Understanding Medicare’s 2026 IRMAA: Tips for Avoiding Post-Enrollment Sticker Shock
Clients often assume that their Medicare payments will be set once they become Medicare-eligible—and that all beneficiaries are treated equally when it comes to premium amounts. Many higher-income taxpayers don’t realize that their higher income levels can impact their Medicare premium payments even after retirement. Even those who are aware that income-based premiums exist often mistakenly believe that they’re in the clear upon retiring. In reality, Medicare applies an Income-Related Monthly Adjustment Amount (or, IRMAA) based on the Medicare beneficiary’s modified adjusted gross income (MAGI) from two years prior to the premium payment year. This two-year lookback is often surprising—and clients should be advised on the planning options that can help them reduce the IRMAA impact and avoid Medicare sticker shock in future years.
Understanding IRMAA
The Medicare IRMAA is a surcharge on Medicare premiums for higher-income taxpayers. The surcharge amounts are added to the client’s regular Medicare Part B and Part D premium bills. The amount is adjusted annually for inflation for tax years beginning in 2020 and later.
A tiered structure applies, so that the IRMAA essentially applies on a sliding scale based on MAGI. Clients in higher income tiers have higher Medicare premium costs. However, it’s important to remember that the system bases those IRMAA surcharges on the client’s income from two years ago. That means clients who enroll in Medicare during 2026 will find that their premium liability is based on their income levels in 2024—often, from a time when the client is fully employed.
The client's MAGI for IRMAA purposes is their adjusted gross income plus: (1) the taxable portion of their Social Security benefits, (2) tax-exempt interest, (3) interest from U.S. savings bonds used for qualifying education expenses, (4) nontaxable income from U.S. territories, and (5) any income earned abroad that was excluded from AGI.
2026 IRMAA Adjustments
The IRMAA itself is calculated based on a sliding scale that includes five income brackets, topping out at $500,000 for single filers and $750,000 for joint returns in 2026. Taxpayers whose income as below $109,000 (single returns) or $218,000 in 2024 are not subject to the IRMAA in 2026.
In 2026, for single taxpayers with income greater than $109,000 and less than or equal to $137,000 (between $218,000 and $274,000 for joint returns), the IRMAA is $81.20 for Part B and $14.50 for Part D coverage. For single taxpayers with income greater than $137,000 and less than or equal to $171,000 (between $274,000 and $342,000 for joint returns) the IRMAA is $202.90 for Part B and $37.50 for Part D.
For single taxpayers with income greater than $171,000 and less than or equal to $205,000 (between $342,000 and $410,000 for joint returns) the IRMAA is $324.60 for Part B and $60.40 for Part D coverage.
For single taxpayers with income greater than $205,000 and less than $500,000 (between $410,000 and $750,000 for joint returns) the IRMAA is $446.30 for Part B and $83.30 for Part D coverage. For single taxpayers with income greater than or equal to $500,000 ($750,000 for joint returns) the IRMAA is $487 for Part B and $91 for Part D coverage.
Planning Options to Reduce IRMAA
For most taxpayers lowering their MAGI is the first step toward reducing IRMAA payments. IRMAA is applied on a “cliff” basis—meaning that if the client’s MAGI is even one dollar over the threshold amount, the higher IRMAA amount will apply.
Of course, taxpayers should be advised to maximize pre-tax contribution amounts to retirement accounts and health savings accounts if they’re still working. For those who are already taking RMDs, the QCD strategy can allow them to reduce taxable income while simultaneously supporting a favorite charity. Clients can also use Roth accounts to reduce taxable income, because Roth distributions are not included in calculating AGI.
For some clients, the income situation has simply changed. Clients can submit Form SSA-44, “Medicare Income-Related Monthly Adjustment Amount Life-Changing Event” to their Social Security office if they have experienced a life-changing event that allows them to qualify for an IRMAA reduction. Both “work reduction” and “work stoppage” qualify as life-changing events, as do marriage, divorce or death of a spouse.
Conclusion
All clients are different. It’s important to evaluate the big picture when planning for IRMAA. For some, the extra premium amounts may be manageable—so it can be better to simply pay the IRMAA rather than make an ill-timed financial move. For others—especially those who are on the edge of a higher threshold—smart tax planning can make a significant difference for the years ahead.