The Medicare surcharge based on what you earned two years ago
Cross one income line and your Medicare premium jumps by hundreds a month. The income that counts is from two years back — and retiring is grounds to appeal it.
Most people meet IRMAA by letter. It arrives in the fall, it is written in the flat register of federal correspondence, and it says your Medicare premium next year will be substantially more than the number everybody else quotes.
The name is Income-Related Monthly Adjustment Amount. It is a surcharge added to your Medicare Part B and Part D premiums when your income is above a threshold. Two things about how it works catch people out, and both are worth knowing before the letter arrives rather than after.
| The standard Part B premium | $202.90 a month. This is what most people pay and what most articles quote. |
|---|---|
| Where the surcharge starts | Modified adjusted gross income above $109,000 single or $218,000 married filing jointly. |
| The first step up | $284.10 a month for Part B — about $81 more, or roughly $975 a year, and that is the smallest bracket. |
| The top of the scale | $689.90 a month, reached above $500,000 single or $750,000 joint. Five brackets in total. |
| Part D as well | A separate surcharge of roughly $14.50 to $91.00 a month on top of whatever your drug plan charges. |
| Whose income counts | Your MAGI — adjusted gross income plus tax-exempt interest, which is why municipal bonds do not help here. |
The first thing: it looks backwards
Your 2026 premium is set by your 2024 tax return. Medicare uses the most recent return the IRS has passed along, which is generally two years old — occasionally three, if the newer one was not available when the determination was made.
That lag is the whole problem. The year that decides your premium is often the last year you were working — or the year you sold a house, converted an IRA to a Roth, took a large distribution, or received a settlement. By the time the surcharge lands you may have retired, your income may have halved, and none of that is visible to the calculation.
People assume the letter reflects what they are earning now. It reflects what they were earning the year before last.
The second thing: it is a cliff, not a slope
IRMAA does not phase in. Cross a threshold by a single dollar and you owe the entire bracket. At the first step that is about $975 across the year in Part B alone, and more at the higher ones. The Part D surcharge is separate and sits on top of it, so the Part B figure is not your total exposure. There is no proration and no partial credit.
Which means the amounts that trigger it are often small and accidental: a year-end bonus, a required distribution slightly larger than expected, a capital gain from selling something you had held for decades. The mechanism does not care that the income was one-off.
Also on The Second Half Guide 55, 60, 62, 65: when does “senior” actually start? There is no senior birthday. About a dozen unrelated clocks — 50, 55, 59½, 62, 65, 67 — set by different institutions, and only some of them matter. Read it →The part almost nobody is told
You can ask for it to be recalculated, and retiring is one of the accepted reasons.
Social Security keeps a list of life-changing events that justify using your current income instead of the two-year-old figure. The form is SSA-44, it is two pages, and it is free. The accepted events are:
- Work stoppage — which includes retirement. This is the common one, and the one people do not realize counts.
- Work reduction — cutting back hours or moving to part-time.
- Marriage, divorce or annulment, or the death of a spouse.
- Loss of income-producing property, through disaster or other events outside your control.
- Loss of pension income.
- Employer settlement payment, or the employer closing or going bankrupt.
You file the form with an estimate of this year's income and documentation of the event — a letter from your employer, a death certificate, a divorce decree. Decisions generally take a month or two, and an approval can be backdated to when the event happened, which sometimes means a refund of premiums already paid.
What does not qualify is simply disagreeing with the number. A one-time capital gain or a Roth conversion is not a life-changing event on this list, however much it feels like one — the gain was real income in the year it happened. There are separate routes if the underlying tax data is wrong rather than merely inconvenient: an amended return, corrected IRS information, or asking Social Security to use a more recent year's return than the one it used.
The surcharge is calculated automatically. The appeal is not. Nobody files SSA-44 on your behalf, and nothing in the letter suggests you might have grounds to.
What to do with this
If you are 63, that is the year that will set your first Medicare premium at 65. Whatever lands in it — a Roth conversion, a property sale, deferred compensation, an unusually large distribution — is what the calculation will read two years later, however little it resembles your income by then.
If you have just retired and a surcharge letter arrives, file SSA-44. Your income has changed and the calculation has not caught up. This is precisely the situation the form exists for.
If the letter is simply correct, it still only applies for one year at a time. The determination is redone annually against a fresh return, so a single high year does not follow you permanently. It follows you for one year, two years later.
The thresholds themselves move a little each year with inflation, which is worth checking rather than assuming: the 2026 figures above are not the 2025 ones. Medicare publishes the full bracket table each fall, and the letter you receive will name the bracket it has put you in.
None of this is a reason to earn less. It is a reason to know that the line exists, roughly where it sits, and that the calculation behind it is looking at a year you have probably stopped thinking about.
This is general information, not personal financial, tax or legal advice. We report the rules, the numbers and the deadlines as clearly as we can. Your income, filing status, state and account types can all change how a rule applies to you, so treat this as a good place to find the right questions, not a substitute for a tax or financial professional looking at your actual return.
Where these facts come from
Checked on 10 August 2026 against the sources listed below. Dollar limits and program rules change — if you're reading this well after that date, verify the numbers at the links below.
- Medicare — Part B costs — https://www.medicare.gov/basics/costs/medicare-costs
- SSA — Request to lower an Income-Related Monthly Adjustment Amount — https://www.ssa.gov/medicare/lower-irmaa
- SSA — Form SSA-44 — https://www.ssa.gov/forms/ssa-44.pdf
- Medicare — Drug coverage (Part D) costs — https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage
Edward Silva
Edward spent more than forty years as a computer professional — long enough to pick up one useful occupational habit: when somebody hands you a summary, go and read the actual documentation. He started The Second Half Guide after noticing that most writing aimed at people his age was either talking down to him or quietly selling him something, and that the plain facts — the dates, the thresholds, the dollar figures — were somehow the hardest part to find.
He's married, with two grown sons, both married themselves. He is not a financial adviser, an attorney or an insurance agent, and this site doesn't tell you what to do with your money. It tells you what the rules actually say, and links to where he checked.