If you are 65 or older and on Medicare, you may have received a letter recently telling you that your Medicare premium is higher in 2026.

For many retirees, that letter creates frustration.

“I’m retired. Why am I paying more now?”

The answer is something called IRMAA.

IRMAA stands for Income Related Monthly Adjustment Amount. In simple terms, it means that if your income is above certain thresholds, you pay more for Medicare. It affects your Part B premium and adds an extra charge to your Part D drug coverage.

It is not a penalty. It is not a mistake. It is based on income.

But here is the part that surprises almost everyone.

The Two-Year Rule That Catches People Off Guard

In 2026, Medicare is using your 2024 tax return.

Not your income today.
Not last year.
Two years ago.

If you had a high-income year in 2024 — perhaps you were still working, sold a house, sold stock, took a large IRA withdrawal, or did a Roth conversion — that income now determines what you pay in 2026.

That is why IRMAA feels like a “gotcha.”

You cannot go back and change 2024. It is history. And when something cannot be changed, it often feels unfair.

The letter you receive from Social Security usually explains the calculation clearly. It shows the income used and the premium adjustment. The frustration does not come from confusion. It comes from surprise.

How Much More Could You Pay?

If your Modified Adjusted Gross Income (MAGI) exceeds certain levels, your Medicare premiums increase.

MAGI is your adjusted gross income plus tax-exempt interest. That means municipal bond interest still counts for IRMAA purposes.

Both married couples and single filers are subject to these rules, but single filers reach higher premium levels at much lower income amounts. This becomes especially important for widows and widowers, since the same income can push a surviving spouse into higher brackets much faster.

For some retirees, IRMAA can add hundreds of dollars per person per month. For a married couple, that can mean thousands of dollars per year in additional Medicare costs.

Can You Appeal IRMAA?

Sometimes you can.

If you have experienced a “life-changing event,” you may be eligible to file an appeal using Form SSA-44. Common qualifying events include retirement, work stoppage, a significant reduction in work hours, divorce, marriage, or the death of a spouse.

If your income has dropped because of one of these events, you can request that Social Security use your current projected income instead of income from two years ago.

When the form is filled out properly and the income is truly lower, these appeals are frequently approved.

However, you must be accurate. If you project lower income and later earn more than you reported, Social Security can go back and collect the difference. We have seen that happen. The approval does not mean the numbers will never be reviewed.

Planning Around IRMAA Without Overreacting

Once people learn about IRMAA, some make the mistake of trying to avoid it at all costs.

That can lead to shortsighted decisions.

For example, Roth conversions increase taxable income in the year they are done. That higher income could push you into an IRMAA bracket two years later. But that impact is temporary. Once conversions stop, the IRMAA effect eventually goes away.

On the other hand, avoiding Roth conversions entirely might allow your IRA to grow so large that required minimum distributions (RMDs) later in life push you into higher IRMAA brackets every year for the rest of your life.

Sometimes paying some IRMAA now reduces larger tax and premium problems later.

The same principle applies when selling highly appreciated assets. Selling a home, rental property, or stock can spike income and trigger IRMAA. That does not necessarily mean you should not sell. It simply means the sale should be coordinated with the rest of your retirement plan.

If you are charitably inclined and over age 70½, Qualified Charitable Distributions (QCDs) from your IRA can reduce taxable income and potentially lower future IRMAA exposure. But that only makes sense if charitable giving is already part of your plan.

The goal is coordination, not reaction.

IRMAA Is Ongoing

IRMAA is not a one-time issue.

Each year, Medicare looks back two years. The process repeats throughout retirement. In November, you receive a new letter based on the most recently reviewed tax return.

Unless your income falls below the threshold entirely, IRMAA remains part of the financial landscape.

That is why it must be considered alongside your IRA withdrawals, Roth conversions, Social Security taxation, estate planning, and long-term income strategy.

Everything is connected.

The Most Important Takeaway

IRMAA is not the enemy.

Surprise is the enemy.

The objective is not necessarily to eliminate IRMAA. The objective is to understand it, anticipate it, and make intentional decisions.

Sometimes it makes sense to stay below the thresholds. Sometimes it makes sense to cross them strategically as part of a larger tax plan.

But the worst position to be in is opening a letter and feeling blindsided.

If you are 65 or older and planning retirement income, IRMAA should be part of the conversation — not an afterthought discovered two years later.

When you understand how income decisions ripple forward, you regain control.