IRMAA Surcharge: How Income Affects Medicare Cost

A single Medicare beneficiary with 2024 modified adjusted gross income of $109,000 pays nothing extra. One dollar more — $109,000.01 — and the Income-Related Monthly Adjustment Amount (IRMAA) adds $81.20 per month to Part B and $14.50 to Part D, or $1,148 for the year. That is the structure of a cliff, not a slope. The surcharge does not phase in across the dollar that crosses the line; it lands in full the moment modified adjusted gross income (MAGI) clears the threshold, and it scales upward in five discrete steps from there to a ceiling of $6,936 per person in 2026.

For a household earning $150k+ that plans to stop working before 65, IRMAA is not a distant Medicare problem. It is a constraint that shapes which retirement-account moves make sense in the years before enrollment — because the income recorded today sets the premium billed two years later.

The 2026 numbers, in one block

Five figures define the surcharge for a single filer this year. Each is per beneficiary, per year, layered on top of the standard premium.

Source: CMS, “2026 Medicare Parts A & B Premiums and Deductibles” (November 2025); surcharge totals per IRMAA Group bracket compilation of CMS figures (2026).

The lookback is the detail most coverage buries. Your 2026 surcharge is set by your 2024 tax return, filed in 2025. A Roth conversion executed in 2024, a large capital gain from selling a position, a final bonus year — any of these can trigger a premium two years later, after the income event is long settled and no longer changeable.

How the brackets actually step

IRMAA runs on six tiers for single and joint filers: a base tier with no surcharge, then five surcharge tiers. The Part B surcharge and the Part D surcharge use the same income brackets but are billed separately — Part B is added to your $202.90 standard premium, Part D is added to whatever your chosen drug plan charges. Both are deducted from a Social Security check when one is being drawn, or billed directly by CMS when it is not.

Source: CMS, “2026 Medicare Parts A & B Premiums and Deductibles” (November 2025), compiled via IRMAA Group (2026). Combined annual figures = (Part B surcharge + Part D surcharge) × 12, rounded to the dollar. Standard 2026 Part B premium is $202.90/month.

Notice the spacing between tiers for a single filer. The first three brackets are roughly $30,000–$34,000 wide. Tier 4 is enormous — it spans from $205,000 to just under $500,000, almost $295,000 of income at one surcharge level. Then Tier 5 opens at $500,000 and stays open, because the top bracket is frozen by statute at $500,000 single and $750,000 joint through at least 2028 while the lower tiers inflate upward each year. That freeze is a slow tightening: as the inflation-adjusted lower brackets climb, the fixed top tier captures more filers annually. Standard bracket creep, applied to Medicare.

Why this hits early retirees differently

The household drawing a paycheck and the household living off a portfolio look identical to IRMAA — it reads MAGI, not employment status. But the early retiree controls MAGI in a way the worker does not. Withdrawal sequencing, the timing of a Roth conversion ladder, whether to realize gains in a low-income year — these are discretionary levers, and each one feeds the same MAGI figure that determines the surcharge two years out.

That cuts both ways. The early retiree who wants to convert traditional IRA balances to Roth in low-income years faces a direct tension: conversions add to MAGI, and a conversion large enough to be efficient can push MAGI past an IRMAA threshold. A retiree filling the bracket up to the top of the 22% or 24% federal band may not realize that the same income figure is simultaneously being measured against $109,000 or $218,000 for Medicare purposes — but only if they are within two years of enrollment. Convert aggressively at 55, and IRMAA is irrelevant; the surcharge clock does not start until the lookback window for age-65 premiums begins, around age 63. The planning question is not “avoid IRMAA forever” but “where does the conversion calendar intersect the lookback window.”

There is a second wrinkle specific to people who retire before claiming Social Security. IRMAA is normally deducted from a Social Security check. An early retiree who has deferred Social Security to capture delayed retirement credits has no check to deduct from, so CMS bills the surcharge directly — a cash outflow that arrives quarterly rather than a number that quietly shrinks a deposit.

The Finluxy Early Retirement Cost Premium, with IRMAA in view

The Finluxy Early Retirement Cost Premium measures the additional annual cost of retiring at a target age versus retiring at 65, the Medicare-eligibility age. Its three components are the healthcare bridge cost from the retirement age to 65, any 10% additional tax on early distributions where pre-59½ funds are accessed without a qualifying method, and the Social Security benefit reduction from filing early. IRMAA sits inside the first component once enrollment begins, and it interacts with the third through the decision of when to draw a check.

