Understanding IRMAA: Income- Related Monthly Adjustment Amount

Understanding IRMAA: How It Can Affect Your Social Security and Medicare Premiums

If you’re approaching Medicare eligibility or you’re already enrolled, there’s a good chance you’ve heard the term IRMAA tossed around — usually followed by a confused look. You’re not alone. Here at Macino Financial, one of the most common questions we get from clients preparing for retirement is: “Why is my Medicare premium higher than my neighbor’s?” The answer often comes down to IRMAA.

Let’s break down what it is, how it’s calculated, and — most importantly — what you can do about it.

What Is IRMAA?

IRMAA stands for Income-Related Monthly Adjustment Amount. It’s a surcharge added to your standard Medicare Part B and Part D premiums if your income is above certain thresholds. The Social Security Administration determines whether you owe IRMAA based on your Modified Adjusted Gross Income (MAGI) — but not from this year’s income. It looks back two years, so your 2026 IRMAA is based on what you reported on your 2024 tax return.

This surprises a lot of people. You could retire, see your income drop significantly, and still get hit with a higher premium for a year or two simply because of what you earned while you were still working.

2025 Income Thresholds

Here’s how the surcharge breaks down for individual and joint filers:

How IRMAA Actually Gets Paid

For most retirees, IRMAA isn’t a bill you write a check for — it’s deducted automatically. If you receive Social Security or Railroad Retirement Board benefits, your Medicare premium (including any IRMAA surcharge) is taken directly out of your monthly check before it ever reaches your bank account.

That means a bump into a higher IRMAA bracket doesn’t just cost you more each month — it quietly shrinks your Social Security income at the same time.

A Real-World Example

Say you’re a single filer with a MAGI of $110,000. Your standard Part B premium of $185 jumps to $259 once IRMAA kicks in, and your Part D premium (assuming a $33 base) rises to $46.70. That’s a total monthly Medicare deduction of $305.70. On a $1,500 Social Security check, that leaves you with $1,194.30.

Now compare that to someone with a MAGI of $135,000 — just one bracket higher. Their total Medicare deduction jumps to $438.30, leaving a net Social Security benefit of only $1,061.70. That’s a meaningful difference for crossing one income threshold.

Can You Appeal It?

Yes — and many people don’t realize this. If your income has dropped significantly due to a life event like retirement, marriage, divorce, or the death of a spouse, you can request a new IRMAA determination using Form SSA-44.

Here’s the general process:

1. Review your IRMAA determination notice from the SSA, which explains your charges and the income it was based on.
2. Identify a qualifying life event — retirement, marriage, divorce, death of a spouse, loss of income-producing property, or an employer settlement payment.
3. Complete Form SSA-44, available on the SSA website or at a local Social Security office.
4. Gather supporting documentation — tax returns, pay stubs, marriage or divorce records, or employer statements.
5. Submit your appeal by mail or in person at your local SSA office.
6. Wait for a decision. This can take several weeks to a few months.
7. Request further review if needed — you can ask for reconsideration, and ultimately a hearing before an administrative law judge if you’re still not satisfied.

Strategies to Help Minimize IRMAA

The best way to deal with IRMAA is to plan ahead so you avoid triggering it in the first place — or at least minimize its impact. Some strategies we discuss with clients include:

• Roth conversions — Moving traditional IRA or 401(k) assets into a Roth IRA can reduce future taxable income, since qualified Roth withdrawals don’t count toward MAGI. Timing matters, though — conversions increase your income in the year you do them, so it’s often smarter to spread them over several lower-income years.
• Income management — Being deliberate about when and how much income you recognize each year can help keep your MAGI below the next threshold.
• Maximizing tax-advantaged accounts — Contributions to Health Savings Accounts can lower your taxable income.
• Qualified Charitable Distributions (QCDs) — If you’re over 70½, donating up to $100,000 per year directly from your IRA to a qualified charity is excluded from taxable income.
• Tax-efficient investing — Managing capital gains and using tax-loss harvesting can help keep your reported income lower.
• Reporting life changes promptly — Retirement, marriage, divorce, or the death of a spouse should be reported to the SSA using Form SSA-44, since it may lead to a lower IRMAA determination.
• Drawing from non-taxable sources — Distributions from Roth accounts don’t count toward MAGI, which can help you stay under a threshold during high-income years.

Where Annuities Can Fit In

Annuities are another tool worth understanding if IRMAA is a concern:

• Deferred annuities let income grow without being realized until you actually start taking payments — useful if you’re still working and near a threshold.
• Roth annuities can provide tax-free income that doesn’t count toward MAGI at all.
• Income smoothing through annuity payments can help you avoid the kind of income spikes that push you into a higher bracket.
• Qualified Longevity Annuity Contracts (QLACs) let you defer Required Minimum Distributions up to age 85, which can reduce taxable income during the early retirement years when IRMAA calculations often catch people off guard.
• Annuity laddering — purchasing multiple annuities with staggered start dates — can help keep your annual income more level over time.

The Bottom Line

IRMAA can catch retirees off guard, especially in the first year or two after a major income change. But with the right planning, many people can reduce or avoid the surcharge altogether — and if you’re hit with an unfair determination, there’s a real appeals process available to you.

At Macino Financial, this is exactly the kind of planning we walk through with clients every day — looking at your full financial picture and helping you make decisions today that protect your income tomorrow.

Have questions about how IRMAA might affect your retirement income? Give us a call at 419.491.0909 or visit us at macinofinancial.com to schedule your free consultation.