Nobody wants to pay more for the same benefits, but that’s the case for certain retirees on Medicare, and they have the IRMAA to thank.
The Income-Related Monthly Adjustment Amount, or IRMAA for short, is an extra charge added to the monthly premiums for Medicare Part B and Part D, if your modified adjusted gross income (MAGI) from the two prior years exceeds certain limits.
The extra expense for 2026 can range from $284.10 to $689.90 per month for Medicare Part B and from $14.50 to $91.00 per month for Medicare Part D, depending on how much your income exceeds the threshold.
IRMAA's negative impact
You might think the IRMAA won't apply to you, since your income in 2026 has to exceed $109,000 as a single filer and $218,000 as a couple. However, it may apply to you when taking into account pensions, dividend-paying investments, capital gains and required minimum distributions.
Plus, the IRMAA is based on your earnings from two years prior; for 2026, it's your 2024 income. “People don’t know what IRMAA is,” says Nancy Gates, lead educator and financial coach at Boldin. “They could pay three times what everyone else pays for Medicare.”
You may not think it's a big deal if you are retiring with a sizable nest egg, but the money owed is deducted from your monthly Social Security check, which many retirees rely on for their cash flow.
“If your Social Security is now 10% less every month, that’s a very tangible consequence,” says Derrick Longo, a wealth advisor at Exencial Wealth Advisors. “Even for people who have adequate savings, Social Security is still a steady source of income.”
Try for an appeal
If you've received an Initial IRMAA Determination from the Social Security Administration alerting you that you'll be subject to IRMAA on your Medicare Part B and D premiums, you can file an appeal to the Social Security Administration (SSA).
You have to prove something happened that significantly impacted your income, such as retirement, divorce, or the death of a spouse, to qualify for the IRMAA exemption. Barring that, you are on the hook for this extra surcharge.
Roth conversion for the win
If your appeal efforts fail, there's a strategy that can help you avoid IRMAA: Roth conversions.
This occurs when you move money out of a traditional IRA, 401(K), 403(b), or 457(b), pay taxes on the withdrawals, and transfer it into a Roth IRA to enjoy future tax-free growth. Beyond the potential for tax-free gains, Roth IRAs have no required minimum distributions and allow tax-free withdrawals after five years and the age of 59-1/2.
This strategy helps avoid the IRMAA because it means that in future years, you won’t have to withdraw money, add to your MAGI, and potentially pay more for Medicare.
Be forewarned that even with a Roth conversion, there could be some income tax bracket creep if you had a lot of capital gains or your income still exceeds the MAGI threshold, says Longo.
That doesn’t mean a Roth conversion isn’t still worthwhile. After all, it's a tax-efficient way to leave money to heirs and to protect your spouse from big tax hits when you pass away. Think of it as prepaying the inheritance tax and defusing a tax bomb before it can go off.
Timing is everything
Gates says Roth conversions work best when you have an idea of your tax rate across your lifespan and know the highs and lows. From there, you can spread the Roth conversions out over the years when your tax bracket falls, so you can remain under the IRMAA threshold. That way, you keep the tax bill low, says Gates.
“You need to monitor the IRMAA threshold and do a series of Roth conversions during those low tax years,” says Gates.
For those in lower income ranges or who plan to retire early, converting to a Roth before age 63 can be especially advantageous. That's because most individuals enroll in Medicare at age 65, and so their income before 63 will not impact their Medicare Premiums, she says.
To avoid IRMAA, time is of the essence. You need to start and complete Roth conversions three years before you apply for Medicare, because of the two-year look-back period. For instance, someone applying for Medicare in 2026 would have needed to complete their Roth conversion by 2024.
A warning for people who applied for Social Security benefits early: you will be automatically enrolled in Part A and Part B (you can decline Part B, but not Part A) and will face premium surcharges if you don't plan accordingly.
Don't forget taxes
There is one caveat with this strategy. When you convert to a Roth, you pay taxes on the money you move from your traditional 401(k) or IRA to a Roth IRA, which could push you into a higher tax bracket, which means more money going to Uncle Sam.
You have to weigh whether it's worth it to pay more taxes for one year or pay higher Medicare premiums for several years. Typically, the tax hit is worth it, says Gates.
When in doubt seek professional advice
If you’re unsure how much of your traditional IRA to convert to a Roth, or when to do it, you don't have to go it alone. Plenty of help is available, from online tools and fee-only financial advisers to the plan sponsor of your company's retirement plan.
The important thing is to be open to seeking advice; taxes are complicated, and since you only get one shot at withdrawing your retirement savings, you want to make sure you do it right. Taking the time for a second opinion now ensures you aren't left with a major tax bill later.
