What Is a Medicare IRMAA?
IRMAA (Income-Related Monthly Adjustment Amount) is an additional surcharge added to your Medicare Part B and Part D premiums if your modified adjusted gross income (MAGI) exceeds certain thresholds. IRMAA is based on your tax return from two years prior — so your 2026 premiums are based on your 2024 income. The surcharge can add $70 to $408+ per month per person to your Medicare costs.
Why It Matters
IRMAA is one of the most common and costly surprises in retirement. Retirees who take large IRA distributions, sell appreciated assets, or do Roth conversions without considering IRMAA can trigger surcharges that cost thousands of dollars per year. Because IRMAA uses a 2-year lookback, actions taken today affect Medicare premiums two years from now.
For Arizona retirees doing Roth conversions or managing RMDs, IRMAA planning is essential. A single large conversion or capital gains event can push you into a higher IRMAA tier, adding $3,000-$10,000 or more in annual Medicare costs for two years.
How It Works
How it's calculated: Social Security uses your modified adjusted gross income (MAGI) from your tax return two years ago. If your income exceeds the threshold ($206,000 married filing jointly for 2026), you pay higher Part B and Part D premiums.
2026 IRMAA tiers (approximate, married filing jointly): - $206,000 or less: Standard premium (no surcharge) - $206,001 - $258,000: +$70.00/month per person - $258,001 - $322,000: +$175.00/month per person - $322,001 - $386,000: +$280.60/month per person - $386,001 - $750,000: +$350.70/month per person - Above $750,000: +$408.20/month per person
What counts as income: Wages, Social Security benefits, pension income, IRA/401(k) distributions, Roth conversion amounts, capital gains, rental income, interest, and dividends.
What doesn't count: Roth IRA withdrawals, return of basis from non-deductible IRA contributions, qualified charitable distributions (QCDs), and Health Savings Account (HSA) withdrawals for medical expenses.
Life-changing events: If your income dropped due to retirement, divorce, death of a spouse, or work reduction, you can request a redetermination using Form SSA-44.
Example
A 66-year-old Chandler couple with $70,000 in pension income and $100,000 in other income (total MAGI: $170,000) decides to convert $100,000 from their traditional IRA to a Roth. Their MAGI jumps to $270,000, triggering IRMAA Tier 2 two years later.
The IRMAA surcharge: $175.00/month x 2 people x 12 months = $4,200 additional Medicare cost for that year. If they had converted $36,000 instead (keeping MAGI under $206,000), they would have avoided IRMAA entirely.
This doesn't mean the conversion was wrong — $100,000 in future tax-free growth may well outweigh $4,200 in IRMAA — but the decision should be made with full awareness of the cost.
Medicare IRMAA in Arizona
Arizona retirees doing strategic Roth conversions should model IRMAA impact as part of their conversion analysis. Because Arizona's 2.5% flat tax makes conversions inexpensive at the state level, the primary cost consideration is the federal tax plus IRMAA impact. Many Arizona advisors use multi-year tax projection software to find the optimal annual conversion amount that maximizes long-term tax savings while managing IRMAA exposure.
Common Questions About Medicare IRMAA
How can I avoid Medicare IRMAA surcharges?
Do Roth IRA withdrawals count toward IRMAA?
Can I appeal my IRMAA surcharge?
Related Terms
Roth Conversion
A Roth conversion is the process of moving funds from a traditional IRA, 401(k), or other pre-tax retirement account int...
Required Minimum Distribution (RMD)
A Required Minimum Distribution (RMD) is the minimum amount you must withdraw annually from tax-deferred retirement acco...
Traditional IRA
A traditional IRA is an individual retirement account where contributions may be tax-deductible in the year they're made...
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