Key Takeaways

• IRMAA (Income-Related Monthly Adjustment Amount) is not a one-time charge—it adjusts every year based on your income from two years ago.

• Planning ahead can help you reduce or avoid IRMAA surcharges, but many retirees don’t realize they have options.

Understanding IRMAA: The Hidden Medicare Cost That Might Surprise You

If you’re enrolled in Medicare, you might assume your monthly premiums are set in stone. However, the Income-Related Monthly Adjustment Amount (IRMAA) can change how much you pay for Medicare Part B and Part D, and it often catches people off guard. IRMAA is an extra charge added to your Medicare premiums if your income exceeds certain thresholds. The problem? Many people don’t even realize they’re subject to it until they get a notice from Social Security.

To help you better understand IRMAA and how it affects your Medicare costs, let’s break down six of the most common misconceptions—and what you need to know to avoid unnecessary surprises.

1. “IRMAA Affects Everyone on Medicare”

Not everyone pays IRMAA. In 2025, IRMAA only applies to those whose modified adjusted gross income (MAGI) exceeds $103,000 for individuals or $206,000 for married couples filing jointly. If your income falls below these limits, you won’t pay any extra Medicare charges due to IRMAA.

Many people mistakenly believe that Medicare automatically includes IRMAA for all beneficiaries, but that’s not the case. Social Security determines your IRMAA status based on tax returns from two years prior. That means your 2023 income determines whether you owe IRMAA in 2025.

2. “IRMAA Is a Fixed Charge That Never Changes”

A common myth is that once you’re subject to IRMAA, you’re stuck paying it indefinitely. In reality, IRMAA is recalculated every year using your latest available tax return. If your income decreases, your IRMAA surcharge may drop—or even disappear altogether.

For example, if your income was above the threshold in 2023 but dropped below it in 2024, your IRMAA charge would be removed in 2026. You’re not locked into higher premiums forever, and you can request a reassessment if your financial situation changes.

3. “There’s Nothing You Can Do to Lower Your IRMAA”

Many retirees believe IRMAA is unavoidable, but that’s not true. There are ways to legally reduce or eliminate your IRMAA charges:

• Life-Changing Event Appeal: If you’ve experienced a qualifying life event—such as retirement, loss of income, or marriage—you can request a reconsideration from Social Security.

• Strategic Income Planning: Adjusting withdrawals from retirement accounts, using Roth conversions, or timing capital gains strategically can help you stay below IRMAA thresholds.

• Charitable Contributions and Qualified Distributions: Certain types of charitable donations and tax-efficient withdrawals can lower your reported income.

Understanding these strategies can help you manage your Medicare costs more effectively.

4. “IRMAA Only Affects Medicare Part B”

Most people are aware that IRMAA increases their Medicare Part B premiums, but fewer realize it also applies to Part D prescription drug coverage. If you’re subject to IRMAA, you’ll pay additional charges on both your Part B and Part D plans.

These extra costs are deducted from your Social Security benefits or billed directly to you. Unlike standard Medicare premiums, IRMAA amounts are not covered by Medicare Advantage or Medigap plans. That means if you’re not prepared for these additional costs, they can add up quickly.

5. “IRMAA Notices Are Always Correct”

Social Security determines IRMAA based on IRS tax data, but mistakes can happen. If you receive an IRMAA notice and believe it’s incorrect, you have the right to appeal. Common errors include:

• Incorrect income data from the IRS

• Misclassification of tax filing status

• Not accounting for a life-changing event

If you suspect an error, you can submit Form SSA-44 to request a reconsideration. Be sure to provide supporting documents, such as a recent tax return or proof of a major financial change.

6. “IRMAA Applies Immediately When Your Income Exceeds the Threshold”

Another common misconception is that IRMAA is applied as soon as your income crosses the threshold. In reality, it takes two years for IRMAA to catch up. Your 2025 IRMAA determination is based on your 2023 income, and your 2026 determination will be based on your 2024 income.

This delay means that if you have a one-time spike in income—such as selling property or withdrawing a large amount from a retirement account—you might not feel the IRMAA impact until two years later. Knowing this timeline allows you to plan ahead and potentially minimize your exposure to higher Medicare costs.

Why Staying Informed About IRMAA Matters

IRMAA can significantly increase your Medicare expenses if you’re not prepared for it. Because the income thresholds and surcharge amounts change annually, it’s important to review your financial situation regularly and explore ways to reduce unnecessary costs.

If you’re unsure whether you’ll be subject to IRMAA or need help planning around it, a licensed agent listed on this website can guide you through your options and help you make informed Medicare decisions.