By Sheila Coomes, CPA, Tax Advisor
Every November, Medicare beneficiaries receive notices showing what their coverage will cost the following year. Many will see the 2027 standard premium amounts. Some will see an increase, even though their coverage didn’t change and neither did their health. The difference is usually IRMAA, short for Income-Related Monthly Adjustment Amount, an income-based surcharge that surprises many people. It feels disconnected from Medicare because it has nothing to do with your care. It is based on a tax return you filed nearly two years earlier.
This surcharge sometimes follows a valid financial decision. A person sells a rental property at a good price, converts part of an IRA to a Roth, or takes a large distribution in a year when the math supports it. The move works exactly as intended, and the tax bill comes and goes as planned. Then, two years later, a Medicare notice arrives with a number nobody was expecting.
Here is how the surcharge works, what to look for when your notice arrives this fall, and the steps you can still take before December 31 to protect future years.
What Is IRMAA?
IRMAA is an additional amount added to two parts of your Medicare coverage:
- Medicare Part B, which covers doctor visits, outpatient care, and preventive services
- Medicare Part D, which covers prescription drugs
Part A is not affected. The Social Security Administration decides who owes the surcharge, using income information supplied by the IRS.
The timing is what surprises people. Social Security uses the most recent return it can get from the IRS, generally the one filed two years earlier. The notice you receive this November for your 2027 premiums, for example, will be based on your 2025 modified adjusted gross income, or MAGI, which is your adjusted gross income plus any tax-exempt interest. When I sit down with a client’s return, the year in front of me is not the one driving their current Medicare bill. It is the one that will show up two years from now. While most retirees never encounter the surcharge at all, Centers for Medicare and Medicaid Services (CMS) estimates only about 7% of beneficiaries paid it in 2025, it is something that can throw off monthly expenses in retirement if you aren’t planning for it.
Is IRMAA a Hidden Tax?
Strictly speaking, no. IRMAA is never collected through your return and never appears on your Form 1040. It acts as an adjustment to the premium you were already paying, based on income you already reported. Many retirees experience it as a tax anyway, which is why you may sometimes see it called a stealth tax.
One difference matters for planning. IRMAA is not permanent the way a tax liability is. Social Security reviews the determination every year, so a single high-income year generally affects a single year of premiums and then goes away on its own.
What Will Your November Medicare Notice Show?
CMS typically announces the following year’s premium amounts in the fall, and notices reach beneficiaries in November and December. As of this writing, CMS has not published the 2027 tiers. They adjust modestly each year. The 2026 numbers show how the structure works and roughly where the lines fall.
For 2026, the surcharge started once your 2024 MAGI exceeded $109,000 for single filers or $218,000 for married couples filing jointly. Below those amounts, you pay the standard Part B premium of $202.90 per month and no Part D surcharge.
| 2024 MAGI (single filer) | 2024 MAGI (married filing jointly) | 2026 monthly Part B premium | 2026 monthly Part D surcharge |
| $109,000 or less | $218,000 or less | $202.90 (standard, no premium) | None |
| $109,001 to $137,000 | $218,001 to $274,000 | $284.10 | $14.50 |
| $137,001 to $171,000 | $274,001 to $342,000 | $405.80 | $37.50 |
| $171,001 to $205,000 | $342,001 to $410,000 | $527.50 | $60.40 |
| $205,001 to $499,999 | $410,001 to $749,999 | $649.20 | $83.30 |
| $500,000 or more | $750,000 or more | $689.90 | $91.00 |
If you are married, filed separately, and lived with your spouse at any point during the year, the thresholds are far less forgiving and the higher tiers arrive much sooner.
Why Did Medicare Think My Income Went Up?
Most retirees expect income to fall once the paychecks stop, and generally it does. What interrupts that pattern is usually one event landing in a single tax year:
- Selling a business or a rental property
- A final bonus or deferred compensation payout before retirement
- Exercising stock options or vesting restricted stock
- Selling highly appreciated investments
- A large Roth conversion
- Required minimum distributions
Any one of these can lift a year’s income well above your normal range, and the surcharge follows two years later, long after the money has been spent or reinvested. That delay is why tax planning and retirement income planning belong in the same conversation. A decision that lowers this year’s tax bill can raise your Medicare cost in 2028.
Planning Ahead for IRMAA Medicare Premiums
The premium on the notice you receive this November for 2027 is already set. It reflects your 2025 return, and unless you qualify for an appeal based on a life-changing event, nothing you do today can change it. What you can still shape before December 31, 2026, is your 2028 premium. That surcharge will be based on the income you report for 2026. The two-year delay that makes IRMAA so frustrating also gives you a long runway, and the decisions most likely to move you across a threshold are ones you control the timing of:
- Roth conversions. Size the conversion to fill the gap between your projected MAGI and the next threshold, then stop, rather than converting a lump sum and finding out later where it landed.
