Summary: IRMAA cliffs can cost you over 10,000$ in retirement even one dollar over can cost you thousands. In short, you have to reduce your income or spread it out effectively. When building a financial plan, some strategies you can use to avoid them in your financial plan…
- Do Roth conversions in low income years. These are 100% AGI so do them wisely
- Draw from Roths, these accounts aren’t included in IRMAA income calculations so they won’t increase your premium.
- Know that its not permanent, only based on a 2 year look back and you can file form SSA-44 to request immediate relief.
- Use donations like QCD to satisfy RMD requirements and give to charity while also reducing income.
If you’ve worked hard, saved diligently, and planned for a comfortable retirement, the last thing you want is an unexpected bill that feels like a penalty for your success. One of the most visible ways clients can see their costs rise is through IRMAA — the Income-Related Monthly Adjustment Amount.
IRMAA is a surcharge added to your Medicare Part B (medical insurance) and Part D (prescription drug coverage) premiums if your income exceeds certain thresholds. While it’s not technically a tax, it functions very much like one: the more you earn (based on your Modified Adjusted Gross Income, or MAGI), the higher your monthly Medicare premiums climb.
Table of Contents
How IRMAA Works
The Social Security Administration determines your IRMAA based on your tax return from two years prior. For 2026 premiums, they look at your 2024 MAGI (AGI + tax-exempt interest + certain other items).
This creates a “cliff” effect: crossing a threshold by even one dollar pushes you into the next bracket, potentially adding hundreds or thousands of dollars annually.
Here are the 2026 IRMAA brackets (based on 2024 income):
Keep in mind these are monthly premiums so the total impact can be over $8,000 in some cases. (Over $16,000 for couples)
Why IRMAA Feels Especially Painful
- High visibility — It turns a predictable Medicare expense into a variable burden that shows up directly in your Social Security check.
- Cliff effect — Even one extra dollar of income can place you over the limit and cost you thousands annually.
- Often overlooked — Many basic retirement calculators and cheap online services ignore IRMAA entirely.
- Stacked on other taxes — On top of all of this, it comes in addition to ordinary income tax, capital gains, Social Security taxation, and more.
Smart Strategies to Minimize or Avoid IRMAA
The good news? With intentional planning, you can often avoid these charges. The main goal to avoid IRMAA is to keep your income low, or spread it out strategically. Here are a few strategies to do this..
1. Roth Conversions in Low-Income Years
Roth conversions add taxable income in the year you do them, so timing is everything. A good advisor can use a Roth conversion ladder strategy — spreading conversions across lower-income years to stay under IRMAA brackets as much as possible.
2. Leverage Roth Withdrawals
Qualified distributions from Roth IRAs or Roth 401(k)s do not count toward your MAGI. This is powerful:
- Withdraw up to the top of your desired IRMAA bracket from traditional accounts (leaving a buffer of course).
- Then cover the rest of your spending needs from Roth accounts tax and IRMAA-free.
3. Understand It’s Not Permanent
IRMAA is based on a two-year lookback. If you have an exceptionally high-income year (e.g., large conversion, asset sale, or bonus) in 2024 for example and then it went back down after, you will only have to pay the excess for the year of 2026 (only 2 year look back). After that in 2027 the rates will automatically drop to reflect your reduced income. You can also file form SSA-44 for immediate relief, more on that in another blog.
4. QCD or charitable gifting
By using a Qualified Charitable Distribution, QCD from your traditional IRA you can reduce MAGI and avoid or minimize IRMAA surcharges. By directing up to the annual limit straight from your IRA to a qualified charity, the amount counts toward your Required Minimum Distribution (RMD) but is excluded from your Adjusted Gross Income, AGI. keeping more of your income below IRMAA thresholds without triggering higher Medicare premiums.
The Bottom Line
These are just a few basic techniques to reduce the amount of income you have in retirement to try to reduce the IRMAA charges. This is not an exhaustive list and we know better than most how each clients needs are different, because of that we make sure we know our clients needs, goals, interests and facts so we can build a plan that not only is efficient but also meets your needs.
IRMAA is one of those details that separates a good plan from a great one. The right strategies can save you tens of thousands of dollars over retirement while keeping more money working for you and your goals.
At Hamilton Financial Planning, our fee-only CFP® fiduciary advisors specialize in financial planning and investment management for people nearing retirement in the Austin and Houston, Texas areas.
Every client’s situation is unique. What works best depends on your full financial picture, goals, risk tolerance, and timeline.
If you’re nearing retirement and want to build (or stress-test) a plan that minimizes unnecessary costs like IRMAA, we’d love to help.
Ready to take control? Visit hamiltonfinancialplanning.com to learn more and schedule a free introductory call.
About Scott
Scott Hamilton is founder and chief financial officer at Hamilton Financial Planning in Austin Texas, a wealth management firm that specializes in providing comprehensive financial planning for retirees. With over 20 years of experience in the financial industry, and having completed over 250 financial plans for retirees across all industries, but mostly the oil and gas industry, Scott is passionate about providing his clients with the tools and insight they need to achieve their financial goals. He has a Bachelor of Business Administration in finance from Texas State University and an MBA in international finance from Pepperdine University. Scott has also been happily married to his wife, Gayle, for over 25 years. To learn more about Scott, connect with him on LinkedIn.
This is for educational purposes only and is not personalized tax or investment advice. Rules are current as of 2026 and subject to change.
Sources and more reading:
Roth Conversion: https://hamiltonfinancialplanning.com/blog/roth-ira-conversions/
Medicare: https://hamiltonfinancialplanning.com/blog/questions-about-your-medicare-plan/
Recent Blog: https://hamiltonfinancialplanning.com/blog/how-to-pay-for-grandchilds-college/
IRMAA Chart: https://secure.ssa.gov/poms.nsf/lnx/0601101020
