The short answer
IRMAA — the Income-Related Monthly Adjustment Amount — is an extra charge added to your Part B and Part D premiums if your income is above certain thresholds. It's tiered: the higher your income, the higher the surcharge, in steps. Most people don't pay IRMAA at all, but if your income crosses a threshold, the added cost can be significant.
The tricky part is that IRMAA is based on your income from two years earlier, so this year's premium reflects a tax return from two years ago.
How the tiers and lookback work
IRMAA uses your modified adjusted gross income (MAGI) from your tax return two years prior. If that income is above the first threshold, you pay a surcharge on top of the standard Part B premium and a separate surcharge on Part D. Each higher income band adds more. Because it's a set of brackets rather than a gradual phase-in, crossing a threshold by even a little bumps you into the next tier.
That cliff effect is why income planning near a bracket matters. Our guide to how IRMAA sets your premium explains the mechanics in more depth.
What to do if you're near a bracket
If your income is close to an IRMAA threshold, managing it — through the timing of withdrawals, Roth conversions, or capital gains — can keep you in a lower tier and save on premiums two years later. And if a life change lowered your income, you may be able to appeal. Our cost estimator can help you see how income affects your Medicare costs.
The key takeaway: IRMAA is predictable once you understand the two-year lookback, so it can be planned around rather than simply absorbed.
Frequently Asked Questions
What is IRMAA?
The Income-Related Monthly Adjustment Amount — an extra charge added to your Part B and Part D premiums when your income is above certain thresholds. Most people don't pay it.
What income does IRMAA use?
Your modified adjusted gross income from your tax return two years earlier. This year's premium reflects income from two years ago.
How do I avoid a higher IRMAA tier?
If you're near a threshold, managing the timing of withdrawals, Roth conversions, or capital gains can keep you in a lower bracket. If a life change lowered your income, you may be able to appeal.
Free Consultation
Have Questions About Your Situation?
Every Medicare situation is different. Our Wyoming and Utah advisors provide free, personalized guidance — no pressure, no obligation.