Retirement & Tax Planning Answers
What Is the Medicare IRMAA Surcharge and How Does It Work?
Quick answer
IRMAA, the Income-Related Monthly Adjustment Amount, is a surcharge the Social Security Administration adds to your Medicare Part B and Part D premiums when your Modified Adjusted Gross Income from two years earlier exceeds a set threshold, $109,000 for a single filer or $218,000 for a married couple filing jointly in 2026. Under the standard premium, the government covers roughly 75% of the true cost of Part B and you cover about 25% through your premium. IRMAA shifts that split against you, up to 85% of the actual cost at the top tier, in five income steps. It applies separately to Part B and Part D, and if both spouses are enrolled in Medicare, each spouse owes their own surcharge based on the same household MAGI, effectively doubling the household hit rather than splitting it.
How the Surcharge Is Actually Calculated and Billed
Start with how Medicare Part B is funded in the first place. For most enrollees, the standard premium covers about 25% of the actual cost of Part B coverage, with general tax revenue covering the other 75%. IRMAA exists to shift more of that cost back onto higher-income beneficiaries: at the first surcharge tier, your share of the true cost rises to about 35%, climbing through 50%, 65%, and 80%, up to roughly 85% at the top tier. The dollar amounts you see in a bracket table are just that shifting cost share expressed in premium terms.
The Social Security Administration, not Medicare itself, determines and notifies you of your IRMAA, using tax return data the IRS provides for the year two years prior to the current one. For 2026 premiums, that means your 2024 MAGI. If SSA's data shows income above the threshold, you get an initial determination notice in the fall before the new plan year starts, showing your surcharge tier and the reduction available if a life-changing event applies.
IRMAA applies to two things independently: your Part B premium and your Part D premium (or Part D coverage embedded in a Medicare Advantage plan). The two surcharges are calculated on the same income brackets but are separate dollar amounts, and you owe both if you're enrolled in both, or just the Part B surcharge if you have no Part D coverage at all. A common point of confusion is assuming a low-premium or $0-premium Part D plan means no surcharge, it doesn't; the IRMAA-D add-on is layered on top of whatever the plan itself charges, regardless of how low that base premium is.
If you're already collecting Social Security, both your standard Part B premium and any IRMAA surcharges are deducted automatically from your monthly benefit check. If you haven't started Social Security yet, Medicare bills you directly, typically quarterly, and nonpayment can eventually lead to disenrollment. Part D premiums paid to a private insurer are handled differently: some plans offer automatic Social Security withholding, but it's usually an opt-in election with the plan, not an automatic default the way Part B withholding is.
You can appeal an IRMAA determination, but only for specific life-changing events defined by SSA: marriage, divorce or annulment, death of a spouse, work stoppage or reduction, loss of income-producing property, loss of pension income, or an employer settlement payment. A drop in income from a one-time capital gain rolling off, or simply having lower income this year than two years ago for ordinary reasons, does not qualify. The appeal uses Form SSA-44 and lets SSA use a more recent estimate of your income instead of the two-year-old tax return.
Married Couples on Medicare Should Budget for Two Surcharges, Not One
If you're married and both spouses are on Medicare, don't model IRMAA as a single household number. Each spouse's Part B and Part D surcharges are assessed individually based on the same joint MAGI bracket, so a couple in the second tier is looking at roughly $203 extra per month per spouse for Part B alone, not $203 total. That's a materially different number when you're projecting retirement cash flow.
Because the lookback is two years, the income decision that determines your 2028 Medicare premium is your 2026 tax return, meaning the Roth conversion or large withdrawal you're weighing right now is really a decision about Medicare costs two years from now, not this year's tax bill in isolation.
Where People Misunderstand How IRMAA Is Assessed
- Assuming a $0 or low-premium Part D plan means no IRMAA-D surcharge applies. The surcharge is added regardless of how low the plan's own premium is.
- Treating IRMAA as one household charge instead of a per-person charge, which understates the real cost for a couple where both spouses are enrolled in Medicare.
- Trying to appeal an IRMAA determination because income simply dropped, without checking whether the drop actually falls into one of SSA's specific qualifying life-changing events.
- Assuming Part D premiums are automatically deducted from Social Security the same way Part B is, when withholding for a private Part D plan usually has to be elected separately.