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If you've ever been surprised by higher Medicare premiums, IRMAA might be the culprit. The Income-Related Monthly Adjustment Amount is a surcharge applied to higher-income Medicare beneficiaries—and it's based on your income from two years ago. One extra dollar of income can cost you hundreds, even thousands more in annual premiums. Let's break down how IRMAA works, who pays it, and what smart retirees can do to reduce or avoid it altogether.
What Is IRMAA?
IRMAA stands for Income-Related Monthly Adjustment Amount. It's an additional premium added to your Medicare Part B and Part D if your income exceeds certain thresholds. While the standard Medicare beneficiary pays about 25% of their Part B premium, higher earners pay between 35% and 85%.
In 2025, this surcharge can add:
How Is IRMAA Calculated?
The Social Security Administration (SSA) uses your Modified Adjusted Gross Income (MAGI) from two years ago to determine if you owe IRMAA. For example:
Your 2024 income determines your 2026 Medicare premiums.
MAGI includes some sources of income and excludes others:
- AGI (line 11 on 1040)
- Tax-exempt interest (line 2a)
- Distributions from traditional IRAs and 401(k)s
- Capital gains, dividends, and rental income
- Roth IRA withdrawals
- HSA distributions
- Life insurance proceeds
- Qualified Longevity Annuity Contract (QLAC) exclusions
Who Pays IRMAA?
Anyone on Medicare with income above the SSA thresholds:
Once a spouse passes away, the survivor often faces higher IRMAA tiers as a single filer, even if their income doesn't change.
How Do You Pay IRMAA?
- Part B IRMAA is deducted from your Social Security benefit (or billed directly).
- Part D IRMAA is billed directly to you—even if your plan is paid by an employer or retirement system.
You'll get a notice from SSA (called the Initial Determination Notice) if you owe IRMAA.
How to Appeal IRMAA
If you've had a life-changing event—such as retirement, divorce, death of a spouse, or income reduction—you can appeal using Form SSA-44. This could lower or eliminate your surcharge.
Can You Avoid IRMAA? Yes—With Planning.
IRMAA is avoidable or at least reducible with smart income planning. Here's how:
Roth Conversions
Convert traditional IRAs to Roth IRA before you enroll in Medicare. Spreading conversions over several years before retirement keeps your taxable income lower when IRMAA starts counting.
Strategic Withdrawals
Pull income from Roth IRAs, HSAs, or life insurance cash values instead of traditional retirement accounts.
Timing Matters
Be mindful of income spikes from capital gains, business sales, and real estate sales. Even a $1 increase in MAGI could bump you into a higher IRMAA tier and cost hundreds more annually.
IRMAA and Iowa Retirees: What the State Tax Exemption Doesn't Cover
Iowa retirees have a real tax advantage most other states don't offer: if you're 55 or older, the state doesn't tax your retirement income at all—no state tax on Social Security, pensions, IRA and 401(k) distributions, or Roth conversions. You can read more about that in our guide to the best time to retire in Iowa.
But that exemption is a state-level rule, and IRMAA is calculated at the federal level. Iowa's exemption has zero effect on your MAGI. A large IRA withdrawal or a big Roth conversion year can trigger IRMAA the same way it would in any other state—even though you owe nothing to Iowa on that same income. It's an easy detail to overlook: many Iowa retirees assume that because a distribution isn't taxed by the state, it's somehow "off the radar" for federal purposes. It isn't.
Iowa has roughly 680,000 residents enrolled in Medicare, with 63 Medicare Advantage plans and 31 Medigap insurers available for 2026. Iowa's Senior Health Insurance Information Program (SHIIP) offers free, unbiased Medicare counseling for anyone comparing plans or trying to understand a premium notice—a useful first stop before decisions get made that could affect your IRMAA exposure.
The practical takeaway: if you're doing Roth conversions or large IRA distributions specifically because Iowa won't tax them, it's worth coordinating that timing with your federal IRMAA thresholds too. The two-year lookback means a big conversion year at 63 could raise your Medicare premiums at 65—well after the state tax benefit has already been banked.
Final Thoughts
IRMAA isn't a tax—it's a premium surcharge. But for high-income retirees, it feels like one. Fortunately, with the right planning and guidance, you can minimize how much of your retirement income gets gobbled up by Medicare.
Need Help Building an IRMAA-Smart Income Strategy?
Let's coordinate your Roth conversions, withdrawals, and income timing so Medicare premiums don't catch you off guard.
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