*6 min read ยท Last updated June 24, 2026*
In this article
– How IRMAA is calculated, and why 2024 set her 2026 bill – The cliff that makes a single dollar expensive – When you can actually appeal – Frequently asked questions
Marisol Grant retired at 66 and sold a rental property in 2024, booking a one-time capital gain that pushed her modified adjusted gross income just past $109,000 for a single filer. She did not think much of it at tax time. Then in late 2025 a letter arrived from the Social Security Administration. Her 2026 Medicare Part B premium would not be the standard $202.90 a month. It would be about $284, roughly $974 more over the year, plus an added surcharge on her drug coverage. One property sale, two years earlier, had moved her one dollar over a line she did not know existed.
That surcharge is the Income-Related Monthly Adjustment Amount, known as IRMAA. It has been part of Medicare for over 20 years, and it catches retirees every year because of one feature almost nobody plans around: the two-year lookback.
How IRMAA is calculated, and why 2024 set her 2026 bill
Most people on Medicare pay the standard Part B premium, which covers about 25% of the program’s cost while the government funds the rest. IRMAA changes that split for higher-income beneficiaries, who pay 35%, 50%, 65%, 80%, or 85% of the cost depending on their income tier.
The income figure that matters is your modified adjusted gross income, or MAGI. That is your adjusted gross income plus a few add-backs, most importantly tax-exempt interest from municipal bonds. The Social Security Administration does not use your current income. It uses the MAGI from your tax return two years prior. So your 2024 return determines your 2026 premium, and your 2025 return will set your 2027 premium.
For 2026, a single filer with MAGI at or below $109,000 pays the standard premium. Above that, the first surcharge tier applies up to $137,000, then higher tiers climb from there. For a married couple filing jointly, every threshold is doubled, starting at $218,000. Because the tiers are statutory multiples of the standard premium, the first tier runs about 1.4 times the base, which is where Marisol’s roughly $974 annual increase came from. The top tier is about 3.4 times the standard premium.
The cliff that makes a single dollar expensive
The brackets are not a gradual ramp. They are cliffs. If your MAGI is one dollar over a threshold, you pay the entire next tier for the full year, the same as someone thousands of dollars deeper into that bracket. That is what makes IRMAA so punishing for a one-time income event.
A retiree who sells a home above the capital-gains exclusion, converts a large traditional IRA to a Roth, takes an oversized required minimum distribution, or realizes a big stock gain can vault a bracket on a single return. For a married couple where both spouses are on Medicare, the surcharge applies to each of them, so the household cost doubles.
This is where people make an expensive assumption. They believe that because the income was a one-time event, they can call Social Security and have the surcharge waived. In most cases, you cannot. A one-time capital gain is not, on its own, a qualifying reason to reverse IRMAA. If you understand the income brackets and the way Medicare Part D coverage works, you can often time income across years to stay under a threshold before the return is filed. After it is filed, your options narrow sharply.
When you can actually appeal
There is a real appeal path, but it is narrow. The Social Security Administration will reconsider IRMAA when your income dropped because of a specific life-changing event. The recognized events include marriage, divorce, the death of a spouse, you or your spouse stopping work or reducing hours, loss of a pension, and the loss of income-producing property due to a disaster.
You request the reduction with Form SSA-44, attaching proof of the event and your more recent, lower income. If you retired in 2025 and your income fell, that is a classic, winnable SSA-44 case, even though your 2024 return shows higher earnings. What does not qualify is simply having a one-time gain you would like excused. The event has to have reduced your income going forward.
One piece of good news for Marisol: IRMAA is recalculated every year. It is not a permanent penalty. When her 2025 income returns to a normal retirement level, her 2027 premium drops back toward the standard amount. The $974 was a one-year cost tied to one high-income year, not a life sentence. For the broader picture of what Part B and the rest of Medicare cover, our beginner’s guide to Medicare is the place to start.
Frequently asked questions
What is IRMAA on my Medicare premium? IRMAA, the Income-Related Monthly Adjustment Amount, is a surcharge added to your Medicare Part B and Part D premiums when your income is above the standard threshold. In 2026, the standard Part B premium is $202.90 a month, and higher earners pay more on top of it.
What income does Medicare use to set my IRMAA? Your modified adjusted gross income from two years earlier. Your 2024 tax return sets your 2026 premium. MAGI includes your adjusted gross income plus add-backs like tax-exempt municipal bond interest.
Can I appeal IRMAA after a one-time income spike? Usually not, if the only issue is a one-time gain. Social Security reverses IRMAA only for specific life-changing events such as retirement, marriage, divorce, death of a spouse, or loss of a pension. You file Form SSA-44 with proof. A capital gain you would like excused does not qualify by itself.
How long does an IRMAA surcharge last? It applies for one year and is recalculated annually based on your most recent tax return. If your income returns to a lower level, your premium drops back toward the standard amount in a later year. It is not a permanent penalty.
Does IRMAA affect my prescription drug coverage too? Yes. The same income brackets trigger a separate IRMAA surcharge on your Part D premium, paid in addition to your plan’s monthly cost. A high-income year can raise both your Part B and Part D bills at the same time.
IRMAA is the rare Medicare cost you can plan around years in advance, but only before the tax return is filed. The retirees who avoid it are the ones who knew the two-year lookback was watching, because once a high-income year is on the books, the surcharge is already on its way.
