This is part three of The Gap Years. In part two we talked about filling your tax bracket with Roth conversions while your income is low. But we ended on a warning: raising your income on purpose has ripple effects, and the nearest one lands on your Medicare premium. It arrives through a surcharge with an unfriendly name and a long memory, and today it gets its own article, because it surprises more retirees than almost anything else we see.
What is IRMAA?
IRMAA stands for the Income-Related Monthly Adjustment Amount. It is an extra charge added to your Medicare Part B and Part D premiums when your income is above a certain level. Most people pay the standard Part B premium, which is 202 dollars and 90 cents a month in 2026. But if your income crosses into the higher brackets, IRMAA raises that premium, in steps, the higher your income goes. It is, in plain terms, a tax on having a higher income in retirement, collected through your Medicare bill.
The two-year memory
Here is the part that catches people. IRMAA does not look at this year's income. It looks back two years. Your 2026 Medicare premiums are set by the income on your 2024 tax return, the one you filed in 2025. So a financial decision you make today does not show up on your Medicare bill now. It shows up two years from now, often after you have forgotten you made it. One of our advisors has a way of describing it that sticks: two years from the time you pull that money out, the Pied Piper comes to collect. Some of the folks we talk with have an even shorter name for the surcharge. They call her Irma, as in, we do not like Irma, she is mean, so we try not to let her visit. The nickname is funny. The two-year delay is what makes her sneaky.
It is a cliff, not a ramp
IRMAA does not phase in gradually. It works in tiers, and crossing a threshold by a single dollar moves you into the whole next tier. Here is the 2026 ladder, based on your modified adjusted gross income from 2024.
- Single up to 109,000 dollars, or joint up to 218,000 dollars: you pay the standard 202.90 a month, no surcharge.
- Single up to 137,000, or joint up to 274,000: 284.10 a month.
- Single up to 171,000, or joint up to 342,000: 405.80 a month.
- Single up to 205,000, or joint up to 410,000: 527.50 a month.
- Single under 500,000, or joint under 750,000: 649.20 a month.
- Single 500,000 and up, or joint 750,000 and up: 689.90 a month.
Notice what that means. A married couple at 217,000 dollars of income pays the standard premium. The same couple at 219,000 dollars pays an extra 81 dollars and 20 cents a month each, for the whole year, on Part B alone, plus a separate smaller surcharge added to their Part D drug premium. That is nearly two thousand dollars a year for the couple on Part B alone, triggered by two thousand dollars of extra income landing on the wrong side of the line. That is why the line matters so much more than the slope.
How this connects to the gap years
Now you can see why parts two and three belong together. The Roth conversion that fills your bracket also raises your income for the year, and if it nudges you over an IRMAA threshold, you will feel it on your Medicare premium two years later. That is not a reason to skip the conversion. It is a reason to size it with the line in mind. Sometimes the right move is to convert just up to the threshold and stop. Sometimes the conversion is worth more than the surcharge costs, and you go ahead and pay Irma a one-year visit on purpose. The point is that you decide it deliberately, with the whole picture in front of you, rather than getting surprised by a bill you did not see coming. This is exactly the kind of trade-off worth modeling before you act.
When IRMAA is a surprise you can actually fight
Here is the part most people never hear, and it is worth telling a neighbor. Because IRMAA looks back two years, it can charge you based on income you no longer have. If you were working in 2024 and retired since, your Medicare premium in 2026 may be based on a paycheck that no longer exists. Social Security knows this can happen, and they let you ask for a do-over. Using Form SSA-44, you can report a life-changing event, and retiring, reducing your work hours, or otherwise stopping work counts, and ask them to use a more recent year instead. Marriage, divorce, the death of a spouse, and the loss of a pension can all qualify too. If you appeal and you are right, they lower the surcharge. A lot of people simply pay the higher amount because this option is rarely explained to them.
What income does IRMAA use?
IRMAA is based on your modified adjusted gross income, or MAGI, from two years earlier. Your 2026 surcharge is set by your 2024 return, filed in 2025. If that return is not yet available, Social Security temporarily uses the year before. This two-year lookback is why a choice you make this year, like a Roth conversion, a large capital gain, or selling a property, can raise your Medicare premium well into the future.
How much is IRMAA in 2026?
The standard Part B premium in 2026 is 202 dollars and 90 cents a month. Above the income thresholds, the total Part B premium rises in tiers to 284.10, then 405.80, then 527.50, then 649.20, and finally 689.90 a month at the highest income level, with a separate surcharge added to your Part D premium as well. The tier you land in depends on your income from two years prior.
Can you appeal or reduce IRMAA?
Yes. If a life-changing event such as retirement, the loss of a pension, marriage, divorce, or the death of a spouse has reduced your income, you can file Form SSA-44 and ask Social Security to base your premium on a more recent year instead of the two-year-old return. If you disagree with their determination, you also have the right to appeal. Many retirees overpay simply because they did not know this option existed.
So that is Irma, properly introduced. She is not a reason to fear a higher income, and she is certainly not a reason to stay poor on paper. She is just one more line to plan around, with a two-year delay that rewards people who see her coming and surprises the ones who do not. Tomorrow, in part four, we turn to another quiet surprise that shows up the same way, when more of your Social Security becomes taxable than you ever expected. If you want help mapping your own income against these thresholds before you make a move, you can reach our team at American Retirement Advisors at 602-281-3898. Tomorrow, part four: the Social Security tax surprise.
Disclaimer: The information in this article is for educational purposes only and does not constitute tax, legal, or investment advice. Tax laws change frequently, and individual circumstances vary. American Retirement Advisors does not provide tax or legal services. Before making any tax-related decisions, consult a qualified CPA, tax attorney, or financial planner who can evaluate your specific situation.