What the IRMAA Cliff Actually Costs Retirees in 2026

By the numbers: One dollar over $218,000 costs a two-person household $1,948.80 more in 2026 Part B premiums.

What IRMAA is, in plain English

IRMAA stands for "Income-Related Monthly Adjustment Amount." It's a Medicare surcharge added to your Part B and Part D premiums when your MAGI (modified adjusted gross income) exceeds annual thresholds.

Three things make IRMAA particularly nasty:

• It's a cliff, not a slope. One dollar over a threshold puts you in the next tier for the entire year. No gradual phase-in.
• It uses a two-year lookback. Your 2026 Medicare premiums are based on your 2024 tax return. By the time you learn what tier you're in, the income decision is already two years old.
• It's calculated per person. A couple both on Medicare pays the surcharge twice. The "annual hit" numbers below are per person for a couple.

IRMAA is layered on top of the standard Medicare Part B premium ($202.90/month in 2026 at baseline) and the average Part D plan premium. The surcharge at the top tier is $6,936 a year per person above the baseline ($487.00 Part B plus $91.00 Part D, monthly), so a Medicare-age couple at the top tier pays about $13,872 of IRMAA per year compared to a couple under the first threshold.

The 2026 IRMAA tiers

These are the 2026 MAGI thresholds. Your 2024 tax return determines which tier you fall into for 2026.

The "Annual hit" column shows what a couple both on Medicare pays in extra IRMAA versus a couple at baseline, per year. It is set again each year: every year your income lands in a tier, you pay it again. Source: CMS, 2026 Medicare Parts A and B premiums and deductibles (November 14, 2025); annual figures are (Part B minus $202.90, plus the Part D add-on) times 12, times 2.

What income counts toward IRMAA

MAGI for IRMAA purposes is broadly defined as AGI plus tax-exempt municipal bond interest. The things that count:

• Ordinary income: wages, pension, IRA/401(k) withdrawals, RMDs, Roth conversions
• Capital gains (long-term and short-term): yes, even at the 0% federal capital gains rate, they still count toward IRMAA MAGI
• Qualified dividends
• Interest (taxable AND tax-exempt municipal)
• Rental income
• Up to 85% of Social Security benefits

The things that don't count:

• Qualified Roth IRA withdrawals (no MAGI hit at all)
• QCDs (Qualified Charitable Distributions from IRA after age 70½): they satisfy your RMD but are excluded from AGI
• HSA-qualified distributions
• Gifts and inheritances you receive

This list is the foundation of every retirement income strategy. Retirees who get through their Medicare years without IRMAA aren't lucky. They plan the order of their withdrawals around these definitions.

How Roth conversions interact with IRMAA

Every dollar of a Roth conversion is counted as ordinary income for the conversion year. That same dollar is counted as MAGI for IRMAA purposes, with the 2-year lookback.

This creates a planning trap: a conversion done in 2026 (perfectly reasonable for federal bracket purposes) shows up on 2028 Medicare premiums. By 2028 the conversion is ancient history; the IRMAA letter is a surprise.

The right way to think about it: your conversion target ceiling has to bake in IRMAA, not just federal brackets. Here is the math for a married couple, both on Medicare, already in Tier 1 from RMDs and Social Security. Converting another $50,000 moves them into Tier 2. Their IRMAA for that year goes from $2,297 to $5,770, so the conversion costs an extra $3,473 in premiums on top of the income tax (2026 amounts). Whether that is worth it depends on how much tax the conversion saves later. Put the $3,473 in the comparison before deciding, not after the letter arrives.

The calculator at the link below runs this math year by year, including the 2-year lookback, so the IRMAA hit shows up in the right year.

Strategies to stay under the cliffs

Five tactics for managing IRMAA in retirement, in rough order of impact:

1. Time conversions before Medicare starts

The 2-year lookback means MAGI in your year-65 minus 2 = age 63 starts affecting Medicare premiums. Conversions before age 63 have zero IRMAA impact. This is the biggest single lever. Use it.

2. Use QCDs to satisfy RMDs without spiking MAGI

After age 70½, you can send up to $111,000 (2026) of RMD directly to charity via a QCD. The QCD satisfies your RMD but is excluded from AGI, meaning it doesn't count toward IRMAA. For charitably-inclined retirees this is a no-brainer.

3. Sequence withdrawals through Roth in Medicare years

Roth withdrawals don't count toward MAGI at all. If you have a Roth bucket and need cash flow during Medicare years, drawing from the Roth instead of the Traditional IRA keeps you out of the next tier.

4. Bunch capital gains

If you're going to realize a large capital gain (selling appreciated stock, taking a business profit), bunch it into a single year you've already accepted as a high-IRMAA year, rather than spreading it across multiple years and triggering multiple tiers.

5. Appeal after a life-changing event

SSA Form SSA-44 lets you appeal IRMAA after certain qualifying events: retirement, marriage, divorce, death of spouse, loss of income property, pension cessation. A one-time Roth conversion or capital gain is not a qualifying event, but actual retirement is. File the appeal immediately when the IRMAA letter arrives.

Common IRMAA mistakes to avoid

Three patterns we see repeatedly:

• Treating the threshold as soft. It's not. A couple at $218,000 of MAGI pays $2,297 less for the year than a couple at $218,001. There is no rounding and no phase-in.
• Forgetting tax-exempt muni interest counts. Many retirees own muni bonds for the federal tax exemption and assume the income is invisible. For IRMAA purposes it is not: it's added right back into MAGI.
• Realizing capital gains in early Medicare years without planning. The 0% federal long-term capital gains bracket is a beautiful gift in your 60s. Once you're 63+, those same gains start triggering IRMAA two years later. Move your gain-realization to before age 63 if at all possible.

The IRMAA calculator linked below lets you plug in scenarios and see exactly which tier you'd land in. It's the easiest way to stress-test a retirement income plan before pulling the trigger on a conversion or capital gain.

Hans Goldstein, EA

Founder & Executive Director · Retirement Literacy Foundation, a 501(c)(3) non-profit
Admitted to practice before the IRS

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