Medicare premiums aren’t always one flat price. For some retirees, a letter arrives announcing an added monthly charge on top of the standard cost for doctor coverage and prescriptions.

The surprise usually comes from income reported years earlier, not what’s happening in the current year. Understanding the rules helps prevent overpaying and speeds up fixes.

IRMAA Basics

The extra charge is called an income-related monthly adjustment amount, often shortened to IRMAA. It can apply to Medicare Part B, which covers doctor and outpatient services, and Part D, which covers prescription drugs. The adjustment is not a penalty for enrolling late; it is strictly tied to income levels set by program rules.

Who Pays More

IRMAA generally affects a smaller slice of beneficiaries because it starts only after income clears specific thresholds. For 2026, the first tier begins above $109,000 for single filers and above $218,000 for married couples filing jointly, with higher brackets scaling the add-on upward. Those above the line pay more, tier by tier.

MAGI Explained

The income Medicare looks at is modified adjusted gross income, or MAGI, using a tax-based formula. It typically starts with adjusted gross income and then adds tax-exempt interest. That detail matters because someone can appear “under the limit” on one line of a return yet still cross the threshold after the add-back is included in the Medicare calculation.

Two-Year Lag

A major source of confusion is timing. Social Security usually bases IRMAA on the most recent tax return information available from the IRS, which often means a two-year lookback. So a premium set for one year may reflect income from two years earlier. A strong income year can echo into Medicare premiums long after paychecks shrink.

Ashton Lawrence, a certified financial planner, states, “No one likes paying excess premiums.” He notes that even small add-ons can feel outsized in retirement, because they reduce predictable monthly cash flow.

Not Forever

The surcharge isn’t permanent. Social Security reviews IRMAA determinations each year, using updated tax information as it becomes available. If income drops below the threshold on a later return, the surcharge can disappear in a future premium year. That annual reevaluation is the built-in reset that helps many households.

Why It Feels Harsh

The system can still feel unfair when income falls suddenly. A retiree might leave a job, reduce consulting work, or lose a stream of taxable income, yet continue paying a higher Part B and Part D amount because the premium is pegged to an earlier return. Without action, the correction may arrive only when the newer return cycles in.

Fast-Track Fix

There is a faster path when a major change reduces income. Social Security can reconsider the IRMAA decision for the current year if a qualifying event occurs and documentation supports the new, lower income picture. The review can adjust premiums sooner than waiting for the next tax-return update to filter through.

Common Triggers

Life changes that can prompt reconsideration include marriage, divorce, or becoming widowed. Other qualifying shifts can involve a work stoppage or other events that clearly reduce earnings for the year. The key point is that the agency typically needs a defined event and credible proof that income has declined enough to change the premium tier.

Wait Costs Money

Doing nothing can be expensive. If a beneficiary simply waits for the lower income to show up on the next tax return, the premium may not reflect the change until the normal two-year cycle catches up. In that situation, overpaid IRMAA amounts generally are not refunded for prior years, because the agency relied on the best tax data it had.

How It’s Collected

For many beneficiaries, Part B premiums are deducted automatically from monthly Social Security benefits. Those not yet collecting Social Security may be billed, often on a quarterly schedule, for Part B. The adjustment is layered on top of the base premium, so the total withdrawal or bill reflects both the standard amount and any income-related add-on.

Part D Add-On

Part D works a bit differently in how it’s paid. Even if a person pays a prescription plan premium directly to the plan, the IRMAA portion is typically collected separately. If Social Security benefits are being received, the Part D surcharge can be withheld from that monthly payment. If not, a separate bill may be issued for the add-on.

Conclusion

IRMAA can feel like a shock, but it follows a clear script: income thresholds, a MAGI calculation, and a two-year lookback that updates annually. The most practical approach is to read the notice carefully, confirm which tax year is being used, and pursue a reconsideration promptly after a qualifying income drop so the change is reflected sooner.