- Realizing capital gains. Split the sale of an appreciated position across two tax years, or offset gains by selling losing positions in the same year to hold the net figure down. The latter is often referred to as tax-loss harvesting.
- Exercising stock options. Stagger exercises across calendar years and price out where a given exercise puts your MAGI before you submit it.
- Retirement account withdrawals. In a year when a large distribution would carry you over the IRMAA threshold, draw from Roth accounts instead or consider a qualified charitable distribution (QCD) if you have RMDs.
Charitable giving offers another option. A QCD, meaning money sent directly from a Traditional IRA to a qualified charity rather than to you first, is non-taxable and does not count towards your MAGI, so routing part of an RMD this way can bring a borderline year back under a threshold.
Each of these works only if you know the threshold before the year closes. Running the projection alongside your tax return, instead of treating each December in isolation, is how most households anticipate IRMAA Medicare premiums rather than react to them.
Why Crossing a Threshold by One Dollar Costs So Much
IRMAA does not phase in gradually. Each threshold works as a step, and when your MAGI crosses it, the full surcharge for that tier applies to the entire year.
For example, picture two single retirees. The first reports 2024 MAGI of exactly $109,000 and pays the standard $202.90 per month for Part B in 2026. The second reports $109,001, one dollar more, and pays $284.10. That one extra dollar of income costs the second retiree $81.20 a month, or $974.40 over the year, plus roughly $174 in Part D surcharges. For a married couple with both spouses on Medicare, exceeding the joint standard premium threshold by a dollar runs closer to $2,300.
Because the steps are this steep, the difference between a $40,000 and $38,500 Roth conversion could matter more than the tax rate applied to the conversion. Those are numbers worth running in October, not the following April.
Am I able to Request a New IRMAA Determination?
In many cases, yes. If your income dropped because of a qualifying life-changing event, you could ask Social Security to use more recent income rather than waiting for the lookback to catch up. Social Security recognizes eight such events:
- Marriage
- Divorce or annulment
- Death of a spouse
- Work stoppage, including retirement
- Reduction in work hours
- Loss of income-producing property
- Loss or reduction of certain pension income
- An employer settlement payment following bankruptcy or closure
You request the change on Form SSA-44 and submit documentation showing the reduction. Filing soon after the event gets the lower premium in place sooner.
One limitation catches people regularly. A drop in income by itself is not enough. Selling a business, realizing large capital gains, or completing a Roth conversion do not qualify on their own, even though each could trigger the surcharge. The reduction must trace back to an acceptable event according to the Social Security Administration.
Get Ahead of Your Next Medicare Notice
A higher premium is easier to anticipate than to unwind. If your notice arrives this fall with a number you did not expect, understanding which return produced it is the first step, and a qualifying life event may open the door to a new determination. If 2026 has been a high-income year for you, there is still time before December 31 to decide how much of it reaches your MAGI.
At CGN Advisors, I work with our advisors so that retirement income decisions, tax preparation, and investment management inform one another. If your premium rose this year and you want to understand why, or you would like to model how this year’s income could affect your 2028 costs, call our Manhattan, Kansas, office at (785) 340-3434.
Frequently Asked Questions About IRMAA Medicare Premiums
When will I know my 2027 Medicare premium?
CMS generally announces the following year’s premium and surcharge amounts in the fall, and Social Security mails notices to beneficiaries in November and December. Your 2027 premium will be based on the 2025 tax return you filed earlier this year. Our guide to Medicare planning in retirement covers how enrollment timing and coverage choices fit alongside these cost questions.
What does IRMAA stand for, and who pays it?
IRMAA stands for Income-Related Monthly Adjustment Amount. It is a surcharge added to Medicare Part B and Part D premiums for beneficiaries whose modified adjusted gross income exceeds an annual threshold, set at $109,000 for single filers and $218,000 for joint filers in 2026 based on 2024 income. CMS estimates about 7% of beneficiaries paid it in 2025.
Why is Medicare using my income from two years ago?
Social Security relies on the most recent tax data the IRS can supply, generally a return filed two years earlier. Your 2026 premium reflects your 2024 MAGI, and if that return is unavailable, Social Security may use 2023 instead. The lag means income you generate today shapes your Medicare costs in 2028, which is why income, distributions and withdrawals deserve a look before the year closes.
Can IRMAA go away on its own?
Yes. Social Security reviews the determination annually. If your income falls back below the threshold, the surcharge comes off the following year with no action on your part. If a qualifying life-changing event reduces your income sooner, Form SSA-44 lets you request a new determination instead of waiting. For more on managing taxable income year to year, see our article on practical ways to reduce income tax.
About Sheila
Sheila Coomes, CPA, is a Tax Advisor at CGN Advisors in Manhattan, Kansas, bringing over 22 years of experience across public accounting, industry leadership, and higher education. A Kansas State University alumna and former Ernst & Young manager, she collaborates with financial advisors to deliver proactive, tax-efficient strategies simplified for individuals and small business owners.
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