7 Ways to Manage Medicare IRMAA and Keep Premiums Low

Why IRMAA Is the Stealth Tax Retirees Can’t Afford to Ignore

If you’ve ever opened your Medicare Part B premium notice and felt blindsided by a number far higher than what your neighbor pays, you’ve met IRMAA — the Income-Related Monthly Adjustment Amount. It’s essentially a surcharge that forces higher-income Medicare beneficiaries to pay more for Part B and Part D coverage, and in my 15 years working in consumer finance, I’ve watched it catch more retirees off guard than almost any other provision in the federal benefits system.

Here’s the critical detail: IRMAA is calculated based on your Modified Adjusted Gross Income (MAGI) from two years prior. That means your 2024 tax return — the one you filed in early 2025 — determines what you’ll pay for Medicare in 2026. And with the Centers for Medicare & Medicaid Services confirming updated bracket thresholds for 2026, the stakes have never been higher.

The standard Part B premium for 2025 is $185 per month. But if your MAGI exceeds $106,000 as a single filer (or $212,000 filing jointly), you’ll pay anywhere from $259.40 to $594.00 per month — per person. For a married couple both on Medicare, that surcharge can exceed $9,800 annually. That’s real money draining from your retirement savings.

“What I see most often is retirees who had no idea a single IRA withdrawal or capital gains event could push them into a higher IRMAA bracket — costing them thousands in Medicare premiums for an entire year.”

The good news? IRMAA is not a fixed sentence. With deliberate income management, you can legally and ethically reduce or eliminate these surcharges. Below are seven strategies I recommend to every retiree I advise.

1. Know Your IRMAA Brackets Cold

You can’t manage what you don’t measure. The first step is understanding exactly where the IRMAA thresholds fall and how close your income lands to each cliff. Unlike the graduated federal tax system, IRMAA operates on hard brackets — exceed one by even a single dollar, and your entire monthly premium jumps to the next tier.

2025 IRMAA Thresholds (Single / Married Filing Jointly)

The brackets for 2025 (based on 2023 MAGI) start at $106,000 / $212,000 and rise through four additional tiers up to $500,000 / $750,000. Each tier adds between $74.40 and $409.00 per month to your Part B premium alone, with additional surcharges on Part D. The Social Security Administration publishes these annually, and I strongly recommend bookmarking that page.

What I tell my readers: print out the bracket chart and tape it inside the folder where you keep your tax documents. Every financial decision you make in a given year — selling stock, converting an IRA, taking a required minimum distribution — should be weighed against those numbers.

2. Time Your Roth Conversions Strategically

Roth conversions are one of the most powerful tools in a retiree’s financial arsenal, but they’re also one of the most common IRMAA triggers. When you convert money from a traditional IRA to a Roth IRA, the converted amount counts as taxable income in that year. A $50,000 Roth conversion can easily push a retiree from zero IRMAA surcharge into the first or second bracket.

The sweet spot is what I call the “IRMAA gap year.” If you retire at 63 or 64, you likely have one or two years before Medicare enrollment at 65 where your income is lower than it will be once RMDs begin. Those years are golden opportunities to execute Roth conversions without any IRMAA consequence, because you won’t be on Medicare yet.

If You’re Already on Medicare

You can still convert — but do it in smaller annual tranches calibrated to stay below the next IRMAA threshold. For example, if your base MAGI is $90,000 as a single filer, you have roughly $16,000 of “room” before hitting the $106,000 cliff. A partial conversion of $15,000 keeps you safe. As Investopedia notes, spreading conversions across multiple years reduces both the tax hit and the IRMAA risk.

For a deeper look at common retirement planning errors, including misunderstanding Roth conversion timing, check out 6 Retirement Myths for 2026 That Could Cost Seniors Thousands.

3. Harvest Capital Gains in Low-Income Years

Capital gains from selling investments — stocks, mutual funds, real estate — count toward your MAGI and therefore affect IRMAA. Many retirees don’t realize that even reinvested mutual fund capital gains distributions (which you never “see” as cash) can push income over a threshold.

The strategy here is intentional harvesting. In years when your other income is low — perhaps you’ve delayed Social Security, or you’re in between RMD years — consider selling appreciated assets to “lock in” gains at a time when your total MAGI remains below IRMAA brackets. Then in higher-income years, hold steady and avoid triggering unnecessary gains.

Watch Out for Mutual Fund “Phantom Income”

Actively managed mutual funds frequently distribute capital gains in December. If you hold these in a taxable brokerage account, those distributions add to your MAGI whether you wanted them to or not. Switching to tax-efficient index funds or ETFs can reduce this phantom income significantly. I’ve seen clients save $2,000 to $4,000 per year in IRMAA surcharges simply by making this fund swap.

4. Manage Required Minimum Distributions Before They Manage You

Starting at age 73 (under the SECURE 2.0 Act), you must begin taking RMDs from traditional IRAs and 401(k)s. These distributions are fully taxable and can create a sudden income spike that triggers IRMAA. For retirees who’ve spent decades diligently saving in tax-deferred accounts, the RMD phase can feel like an ambush.

The antidote is to start drawing down those accounts earlier — through Roth conversions (as discussed above) or simply by taking voluntary distributions in your 60s and early 70s to reduce the account balance before mandatory withdrawals begin. A smaller IRA balance means smaller RMDs, which means lower MAGI and lower IRMAA risk.

