By the Cornerstone Wealth Management Team
Higher-than-anticipated Medicare premiums often catch retirees off guard. The culprit is typically IRMAA and Medicare’s income-based surcharge system, which adds hundreds or even thousands of dollars per year to what higher-income beneficiaries pay. What makes it especially frustrating from a financial planning perspective is that the income used to calculate the surcharge isn’t even from this year, it’s from two years ago.
This article explains exactly how IRMAA works, what income thresholds trigger it in 2026, and what steps you can take to manage it before it affects your retirement budget.
What Is IRMAA and How Does It Work?
IRMAA (the Income-Related Monthly Adjustment Amount) is a surcharge added to your standard Medicare Part B and Part D premiums when your income exceeds certain thresholds. Rather than paying the standard premium, higher-income beneficiaries pay a larger share of the actual cost of coverage.
What catches many retirees off guard is that Medicare uses your Modified Adjusted Gross Income (MAGI) from two years prior to determine your current year’s premium.
That means a strong income year in 2024, from a business sale, a Roth conversion, required minimum distributions, or the sale of a property, could directly increase your Medicare premiums in 2026, even if your income has since dropped significantly.
2026 IRMAA Thresholds: What Triggers a Surcharge?
The surcharge kicks in at different income levels depending on your filing status, with the additional monthly premium increasing at each bracket. For 2026, the income brackets are based on 2024 MAGI.
For individuals filing single:
- $109,000 or less — standard premium, no surcharge
- $109,001 to $137,000 — moderate surcharge added
- $137,001 to $171,000 — surcharge increases
- $171,001 to $205,000 — surcharge increases further
- $205,001 to $499,999 — significant surcharge
- $500,000 and above — highest surcharge tier
For married couples filing jointly, the thresholds are generally doubled.
Depending on income, the additional monthly Part B premium can range from about $81 to $487 per person per month on top of the standard premium. At the highest tier, total additional Medicare costs for a couple can exceed $13,000 annually when Part B and Part D surcharges are combined.
How Do IRMAA and Medicare Interact With Retirement Income Planning?
The two-year lookback is where IRMAA and Medicare planning intersect most directly with retirement income strategy. As mentioned, a retiree who triggers a significant capital gain may not feel the Medicare impact until two years later, and by then, the window to prevent it has closed.
Consider a married couple, both retired, with income that normally keeps them comfortably below the IRMAA threshold. In 2024, they sell a vacation property and recognize $180,000 in capital gains. That single transaction pushes their 2024 MAGI above the threshold, and their 2026 Medicare premiums increase accordingly, for both Part B and Part D, for both spouses.
This is why Roth conversion strategies, asset sale timing, and income smoothing aren’t just tax planning decisions, they’re Medicare planning decisions too.
Can You Appeal an IRMAA Determination?
Yes, and it’s worth knowing when. If your income has dropped significantly since the year Medicare used to calculate your surcharge, you can request a review using Form SSA-44. Qualifying life-changing events include retirement, divorce, the death of a spouse, and loss of income-producing property.
A retiree who earned $250,000 in 2024 but retired in 2025 and now lives on $85,000 per year doesn’t have to simply absorb the higher premium. Filing for a reconsideration with documentation of the income change can bring premiums back in line with current circumstances, but the process requires documentation and follow-through.
Strategies to Reduce IRMAA Exposure
Managing IRMAA often comes down to thoughtfully timing and structuring income across retirement years rather than simply avoiding income altogether.
Several strategies can reduce surcharge exposure over time:
- Roth conversions in lower-income years reduce future required minimum distributions, which are a common trigger for IRMAA surcharges.
- Qualified charitable distributions (QCDs) allow IRA owners age 70½ and older to donate directly to charity, satisfying RMD requirements without the distribution counting as taxable income.
- Capital gain harvesting across multiple years instead of concentrating gains in a single tax year.
- Coordinating Social Security timing to manage the year income first crosses key thresholds.
None of these strategies work in isolation, they require a coordinated plan that looks at income across multiple years, not just the current one.
Take Control of Your Medicare Costs Before They Surprise You
IRMAA surcharges are one of the more manageable costs in retirement, but only when they’re planned in advance.
At Cornerstone Wealth Management, we work with retirees and pre-retirees in the Henderson and Las Vegas areas to build retirement income strategies that account for Medicare costs alongside tax planning, investment management, and long-term financial goals.
If you’d like to understand how your income picture affects your Medicare premiums, and what you can do about it, we’re glad to walk through it with you. No pressure, just a straightforward conversation about where you stand.
Schedule a complimentary call today by calling (702) 342-0781 or emailing scheduling@cornerstonevegas.com.
Frequently Asked Questions
What income triggers higher Medicare premiums through IRMAA?
IRMAA and Medicare surcharges are triggered when your Modified Adjusted Gross Income (MAGI) exceeds certain thresholds set by Medicare. For 2026, single filers with income above $109,000 and married couples filing jointly above roughly double that amount may pay higher Part B and Part D premiums. What surprises many retirees is that Medicare looks back two years, meaning a large Roth conversion, business sale, or capital gain in 2024 could increase your Medicare premiums in 2026.
How can I reduce IRMAA surcharges on Medicare premiums?
Several strategies may help reduce IRMAA and Medicare surcharge exposure over time, including spreading out capital gains, managing Roth conversions carefully, and using qualified charitable distributions (QCDs) to lower taxable income. Coordinating withdrawals from retirement accounts and timing Social Security benefits strategically can also help. At Cornerstone Wealth Management, we help retirees build retirement income strategies designed to manage taxes and Medicare costs together rather than treating them separately.
Can you appeal an IRMAA determination if your income drops?
Yes. If your income has significantly decreased due to retirement, divorce, the death of a spouse, or another qualifying life event, you may be able to appeal your IRMAA surcharge using Social Security Form SSA-44. Many retirees don’t realize Medicare adjustments are not always permanent. Cornerstone Wealth Management helps clients evaluate whether an appeal makes sense and how Medicare costs fit into a broader retirement and tax planning strategy.
About Cornerstone Wealth Management
Cornerstone Wealth Management is a fiduciary wealth management firm based in Henderson, Nevada, helping retirees and pre-retirees nationwide plan for their future with clarity, confidence, and care. Co-founded by Jammie Avila, Kyle Kirwan, and Anthony Napolitano, the firm takes a comprehensive approach that unites income, investment, tax, healthcare, insurance, and legacy planning under one roof—simplifying complex financial decisions so clients can focus on what matters most.
Disclosures: Registered Representatives offer securities through Independent Financial Group, LLC (IFG), Member FINRA/SIPC. Investment Advisor Representatives offer Advisory services through Independent Financial Group, LLC (IFG), a Registered Investment Adviser.
Cornerstone Wealth Management, Cornerstone Tax Advisory and IFG are unaffiliated entities.
The foregoing content was prepared by Indigo Marketing Agency with verbiage, opinions and/or financial commentary input provided by Cornerstone Wealth Management.
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