If you’ve never heard of IRMAA or are unaware of Medicare surcharges and how they work, don’t worry—you’re not alone! This post is here to help, not only explaining these surcharges but also offering tips on how to avoid them.

What is IRMAA?

IRMAA—"income-related monthly adjustment amount”—is the additional sum you may need to pay in addition to Medicare Part B and Part D premiums. Why? Because Medicare imposes surcharges on higher-income beneficiaries.

How Medicare IRMAA is calculated

After the Centers for Medicare & Medicaid Services (CMS) calculates IRMAA and publishes this amount in the Federal Register (on an annual basis), the Social Security Administration is then responsible for determining whether or not you must pay more than the standard premium (note Medicare benefits remain the same for all, even those who ultimately pony up additional money due to surcharges).

The surcharge is calculated based on tax returns reported from two years prior: meaning your 2025 income determines your IRMAA in 2027, your 2026 income determines your IRMAA in 2028, and so on. For those unaware of IRMAA, the two-year lag can create unpleasant surprises when you first enroll in Medicare—especially if your income declines substantially post-retirement.

IRMAA can also creep up again later in life when you begin taking required minimum distributions (RMDs) as the additional amount is reevaluated every year based on your previous two years of income. More specifically, Medicare surcharges are triggered when one’s modified adjusted gross income exceeds $212,000 (for married taxpayers filing jointly) or $106,000 (for individual taxpayers). Those required to pay the surcharge receive written notice to do so.

IRMAA surcharge amounts

As these monthly surcharges are tacked onto “normal” original Medicare premiums for Medicare Parts B and D coverage, you may end up paying several hundred dollars more per month than what you’d originally planned for. In 2025, these monthly charges break down as follows for each of the following groups:

· Single income greater than $106,000 but less than or equal to $133,000 or joint income greater than $212,000 but less than or equal to $266,000 = extra $74.00 for Part B and $13.70 for Part D

· Single income greater than $133,000 but less than or equal to $167,000 or joint income greater than $266,000 but less than or equal to $334,000 = extra $185.00 for Part B and $35.30 for Part D

· Single income greater than $167,000 but less than or equal to $200,000 or joint income greater than $334,000 but less than or equal to $400,000 = extra $295.90 for Part B and $57.00 for Part D

· Single income greater than $200,000 but less than or equal to $500,000 or joint income greater than $400,000 but less than or equal to $750,000 = extra $406.90 for Part B and $78.60 for Part D

· Single income equal to or greater than $500,000 or joint income equal to or greater than $750,000 = extra $443.90 for Part B and $85.80 for Part D

Additional monthly charges break down as follows for married individuals who lived with their spouse at some point during the taxable year but filed a separate tax return:

· Those who earn more than $106,000 but less than $394,000 will pay an extra $404.90 for Part B and $78.60 for Part D.

· Those who earn $394,000 or more will pay an extra $441.70 for Part B and $85.80 for Part D.

How to avoid IRMAA surcharges

Worried about these extra fees? Don’t panic! The good news is you can mitigate or even avoid Medicare surcharges altogether.

One approach is to utilize proper tax-planning strategies, ideally a few years before enrolling in Medicare Part B (and Part D). You should consult your tax advisor or financial advisor before implementing these, however, noting the approach might include Roth conversions (converting funds from a traditional, SEP, or SIMPLE IRA to a Roth IRA) or funding a health savings account (HSA). Withdrawals from either of these accounts aren’t included in gross income and therefore don’t generate IRMAAs.

Another mitigation strategy is to utilize qualified charitable distributions (QCDs), direct transfers from your IRA to a qualified charity—thus reducing your taxable income when executed properly.

How to appeal IRMAA surcharges

One additional approach you can employ to mitigate or even avoid Medicare surcharges is to file an appeal, especially in the wake of a life-changing event that may qualify for IRMAA reconsideration such as:

· The death of a spouse

· Marriage

· A divorce or annulment

· A reduction (or complete cessation) of hours worked

· A reduction in or loss of pension income (due to a default, scheduled cessation, etc.)

· The loss of income-producing property beyond beneficiary control (such as a disaster, theft, or similar circumstances)

· An employer settlement payment wherein you or your spouse receive a settlement from an employer (or former employer) due to said employer’s bankruptcy or reorganization

The quickest and easiest way to file an IRMAA appeal is via online filing form SSA-44 on the Social Security website, but you can also do so over the phone (800-772-1213) or by contacting your local Social Security office. Note you should appeal only after receiving notice that your Medicare premiums for Part B and Part D (prescription drug coverage) include IRMAA.

Final thoughts on Medicare surcharges

Understanding healthcare costs is critical for successful retirement planning. While jumping into a higher tax bracket is a good problem to have, doing so can unfortunately trigger these Medicare surcharges and thus require you to pay hundreds of extra dollars a month. Fortunately, the various strategies we just outlined can minimize (or even avoid!) these fees.

Still have questions about Medicare surcharges? Schedule a FREE discovery call with one of our CFP® professionals to get them answered.

FAQs

When you enroll in Medicare, you’re initially charged standard premiums until Social Security receives your income data from the IRS (your federal tax return). If your income does in fact reach the IRMAA threshold, Social Security will automatically mail you a predetermination notice detailing how this determination was made and how to proceed if the information is incorrect or your situation has changed (see the above information regarding IRMMA appeals). The Social Security Administration also updates your IRMAA determination each year automatically based on your federal tax return.
If you’re already receiving benefits from Social Security (and/or Railroad Retirement Board benefits) and Medicare Part B and D premiums are deducted from your benefit check, your IRMAA is deducted automatically in the same manner.
If your Social Security check isn’t large enough to cover IRMAA or Medicare premiums aren’t automatically deducted from your benefit check, however, you’ll receive a bill for Part B and Part D IRMAAs.
Surcharges apply regardless of how you receive Medicare coverage, meaning those who enroll in a Medicare Advantage plan are still subject to Medicare Part B premiums plus any IRMAA surcharges.
Fortunately, Medicare premiums are recalculated on an annual basis; so if your income drops, your IRMAA status likely will as well.

IRMAA: How to Avoid Surcharges for Medicare Parts B and Part D