1. Calculate your projected RMD at age 73 using the IRS Uniform Lifetime Table (available at irs.gov).
2. Determine how that RMD plus Social Security, pensions, and other income would position you relative to IRMAA brackets.
3. Work backward to identify how much you need to draw down or convert before age 73 to keep future RMDs below the danger zone.
4. Execute partial conversions or voluntary distributions each year, staying below the first IRMAA threshold.
5. Reassess annually, because bracket thresholds adjust with inflation and your investment returns will vary.

5. File an IRMAA Appeal After a Life-Changing Event

This is the strategy that too few retirees know about — and it can provide immediate relief. If your income has dropped significantly due to a qualifying life-changing event, you can ask Social Security to use a more recent year’s income instead of the standard two-year lookback.

Qualifying Events Include:

Marriage, divorce, death of a spouse, work stoppage (retirement counts!), work reduction, loss of income-producing property, and loss of pension income. If any of these apply, you file SSA-44 (Medicare Income-Related Monthly Adjustment Amount — Life-Changing Event) with your local Social Security office.

In my experience at the CFPB, I saw countless cases where retirees paid inflated premiums for a full year simply because they didn’t know this form existed. If you retired in 2024 and your 2023 income (your last full working year) was $180,000, but your 2024 retirement income dropped to $65,000, you shouldn’t be paying IRMAA based on that $180,000 figure. File the appeal.

“Filing Form SSA-44 after retirement is one of the single highest-value financial moves a new retiree can make — I’ve seen it save individuals $3,000 to $6,000 in the first year alone.”

6. Coordinate Income Between Spouses

For married couples filing jointly, both spouses’ income combines to determine IRMAA — but the surcharge applies to each spouse’s Medicare premium individually. This creates a painful multiplier effect: one spouse’s large IRA withdrawal can trigger IRMAA surcharges on both Medicare premiums.

Strategic coordination matters. If one spouse has significantly larger retirement accounts, consider whether the timing of that spouse’s withdrawals can be shifted. In some cases, it may even make sense to evaluate filing status — although filing separately introduces its own complications and a much lower IRMAA threshold ($106,000 in 2025), so this requires careful calculation with a tax professional.

The Social Security Timing Factor

When each spouse claims Social Security also affects joint MAGI. Delaying one spouse’s benefit to age 70 while the other claims earlier can smooth income across years and help avoid IRMAA spikes. This dovetails with broader retirement income planning — and if you’re also thinking about how your housing costs fit into the picture, this guide on setting up your home to age in place addresses one of the biggest expense variables retirees face.

7. Use Health Savings Accounts and Charitable Giving to Lower MAGI

Two often-overlooked tools can directly reduce your Modified Adjusted Gross Income and help you stay below IRMAA thresholds.

Qualified Charitable Distributions (QCDs)

If you’re 70½ or older, you can direct up to $105,000 per year (2024 limit, indexed for inflation) from your traditional IRA directly to a qualified charity. This satisfies your RMD requirement without adding a dime to your MAGI. For retirees who already give to charity, switching from writing a check to making a QCD is practically free money in IRMAA savings.

Health Savings Accounts (HSAs)

If you’re still working or have a working spouse with a high-deductible health plan (before Medicare enrollment), maximizing HSA contributions reduces MAGI. Even better, HSA withdrawals for qualified medical expenses in retirement are completely tax-free and don’t count toward MAGI. Building an HSA balance in your late 50s and early 60s creates a tax-invisible pool of money for healthcare costs that won’t trigger IRMAA.

For more on managing retirement income to sidestep IRMAA entirely, read our detailed playbook: How to Manage Retirement Income to Avoid Higher Medicare IRMAA.

Putting It All Together: Your IRMAA Action Plan

Managing Medicare IRMAA isn’t about finding a single trick — it’s about building an annual income strategy that accounts for every dollar flowing through your tax return. Here’s my recommended annual checklist:

1. January–February: Review your prior year’s MAGI estimate and confirm where you landed relative to IRMAA brackets.
2. March–April: File your tax return and note exactly how close you were to the next threshold.
3. May–June: Assess any planned asset sales, Roth conversions, or large purchases that might generate taxable events.
4. July–September: Execute mid-year Roth conversions or capital gains harvesting if you have headroom below your IRMAA bracket.
5. October–November: Check for pending mutual fund capital gains distributions and consider selling shares before the distribution date if you’re near a threshold.
6. December: Make qualified charitable distributions if you’re 70½+ and finalize any remaining income adjustments before year-end.

The Bottom Line on Medicare IRMAA

IRMAA is not a punishment — it’s a policy mechanism that increases Medicare costs for higher earners. But “higher earner” doesn’t necessarily mean wealthy. A retired teacher with a pension, Social Security, and a modest IRA can easily cross the $106,000 threshold in a year when they sell a rental property or take a lump-sum distribution. The surcharges are blunt, and they don’t care about your circumstances — only your MAGI.

What I’ve learned across hundreds of cases is that the retirees who come out ahead are the ones who plan income year by year, not decade by decade. A $500 miscalculation might cost you $1,800 in extra premiums. A well-timed QCD or a disciplined Roth conversion schedule can save you tens of thousands over the course of retirement.

If you take one thing from this article, let it be this: check your MAGI against the IRMAA brackets every single year before December 31. That one habit is worth more than any financial product or strategy I can recommend.