Imagine opening a letter from the Social Security Administration and finding out your Medicare premium just went up — not because your coverage changed, but because of a tax return you filed almost two years ago.
That’s the quiet mechanic behind IRMAA, the Income-Related Monthly Adjustment Amount. It’s a surcharge added to Medicare Part B and Part D premiums for beneficiaries whose income climbs above certain thresholds. Here’s the part that catches people off guard: your 2026 income determines your 2028 IRMAA, because it’s based on the tax return from two years prior. Blue Heron CPAs
A few things make that two-year lag genuinely tricky:
- The income that sets your premium is often earned during a year you’re not thinking about Medicare at all.
- The determination notices arrive unsolicited by mail, typically each November — well after the deciding year has closed. Open Window
- By the time the letter shows up, the tax year that triggered it is already locked. There’s no going back to adjust it.
This isn’t a universal problem, and that’s worth saying plainly up front. IRMAA reaches only a minority of Medicare participants — roughly 8% receive an IRMAA letter (a figure I’d attribute to that single industry source and confirm against SSA data before publishing). Plenty of retirees never pay a cent of it. Open Window
But if your 2026 income could push you over a threshold — through a Roth conversion, a home or business sale, or a spike in required distributions — 2026 is the year that decision gets made. Not 2028, when the bill arrives.
What IRMAA Actually Is
IRMAA is a surcharge, not a coverage change. If your income clears certain thresholds, the Social Security Administration adds an extra monthly amount to your Medicare Part B and Part D premiums — your benefits stay identical, you just pay more for them.
It works off a two-year lookback. For your 2026 premiums, the SSA looks at your 2024 tax return — the most recent one on file before the coverage year begins. Slide that forward and you get the point of this article: your 2026 income sets your 2028 IRMAA.
The income figure it uses is MAGI — your adjusted gross income plus any tax-exempt interest — which means muni-bond interest and one-time events count, even though they don’t show up in your “taxable income” line.
A few mechanics worth knowing:
- It’s tiered. There are five income brackets above the base. Higher-income beneficiaries pay 35%, 50%, 65%, 80%, or 85% of program costs instead of the standard 25%, which works out to paying roughly 1.4 to 3.4 times the standard premium.
- It’s a cliff, not a ramp. Crossing into the next bracket by a single dollar can raise your premiums by over $1,000 a year — and for a married couple where both are on Medicare, that hit applies to each spouse.
- Part B and Part D are billed separately. The Part B surcharge attaches to your standard premium ($202.90 per month in 2026); the Part D surcharge is added on top of your drug-plan premium and is deducted from your Social Security check or paid directly to Medicare.
For the 2026 coverage year, the surcharge starts once MAGI exceeds $109,000 for a single filer or $218,000 for a married couple filing jointly. Those are the current official figures — the 2028 thresholds your 2026 income will actually be measured against aren’t published yet.
Who It Actually Hits
Most retirees never pay IRMAA. The surcharge reaches only about 8% of people enrolled in Medicare Part B and Part D — a figure CMS confirmed in its 2026 release, consistent with the Medicare Trustees Report’s 7–8% estimate. For the large majority, income sits below the threshold and the standard premium is all they’ll ever see.
The line for 2026 sits at $109,000 in MAGI for a single filer and $218,000 for a married couple filing jointly. Below that, no surcharge. Above it, you enter the first of five tiers — and the amount climbs from there, with the highest earners covering up to 85% of their Part B program cost versus the standard 25%.
Two things make the “who” less predictable than it looks:
- It’s per person, not per household. For a married couple where both are enrolled, the surcharge is assessed on each spouse separately, so a joint income event can double the cost.
- New retirees get caught most often. Because the SSA works off a return from two years back, someone who earned a full salary in 2024 and retired since can land in an IRMAA tier in 2026 while living on a fixed income — paying a high-earner surcharge on money they no longer make. (The Social Security “hold harmless” rule that shields most beneficiaries from premium spikes doesn’t apply to IRMAA payers.)
The takeaway for the reader isn’t “you’ll owe this.” It’s: know whether a 2026 income event could put you over the line, because the people surprised by IRMAA are usually the ones who didn’t realize they were near it.
Why People Find Out Too Late
The trap isn’t the surcharge itself — it’s the lag between the decision and the bill. The income event that triggers IRMAA happens in one tax year, but you don’t hear about the consequence until roughly two years later, after the deciding year is closed and nothing can be changed.
