Retirement planning brings several decisions into focus: when to step away from work, how to draw income from your savings, and how to prepare for healthcare costs.
Those decisions are connected. A withdrawal, a business sale, or a Roth conversion can affect more than your income tax bill. It may also influence what you pay for Medicare down the road.
One reason is IRMAA. Understanding how it works can help you make decisions with a clearer view of their full cost.
What Is IRMAA?
IRMAA stands for Income-Related Monthly Adjustment Amount. It is an additional monthly charge that higher-income Medicare beneficiaries pay for Part B and Part D prescription drug coverage.
The charge depends on your income and tax filing status. If both spouses have Medicare coverage, each may pay an adjustment based on their joint income.
For 2026, IRMAA begins above $109,000 for single filers and $218,000 for married couples filing jointly. Different rules apply to certain married individuals filing separately. These thresholds and premium amounts can change each year.
Why the Timing Matters
Social Security generally uses income from two years earlier to determine IRMAA. Your 2026 premiums, for example, generally reflect your 2024 income.
For this purpose, income means modified adjusted gross income, or MAGI: your adjusted gross income plus tax-exempt interest.
That delay can create a disconnect. Your Medicare premiums may reflect a year when you were still working or received unusually high income, even though your financial circumstances have since changed.
A Small Increase Can Have a Larger Effect
IRMAA operates in tiers. Crossing a threshold can move you into a higher premium category, even when your income exceeds the limit by only a small amount.
Consider a hypothetical married couple enrolled in both Part B and Part D throughout 2026. If their 2024 income placed them just above the $218,000 threshold, but within the first IRMAA tier, each spouse would pay an additional $81.20 per month for Part B and $14.50 for Part D.
Together, that would add $2,296.80 in annual premiums above their regular coverage costs.
The practical lesson is to understand where a planned transaction may place you before completing it.
Keep the Larger Plan in View
Avoiding an additional Medicare charge is one consideration within a broader retirement strategy.
A Roth conversion, for example, may increase current income while supporting a longer-term tax strategy. Selling an appreciated investment may help fund an important goal or reduce a concentrated position. Either decision deserves a full evaluation.
Before acting, consider:
How much income will the decision create?
Could it affect future Medicare premiums?
What are the tradeoffs of completing it now versus spreading it across multiple years?
How does it support your retirement, family, and legacy goals?
Sometimes, accepting higher premiums for a year may be a reasonable part of the plan. The value comes from understanding that tradeoff in advance.
What If Your Income Has Fallen?
If you retire, reduce your work hours, or experience another qualifying life-changing event that lowers your income, you may be able to ask Social Security to use more recent information.
Form SSA-44 provides a way to request that adjustment. Supporting documentation is required, and a reduction is subject to Social Security’s review.
Preparation Creates Clarity
At Iron Legacy Wealth Advisors, we believe thoughtful planning means understanding how one decision affects the next.
Medicare premiums belong in that conversation alongside investment income, taxes, retirement distributions, and business transitions. Coordinating those decisions with your financial advisor and tax professional can help you move forward with greater clarity.
Begin the Conversation
If you are approaching Medicare eligibility or considering a significant financial decision, let’s discuss how it fits into your broader plan.
This article is for educational purposes and does not provide individualized tax or legal advice. Figures reflect 2026 Medicare rules.