Consider a single filer retiring at 50 versus 65. The healthcare bridge spans fifteen years of private coverage before Medicare. For an unsubsidized older adult buying a benchmark silver plan, KFF data on 2026 marketplace premiums points to an annual premium in the low-to-mid five figures once the enhanced premium tax credits expire at the end of 2025 — KFF estimates a 60-year-old at just over 400% of poverty would, in many states, pay benchmark-plan premiums consuming a quarter or more of income, with unsubsidized annual costs commonly in the $20,000–$24,000 range and higher in expensive states. Model-specific point premiums for a 50-year-old at a $150k+ income were not published as a single national figure, so the bridge below uses a defensible $22,000/year midpoint for illustration; the exact figure should be pulled from the KFF calculator for the retiree’s ZIP code and age.

Sources: KFF, marketplace premium analyses (Dec 2025–Feb 2026); SSA, benefit reduction and delayed retirement credit rules (Congress.gov R47151; SSA Benefits Planner); CMS 2026 IRMAA (Nov 2025). Healthcare-bridge and Social Security figures are illustrative; substitute the retiree’s actual benchmark premium and FRA benefit. The 10% additional tax on early distributions is excluded here on the assumption that pre-59½ access uses a qualifying method such as substantially equal periodic payments.

The cost premium is dominated by the healthcare bridge and the Social Security reduction, not by IRMAA. IRMAA’s Tier 1 figure of $1,148 is small against a $22,000 premium. But the framing matters: the bridge cost and IRMAA are both MAGI-sensitive, and a retiree managing MAGI down to qualify for ACA premium assistance before 65 is using the same lever that governs IRMAA after 65. The two cliffs are adjacent, and the income strategy that clears one often determines the other.

Avoiding the 10% additional tax doesn’t avoid IRMAA

A retiree under 59½ who needs to tap an IRA without triggering the 10% additional tax on early distributions typically uses substantially equal periodic payments. Under IRS Notice 2022-6, substantially equal periodic payments (SEPP) must continue for the greater of five years or until age 59½, calculated by one of three approved methods — required minimum distribution, amortization, or annuitization. The 72(t) SEPP solves the penalty problem. It does nothing for IRMAA.

Every dollar a SEPP distributes is ordinary income and counts toward MAGI. A retiree who structures a 72(t) SEPP large enough to live on may find that the locked, unchangeable payment stream pushes MAGI above an IRMAA threshold in the lookback years before 65 — and because a SEPP cannot be modified without retroactive penalties, that income is fixed. The interaction is the trap: the method chosen to avoid one tax (the 10% additional tax) can hard-wire exposure to a surcharge (IRMAA) that arrives a decade later. The retiree who builds a SEPP withdrawal plan at 52 should model the MAGI that plan produces at 63 and 64, not just the income it produces today.

What most coverage overlooks

The standard IRMAA article treats the surcharge as a retirement-income problem — manage your withdrawals at 66, 67, 68. The dataset shows the leverage is earlier and narrower than that. Because IRMAA uses a two-year lookback and Medicare enrollment is at 65, the income that determines your first IRMAA bill is your MAGI at age 63. For an early retiree, age 63 is often the single most consequential year in the entire conversion calendar — late enough that conversion runway is closing, early enough that the income still lands in the lookback window. Most coverage never isolates that year because most coverage is written for people who worked until 65, for whom age 63 income is just employment income they cannot control anyway.

For the deliberate early retiree, age 63 and 64 MAGI are fully controllable and fully decisive. A conversion that made sense every year from 55 to 62 may need to stop, or shrink, at 63 — not for income-tax reasons, but because that year’s MAGI now carries a Medicare price tag that the years before it did not. That is the planning edge the bracket-and-lookback structure creates, and it is invisible if you only look at the surcharge table without overlaying the enrollment timeline.

The $150k+ household calculus

A household at $150k+ income is, almost by definition, in or near IRMAA territory the moment it enrolls — joint MAGI of $218,000 is not a stretch for two people with pensions, portfolio income, and any Social Security. The relevant question is not whether to avoid IRMAA entirely, which is often impossible and sometimes not worth the contortion, but where the surcharge tiers sit relative to the income moves that matter more: filling low federal brackets with Roth conversions, managing the ACA premium cliff before 65, and timing the withdrawal sequence across a 40-year horizon.

The trade-off that defines this income bracket is conversion depth versus surcharge exposure in the two pre-enrollment years. Outside the age-63-to-64 window, IRMAA is irrelevant and conversions should be sized purely on income-tax efficiency. Inside it, a tier jump of $1,148 to $1,735 per person is rarely a reason to forgo a conversion that saves multiples of that in lifetime tax — but it is a reason to know exactly where the line is, and to round the conversion to land just under it when the cost is trivial to do so. The error is not paying IRMAA; it is paying it by accident, in a year you could have measured. A household running an early retirement plan for $150k+ earners should treat the IRMAA bracket table and the Medicare enrollment date as a single overlay on the conversion calendar, and price the surcharge as one line among several rather than the headline. Coordinating that overlay with a tax professional who will model the age-63 MAGI explicitly — not just the current-year tax bill — is where the dollars are won or lost.