If you recently retired or soon will, and you're enrolled in Medicare (or will be), it's critical to understand Income-Related Monthly Adjustment Amounts (IRMAAs). These are essentially surcharges added to the Medicare premiums of beneficiaries with incomes above certain levels.
At first glance, it may seem reasonable for the federal government to charge higher-income individuals more for health insurance. However, IRMAAs are based on your income from two years earlier, which may differ from your current income. And if you're subject to one, the additional charge can be hundreds or even thousands of dollars.
The good news is the government recognizes that certain events can cause income to decline — and retirement is one of them. So, you can file an appeal. Let's explore some key questions about this process.
Federal law requires some Medicare beneficiaries, based on their income, to pay higher premiums. This affects Medicare Part B (medical insurance) and Medicare Part D (prescription drug coverage). It doesn't apply to Medicare Part A (hospitalization). For 2026 Medicare Part B, the standard monthly premium is $202.90 (up from $185 in 2025). Part D premiums vary by plan and are typically set by Medicare-approved private insurers.
IRMAAs are tacked on to the standard monthly premiums. Because they're based on your modified adjusted gross income (MAGI) as reported on your federal tax return from two years earlier, your 2024 MAGI will determine whether you must pay an IRMAA in 2026.
The income thresholds that trigger IRMAAs are adjusted annually for inflation. For example, in 2026, if your 2024 MAGI was lower than $109,000 (or $218,000 for married couples filing jointly), you generally won't have to pay the additional amount. For more specifics about this year's numbers, see "2026 Medicare Income-Related Monthly Adjustment Amounts (IRMAAs)" below.
So, let's say you retire in 2026, but you reported a 2024 MAGI of $210,000 while you were still working. In this case, your monthly 2026 Medicare Part B premium would initially be $649.20 (the $202.90 standard amount plus a $446.30 IRMAA).
The IRS provides taxpayers' MAGI to the U.S. Social Security Administration (SSA), which determines whether Medicare beneficiaries must pay an IRMAA. If the income reported no longer reflects your current situation, you can file an appeal by submitting Form SSA-44, "Medicare Income-Related Adjustment Amount – Life-Changing Event," to the SSA. Most people do so after receiving an IRMAA determination notice.
However, to succeed at an appeal, you must prove that you experienced a "life-changing event," such as:
When filing the form, you'll need to provide the date of the event and the amount of your MAGI (actual or anticipated), along with evidence that your income has decreased. Evidence may include a copy of your federal tax return, a severance agreement, or a letter from an employer stating that your employment was reduced or ended. If you're self-employed, you may need to include certain other information, such as a signed personal statement.
The SSA doesn't publish statistics on how many requests are approved or denied. Many initial requests are delayed or rejected because of documentation errors.
If your appeal is successful, the IRMAA will be reduced or eliminated, lowering your Medicare premiums. In some cases, refunds of excess premiums paid after the life-changing event are issued. Such refunds generally cover all months back to the effective date of the life-changing event.
Important: A premium reduction or elimination applies to only the year for which you filed an appeal. The SSA will reassess whether you're subject to an IRMAA using your next available tax return.
If you're planning to retire in the next couple of years, you may be able to prevent IRMAA liability by lowering your MAGI. After all, actions taken on your 2025 federal income tax return affect your 2025 MAGI — which will, in turn, impact your 2027 Medicare premiums.
Careful planning is especially relevant if you're self-employed or a pass-through entity owner, such as:
Such individuals may have valuable opportunities to manage taxable income when preparing their returns.
For instance, the self-employed have until the due date of their 2025 tax returns to make deductible IRA contributions under a Simplified Employee Pension (SEP) plan. (For the 2025 tax year, the deadline is April 15, 2026.) If you're self-employed and file for an automatic tax return extension, you'll have until October 15, 2026, to contribute to your SEP-IRA. In either case, that contribution will lower your 2025 MAGI and potentially your 2027 Medicare premiums.
Likewise, pass-through entity owners may be able to make other choices to lower their MAGI. One possibility may be to maximize or minimize business depreciation deductions. (Consult your tax advisor to discuss specific strategies.)
For retirees and soon-to-be retirees, it's critical to address the possibility of being subject to an IRMAA so you can decide whether to file an appeal. If you leave the matter to chance and you are liable, Medicare will keep charging you higher premiums based on old tax returns that may no longer reflect your current income. Ask your tax advisor for help reviewing or projecting your MAGI to determine the best path forward.
*Modified adjusted gross income.
†Includes head of household, qualifying widow(er) with dependent child and married filing separately if you didn't live with your spouse during the tax year.
Get in touch today and find out how we can help you meet your objectives.