Here’s the sequence. Your 2026 income lands on the 2026 tax return you file in early 2027. The SSA pulls that IRS data and, if you’re over a threshold, mails a predetermination notice followed about 20 days later by an initial determination notice that formally sets your premium. In practice those letters typically go out in December for the coverage year that starts the following January. So a 2026 income decision surfaces as a notice in late 2027 for premiums you pay across 2028.
By then the lever is gone. You can’t retroactively shrink a Roth conversion, undo an asset sale, or respread a capital gain from two years back. This is why one-time events are the usual culprit — a business sale, a property disposition, or an RMD spike can push MAGI over a cliff for a two-year premium period, and the person often has no idea it happened until the letter arrives.
There is one real exit, but it’s narrow: if your income dropped because of a qualifying life-changing event — retirement, work stoppage, marriage, divorce, death of a spouse, or loss of income-producing property — you can ask the SSA to use more recent income by filing Form SSA-44, and you generally have 60 days from the determination notice to appeal. What you can’t do is appeal simply because a planned, voluntary income event turned out to be expensive. That’s the case for planning ahead in the year that still counts.
The 2026 Decisions That Matter
If 2026 is the year that sets your 2028 premium, it’s also the year you have the most control. IRMAA is driven by MAGI, so the levers that matter are the ones that shape how much taxable income you recognize this year. None of these guarantees a lower premium — they’re tools that may keep MAGI under a threshold, and each depends entirely on your own tax picture.
Four that come up most often:
- Sizing Roth conversions carefully. A conversion adds to MAGI in the year you do it, which flows through to IRMAA two years later. Converting during lower-income years — often the window between retirement and RMDs — can help you pursue long-term tax benefits, but an oversized conversion can push you over a cliff. The planning question is how much room you have below the next threshold before the conversion costs more than it saves.
- Timing capital gains and asset sales. A home sale, business sale, or large gain can spike MAGI in a single year. Spreading gains across two tax years, or timing them for a year you’re already over the threshold, may keep a one-time event from triggering a surcharge.
- Qualified Charitable Distributions (QCDs). If you’re 70½ or older, you can direct up to $111,000 per person in 2026 ($222,000 for a married couple, each from their own IRA) straight from an IRA to a qualified charity. Because a QCD is excluded from income rather than deducted, it satisfies your RMD without adding to MAGI — one of the few moves that reduces the income figure IRMAA uses. The 2026 limit rose from $108,000 in 2025, and the transfer must go directly from custodian to charity by December 31.
- Reducing current MAGI through pre-tax contributions and tax-loss harvesting. Contributions to a traditional IRA, 401(k), SEP, or HSA lower taxable income now — and the MAGI that surfaces two years out. Harvesting investment losses can offset gains that would otherwise count.
One caveat worth stating plainly in the article: these don’t operate in isolation. IRMAA interacts with income taxes, the taxation of Social Security benefits, and the net investment income tax, so a move that helps one can worsen another. The point isn’t to chase the lowest possible MAGI — sometimes paying a surcharge is the right call for a larger goal like a strategic Roth conversion. It’s to decide intentionally, with the full picture, in the year the decision still counts.
This article is educational and general in nature. It isn’t individualized tax, investment, or legal advice — your own situation should be reviewed with a qualified professional before you act.
Plan in the Year That Counts
The concept isn’t complicated. What’s hard is the execution — knowing how much income to recognize this year, and in which order, against everything competing for the same dollars: the IRMAA cliffs two years out, Social Security timing, RMDs, the senior deduction, capital gains, and a tax picture that keeps shifting under you while you plan.
If you’d like to explore how coordinated retirement income and tax planning might apply to your situation, you can request a Fit Meeting with Paul Axberg at Axberg Wealth Management. This introductory conversation is designed to review your priorities, look at how decisions like distribution timing, charitable giving, and income sequencing fit together, and determine whether working together is an appropriate mutual fit — without assumptions or commitments.
Disclosures
The opinions expressed herein are not meant to provide specific investment advice or serve as a prediction for future stock market performance. We recommend everyone consult with a financial professional for advice related to their own, individual financial situation or plan. Paul Axberg is an investment advisor representative of, and securities and advisory services are offered through USA Financial Securities, Member FINRA/SIPC. A registered investment advisor located at 6020 E. Fulton St., Ada, MI 49301. Axberg Wealth Management is not affiliated with USA Financial Securities.