Key Takeaways IRMAA is automatic. Medicare beneficiaries with income above the threshold pay higher Part B and Part D premiums. Nobody opts in.It uses income from two years prior. Your 2026 Medicare IRMAA is based on your 2024 modified adjusted gross income (MAGI), which means your final working years can drive your first retirement bills.The 2026 thresholds start at $109,000 for individual filers and $218,000 for married couples filing jointly. There are five IRMAA brackets above the standard premium.The cost adds up fast. In the top bracket, the combined Part B and Part D IRMAA surcharge can exceed $6,000 per person per year.Joint income matters. For married couples filing jointly, combined MAGI sets IRMAA for both spouses.Income can be planned. Large retirement distributions, business sales, and capital gains show up in Medicare premiums two years later.There is a recalculation path. If income drops after retirement, beneficiaries can ask Social Security to use more recent income with Form SSA-44.Employers should flag it early. A short mention of IRMAA in pre-retirement communication can save high earners from an expensive surprise.There’s a moment in many high-earning employees’ retirement planning when they discover IRMAA and realize they’ve been making a silent assumption about their Medicare costs that’s about to blow up in their face.
What Is IRMAA? IRMAA stands for Income-Related Monthly Adjustment Amount, and it is Medicare’s mechanism for making sure that higher-income beneficiaries pay more for Part B (medical coverage) and Part D (drug coverage) premiums than lower-income beneficiaries do. And for people who didn’t know about it until their first bill arrived, it’s often a nasty surprise that translates into thousands of dollars per year that they didn’t anticipate.
IRMAA isn’t new. But it gets adjusted every year, the thresholds keep rising, and more people keep hitting it. And HR teams almost never mention it in retirement communications. That’s where this newsletter comes in.
How IRMAA Is Calculated and Who Gets Hit IRMAA is based on modified adjusted gross income from two years prior. That’s the critical detail. When you retire in 2026 and enroll in Medicare at age 65, your IRMAA for 2026 is based on your income from 2024. Your IRMAA for 2027 is based on your 2025 income.
This two-year lag creates a bizarre timing situation where people sometimes pay IRMAA premiums in their first year of retirement based on income they earned while still working. High-earning executives who worked through age 65 and earned significant salaries in their final years of work will almost certainly hit IRMAA. Someone with $200,000 in modified adjusted gross income will absolutely be in one of the higher IRMAA brackets.
It works through income bands. There are multiple IRMAA tiers. Higher income means higher tiers. Higher tiers mean higher Part B and Part D premiums. The difference between the lowest IRMAA bracket and the highest can be several hundred dollars per month just for Part B alone. Add Part D, and the annual difference can exceed $6,000+ per year.
(See the 2026 IRMAA brackets below.)
2026 IRMAA Brackets and Thresholds As of 2026, IRMAA thresholds for individual filers start kicking in around $109,000 of modified adjusted gross income. For married couples filing jointly, the thresholds are higher, but the principle is the same. Once you cross the threshold, your Part B premium increases. The increases are incremental as income rises.
There are five IRMAA brackets above the standard premium. The highest bracket, for individual filers with income above around $500,000, can result in Part B premiums that are triple or more the standard amount. Part D follows a similar structure with its own IRMAA brackets. For someone in the highest income tier, Part D premiums can balloon from a standard amount to significantly more.
2026 Medicare IRMAA brackets (based on 2024 MAGI):
Standard: $109,000 or less (single) / $218,000 or less (joint). Part B: $202.90 per month. Part D IRMAA: $0.Tier 1: $109,001 to $137,000 / $218,001 to $274,000. Part B: $284.10. Part D IRMAA: +$14.50.Tier 2: $137,001 to $171,000 / $274,001 to $342,000. Part B: $405.80. Part D IRMAA: +$37.50.Tier 3: $171,001 to $205,000 / $342,001 to $410,000. Part B: $527.50. Part D IRMAA: +$60.40.Tier 4: $205,001 to $499,999 / $410,001 to $749,999. Part B: $649.20. Part D IRMAA: +$83.30.Tier 5: $500,000 or more / $750,000 or more. Part B: $689.90. Part D IRMAA: +$91.00.Source: Centers for Medicare & Medicaid Services, 2026 Medicare Parts A & B Premiums and Deductibles. Part D IRMAA is paid on top of the plan premium.
