Glossary
What is IRMAA?
IRMAA is the Income-Related Monthly Adjustment Amount — a surcharge added to Medicare Part B and Part D premiums when income exceeds set thresholds. It is based on your tax return from two years earlier, and it works as a cliff: one dollar over a threshold moves you into the higher tier.
The two-year lookback often trips people up. The year you sell a business, realize a large gain, or run a big Roth conversion is the year that sets your premium two years later.
The cliff structure is what makes it worth planning around. Unlike tax brackets, where only the income above a threshold is taxed higher, crossing an IRMAA threshold by any amount moves the whole premium up a tier.
This is why a Roth conversion that looks good on tax alone can still be the wrong move — the conversion saves tax and the surcharge takes some of it back.
Common questions
Yes, if a life-changing event caused the income drop — retirement, the death of a spouse, divorce, or loss of a pension. You file Form SSA-44 with documentation. A one-time capital gain is not a qualifying event.
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