth conversions can themselves trigger IRMAA in the years you do them.

The resolution is precision. You don't need to convert as much as possible each year. You need to convert up to the optimal amount — the point where one more dollar starts to cost you more in IRMAA surcharges than it saves in future taxes.

That calculation requires knowing your current income from all sources, the exact IRMAA thresholds for the current year, and a projection of your future income under multiple scenarios. It's not back-of-envelope math.

For a comprehensive look at the tax cliffs that interact with Roth conversions — including IRMAA, ACA subsidy cliffs, and Social Security taxation — see our post on Roth conversion tax cliffs.