Medicare Part B and Part D premiums are not flat - they increase with income through a system called IRMAA (Income-Related Monthly Adjustment Amount). A single Roth conversion, a large stock sale, or an unusually high income year two years ago can push a retiree into a higher IRMAA tier and cost thousands of dollars in additional Medicare premiums. Because IRMAA uses a two-year lookback, the Medicare premiums you pay today are based on your 2024 tax return - making retirement income planning critical.
The IRMAA calculation uses your MAGI from two years prior. Your 2026 Medicare Part B and Part D premiums are based on your 2024 MAGI (from your 2024 tax return, filed in early 2025). If your 2024 income was unusually high - a business sale, Roth conversion, real estate sale, RMD-heavy year - you pay higher 2026 Medicare premiums regardless of what your 2025 or 2026 income looks like.
MAGI for IRMAA = AGI plus tax-exempt interest income. It does not exclude Roth distributions (those already reduced your AGI when contributed). But it does not include non-taxable SS benefits or return of basis.
The standard 2026 Medicare Part B premium is approximately $185/month (SSA adjusts annually; verify at SSA.gov or Medicare.gov before planning). IRMAA adds a surcharge on top of that standard premium based on your 2024 MAGI. The 2026 IRMAA thresholds below are estimated based on inflation adjustments from 2025 levels - verify the exact figures at SSA.gov once published for 2026.
| 2024 MAGI (Single) | 2024 MAGI (MFJ) | Approx. Monthly Part B Premium (2026) | IRMAA Surcharge |
|---|---|---|---|
| $106,000 or less | $212,000 or less | ~$185/month | $0 - standard rate |
| $106,001 - $133,000 | $212,001 - $266,000 | ~$259/month | Tier 1 |
| $133,001 - $167,000 | $266,001 - $334,000 | ~$370/month | Tier 2 |
| $167,001 - $200,000 | $334,001 - $400,000 | ~$480/month | Tier 3 |
| $200,001 - $500,000 | $400,001 - $750,000 | ~$591/month | Tier 4 |
| Above $500,000 | Above $750,000 | ~$628/month | Tier 5 - max surcharge |
IRMAA is not a smooth phase-in - it is a series of sharp jumps. A single dollar of additional MAGI crossing a bracket threshold can cost over $1,000 in additional annual Medicare premiums. For a married couple both on Medicare, crossing from Tier 1 to Tier 2 on Part B alone costs roughly $2,640/year. This creates a powerful incentive to manage MAGI precisely in the two years before a Medicare enrollment. A retiree at age 63 making Roth conversion decisions is simultaneously making IRMAA decisions for ages 65 and 66.
If your income dropped significantly due to a qualifying life-changing event, you can request a reduction in IRMAA using SSA Form SSA-44. Qualifying events include: marriage, divorce or annulment, death of a spouse, work stoppage or reduction, loss of income-producing property (involuntary), loss of pension income, and employer settlement payment. If the event qualifies, SSA will use a more recent year's income rather than the two-year-lookback figure.
The key tools for managing IRMAA are: Roth conversions before age 63 (two years before Medicare begins at 65), using qualified charitable distributions to reduce RMD income (QCDs do not count toward MAGI), careful capital gain harvesting timing, and delay of large one-time income events when possible. The IRMAA brackets create specific MAGI targets - model each year's income two years forward to see the Medicare premium impact before executing transactions.