IRMAA: The Medicare Surcharge With a Two-Year Memory
/
Medicare has a means test with two unusual features: it looks at your income from two years ago, and its brackets are cliffs — one dollar over a line raises premiums for the entire year, for both spouses. IRMAA (the income-related monthly adjustment amount) is small print that routinely costs high-income retirees thousands a year, and it’s among the most manageable taxes in retirement — for households who plan on its calendar.
The mechanics
IRMAA adds surcharges to Medicare Part B and Part D premiums based on MAGI from two years prior (your 2026 premiums reflect 2024 income). The tiers start around $100K single / low-$200Ks joint (indexed annually) and step up through several brackets; at the top, a couple can pay $8,000–12,000+ per year in combined surcharges above the base premiums. And the cliff structure is merciless: $1 of income over a threshold can cost a couple $1,500–2,500 in premiums. Few places in the code price a marginal dollar so badly.
The two-year memory changes everything
The lookback means your IRMAA planning window is ages 63–64 onward — before Medicare even starts. The classic ambushes: a large Roth conversion at 63, a home or business sale at 64, a final-year bonus — each resurfacing as a premium notice at 65, when the income is long gone. Every large-income decision from 63 forward should carry an “IRMAA, two years out” line in the model. (And IRMAA never really stops watching: RMDs, conversions, and gains at any age feed premiums two years later, for life.)
The appeal that actually works
IRMAA is based on old income, so Social Security provides a correction: Form SSA-44, for life-changing events — retirement or work reduction being the big one, plus marriage, divorce, death of a spouse, and a few others. Retire at 65 and your 63-year-old salary is irrelevant: file the SSA-44 with evidence, and premiums get set on your new, lower income. This appeal succeeds routinely and is skipped constantly. What doesn’t qualify: one-time income spikes like conversions or asset sales — those you planned around or you pay.
The planning calendar
Know the current-year thresholds and your projected MAGI — including the pieces people forget (muni interest counts in MAGI here; QCDs don’t).
Steer big events into single years. Two years each slightly over a cliff costs more than one year well over it — IRMAA rewards lumping income, the opposite of most bracket planning. Conversions especially: better one deliberate large-conversion year than five marginal breaches.
Use QCDs and withholding-smart RMDs to hold the MAGI line after 73.
December check, every year, from 63 on: distance to the nearest cliff, and whether $2,000 of deferred income or an extra charitable gift buys back a threshold. Ten minutes; four figures.
File the SSA-44 in every genuine retirement-transition year — both spouses.
IRMAA isn’t avoidable for genuinely high retirement incomes, and paying it beats earning less. But paying it by accident — one careless dollar over a cliff, one unfiled appeal — is the retirement-tax equivalent of a parking ticket on your own driveway.
Romanchuk CPA LLC is a fully virtual CPA firm serving individuals, families, and business owners nationwide since 2014, with NJ/NY depth. Book a consultation at rfg.tax.
This article is general information, not tax advice for your specific situation. Figures adjust annually — verify current amounts.