When you think about retirement costs, Medicare premiums probably aren’t the first thing that come to mind.

But there’s a little-known surcharge—IRMAA—that can quietly eat into your income.

And it can hit harder than you think.

What Is IRMAA, Really?

IRMAA stands for Income-Related Monthly Adjustment Amount. It’s an extra charge added to your Medicare Part B and Part D premiums if your income is above certain thresholds.

Here’s the part that trips people up:

• It’s based on your Modified Adjusted Gross Income (MAGI)—which can include wages, self-employment income, pensions, withdrawals from pre-tax retirement accounts, dividends, capital gains, rental income, and more.

• It looks back two years. Your 2025 Medicare premiums are based on your 2023 income.

• One dollar matters. Go just $1 over a bracket, and you’ll pay the higher premium for an entire year—per person. That’s what we call falling off the Medicare cliff.

IRMAA Brackets for 2025

Here’s what the Part B IRMAA brackets look like for 2025 (per person, per year):

Note: Part D surcharges are additional.

That’s why planning around IRMAA matters—it’s not just a few dollars, it can mean thousands over time.

How IRMAA Is Paid (and Why It Matters)

If you’ve started Social Security, Medicare premiums (and IRMAA surcharges) are deducted right from your monthly check. That means potentially less cash flow—possibly at a time when you need it most, like during market downturns.

If you’re on Medicare but not yet taking Social Security, you’ll get a bill each month. That’s another payment to budget for, which can feel like a drain on resources.

Even for people with healthy savings, Social Security provides a steady, predictable income. So when IRMAA reduces that amount, it may be noticeable.

What Can Trigger IRMAA?

Many retirees think IRMAA is just about “high earners.” Not true. You could trigger IRMAA from:

• Large capital gains from selling stocks, bonds, or mutual funds
• Sale of real estate (including rental property)
• A big traditional IRA or 401(k) withdrawal (including Required Minimum Distributions)
• Roth conversions
• Part-time consulting or business income
• Cashing in a pension lump sum
• Inherited IRA withdrawals

Even one-time income spikes can have a two-year impact on your premiums.

When Life Changes—Form SSA-44

Here’s something most people don’t know: if your income drops due to a life-changing event, you may qualify for IRMAA relief.

The form you’ll need is SSA-44: Medicare Income-Related Monthly Adjustment Amount – Life-Changing Event.

Qualifying events include:

• Marriage or divorce
• Death of a spouse
• Work stoppage or reduction in work
• Loss of pension income
• Loss of income from income-producing property

By filing SSA-44, you’re asking Social Security to recalculate your IRMAA based on your new, lower income instead of the two-year-old figure.

The Rule of $1—and Why It’s Dangerous

Here’s the rule no one may warn you about:

If you go even $1 over the IRMAA threshold, you’re in the next bracket. That means higher premiums for the whole year.

Example: Let’s say the joint filer limit is $266,000, and your MAGI comes in at $266,001 because of a year-end stock sale. That single extra dollar could cost you up to $1,500 in additional Medicare premiums for the year.

Roth Conversions and IRMAA

Roth conversions can be an excellent long-term tax strategy. But in the short term, they increase your taxable income and can push you into a higher IRMAA bracket.

That doesn’t mean you shouldn’t do them—it means you should plan conversions carefully, possibly spreading them over several years to avoid unnecessary surcharges.

We Believe Your Best Defense is A Thoughtful Plan

IRMAA isn’t just about taxes—it’s about cash flow, timing, and protecting your income.
A coordinated plan can help you:

• Time withdrawals and income events strategically
• Use tax diversification to your advantage
• Avoid unnecessary IRMAA surcharges
• File SSA-44 promptly if you qualify for relief
• Make Roth conversions work without unwanted surprises

Bottom line:

IRMAA can be one of retirement’s “stealth costs”—but it doesn’t have to catch you off guard. With careful planning, you can avoid unnecessary surcharges and keep more of your hard-earned money working for you.

👉 If you’d like to see how IRMAA fits into your retirement income picture, let’s start that conversation now—before a $1 mistake costs you thousands.