The specifics change annually because CMS adjusts thresholds to keep pace with inflation, but the concept is consistent. If you’re higher income, you pay more. This is not a penalty, it is by design. But people usually don’t see it that way when they get their bill.
Why Executives and Higher Earners Are Often Surprised The surprise happens because nobody told them. Retirement communications from employers usually focus on the transition to Medicare , enrollment periods, and coverage options. Very few employers flag IRMAA as something the higher-income executive should be thinking about.
So they retire having never heard of it. They get their Social Security application approved. They’re thinking about their monthly income, their retirement budget, their fixed expenses. Then the first Medicare premium bill arrives, and it’s significantly higher than expected.
They call Social Security or Medicare to ask why. The answer is IRMAA. They didn’t opt out. They didn’t make a special election. It’s automatic. Anyone with income above the threshold automatically pays higher premiums. That’s when the executive realizes they should have been thinking about this before they retired.
The Income Planning Conversation Every Executive Should Have This is where HR or the company’s retirement planning advisory team becomes valuable. Executives approaching retirement should understand that their Medicare costs aren’t fixed. They’re income-dependent.
If someone plans to take a large distribution from a retirement account, sell a business interest, or realize capital gains in a particular year, they should understand how that will affect their Medicare premiums two years later. Some executives intentionally manage their income to stay below IRMAA thresholds if they can. Others accept that they’ll hit IRMAA and budget for it. But the decision should be intentional, not a surprise.
The other variable is the spouse. If a married couple is planning retirement, their joint modified adjusted gross income determines both of their IRMAA premiums. Sometimes spouses approach this differently . One might have high income while the other has low income. For IRMAA purposes, joint income matters.
These conversations are nuanced. They require understanding someone’s full financial picture, not just their benefits. But that’s where educated HR teams can add value. Even just flagging IRMAA as a concept that high-earning employees should discuss with their financial advisors is helpful. It prompts the conversation to happen at the right time, before retirement decisions are locked in.
What Employers and HR Should Flag for Approaching Retirees The simplest approach is to include IRMAA in your pre-retirement communication. As employees approach age 65 and start thinking about Medicare, mention that IRMAA exists and affects higher earners. The good news is this is something our team at Exact Benefits can help you navigate, whether you’re an Ohio employer or supporting employees across the country.
If your company offers retirement planning resources or financial advisory services, make sure those advisors know about IRMAA and bring it up in retirement income discussions.
You might also mention that if someone’s income drops significantly in their first year or two of retirement, perhaps because they stop working and have less W-2 income, they can request an IRMAA recalculation based on current year income instead of prior-year income. Social Security handles this through Form SSA-44, the life-changing event request. This appeals to people whose retirement income was lower than their working income. The request process is straightforward but only works if the person knows it exists.
By flagging IRMAA early, you’re not committing to advising them on it. You’re just ensuring they don’t hit it accidentally.
Frequently Asked Questions About IRMAA What is IRMAA in Medicare? IRMAA, the Income-Related Monthly Adjustment Amount, is an extra amount higher-income Medicare beneficiaries pay on top of their standard Part B premium and their Part D plan premium. Social Security determines it automatically using tax return data.
What are the 2026 IRMAA brackets? For 2026, IRMAA applies to individual filers with 2024 MAGI above $109,000 and married couples filing jointly above $218,000. Part B premiums range from the standard $202.90 per month up to $689.90 per month in the highest bracket, and Part D IRMAA ranges from $14.50 to $91.00 per month.
Why is IRMAA based on income from two years ago? Social Security uses the most recent tax return the IRS provides, which is usually from two years prior. That is why 2026 premiums are based on 2024 income.
Can you appeal or reduce IRMAA? Yes. If your income dropped because of a life-changing event such as retirement or reduced work hours, you can ask Social Security to use more recent income by filing Form SSA-44. You can also request reconsideration if the tax information Social Security used was wrong.
Does IRMAA apply to both spouses? For married couples filing jointly, combined MAGI determines IRMAA, and each spouse enrolled in Medicare pays the adjustment on their own premiums.
Should employers talk to employees about IRMAA? Employers don’t need to give tax or financial advice, but flagging IRMAA in pre-retirement communication helps high-earning employees plan ahead with their financial advisors. It is a simple, low-risk way for employer Medicare education to prevent costly surprises.
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Next issue: Is It Cheaper to Stay on the Employer Plan? The financial comparison more employees should be making.
