IRMAA Planning for Wealthy Families: What the 2026 Medicare Surcharges Actually Cost

What IRMAA is and why it hits the $2M–$20M bracket hardest

IRMAA — the Income-Related Monthly Adjustment Amount — is a Medicare premium surcharge that applies when your modified adjusted gross income (MAGI) from two years prior exceeds certain thresholds. For 2026 premiums, the SSA uses your 2024 tax return. The surcharge is layered on top of the standard Medicare Part B and Part D premiums.

In 2026, the standard Medicare Part B premium is $202.90 per month.¹ IRMAA surcharges add $81.20 to $487.00 per person per month on top of that. With Part D surcharges on top, a married couple at the highest tier pays over $13,800 more than the standard premium per year — from investment income alone.

Here's why this hits the $2M–$20M bracket so hard: a couple with $5M invested earning a 4% portfolio yield generates roughly $200,000 in annual investment income. Before adding Social Security benefits (85% of which is includable in MAGI), any part-time consulting income, or Required Minimum Distributions from a pre-tax 401(k), they're already flirting with MFJ Tier 1 or Tier 2. Add $80,000 in annual RMDs from a $1.5M IRA balance, and they move into Tier 3 ($9,240/year in surcharges for the couple).

2026 IRMAA brackets: complete table

All brackets are based on 2024 MAGI reported on your 2024 federal tax return. MAGI for IRMAA = AGI + tax-exempt interest (note: municipal bond income is included).

Annual cost per person = (Part B total + Part D add-on) × 12. Part D add-on is in addition to the plan's own premium. Part B surcharge figures per CMS Federal Register Nov 2025 and SSA POMS HI 01101.020.¹²

What this looks like for real $2M–$20M households

Scenario 1: Recently retired couple, $4M portfolio

Bob and Linda retired in 2023. Their $4M portfolio — mostly a taxable brokerage and two rollover IRAs — generates about $160,000 in dividends and interest annually. At 72, Bob has a $1.8M IRA and takes ~$73,000 in RMDs. Linda has a smaller IRA ($400K) with ~$17,000 in RMDs. They each collect $28,000/year in Social Security (85% includable = $47,600 combined). Total MAGI: roughly $160K + $73K + $17K + $47.6K = $297,600.

That puts them solidly in MFJ Tier 2 ($274,001–$342,000). As a couple, they pay $10,644/year in IRMAA surcharges on Part B alone ($5,322 × 2), plus Part D add-ons. Their Medicare premium is $3,473/year more than it would have been if their MAGI was $273,999 instead of $297,600 — a "bracket cliff" with no proportionality.

Scenario 2: Business owner who just sold, one-time income event

Sarah, age 61, sold her business in 2024 for a $900,000 gain (after QSBS exclusion). Her otherwise-normal income is $180,000 (salary + dividends). With the sale proceeds, her 2024 MAGI was ~$1,080,000. For 2026 Medicare, she's in Tier 5 ($500,000+ single): $9,371/year for Part B + Part D. If she'd structured the sale as an installment sale spreading income over three years — keeping each year's gain below $205,000 — she could have stayed below Tier 3 in every year instead. The after-tax value of that income management strategy: roughly $14,000–$24,000 in total Medicare savings across two affected Medicare years.

Scenario 3: The "one dollar" cliff

For a married couple, crossing $274,000 in MAGI takes them from Tier 1 ($7,166/year for the couple) to Tier 2 ($10,644/year). The difference: $3,478/year for having $1 more in income. A year-end Roth conversion of $30,000 that pushes MAGI from $258,000 to $288,000 saves years of future income tax but triggers a $3,478/year IRMAA increase in the next two Medicare years. A thoughtful advisor models both — the Roth savings and the IRMAA cost — before recommending the conversion amount.

IRMAA calculator: estimate your 2026 surcharges

Enter your estimated 2024 MAGI and filing status to see which tier applies and what your annual Medicare surcharge will be.

Six strategies to manage IRMAA exposure

1. Build Roth now, reduce taxable retirement income later

The most powerful long-term tool: Roth IRA and Roth 401(k) balances produce withdrawals that are completely excluded from MAGI. If you're currently in your 50s and expect large IRA balances at retirement, Roth conversions now — even in a moderate tax year — reduce future RMDs and therefore future MAGI. Every $100,000 converted to Roth today represents income that won't push you into a higher IRMAA tier in your 70s. See our Roth conversion planning guide for the tax-bracket math.

2. Use Qualified Charitable Distributions (QCDs) instead of regular charitable deductions

If you're 70½ or older with an IRA, a Qualified Charitable Distribution transfers money directly from your IRA to a qualifying charity. The distribution satisfies your RMD but is excluded from gross income entirely — it never appears in your MAGI. In 2026, the QCD limit is $111,000 per person ($222,000 for a couple).³ A couple donating $80,000/year via QCDs instead of writing a check from a brokerage account reduces their MAGI by the full $80,000 — which can be enough to step down one or two IRMAA tiers. Note: QCDs cannot go to a Donor Advised Fund; they must go directly to a qualifying public charity.

3. Time capital gains realizations across years

Selling appreciated securities — particularly in a concentrated position or a portfolio rebalance — can spike MAGI in a single year and trigger IRMAA two years later. Spreading gains across two or three years (when possible without creating other tax problems) keeps annual MAGI below a tier threshold. Our tax-loss harvesting guide covers how harvesting losses can offset gains in the same year to manage MAGI. Our concentrated stock guide covers multi-year phased diversification specifically.

4. Structure large one-time income events as installment sales

A business sale, large real estate transaction, or other lump-sum gain that hits in a single year can push MAGI into the highest IRMAA tiers for two Medicare years. An installment sale under IRC §453 defers a portion of the gain to future years — potentially keeping each year's MAGI below a lower tier. This requires planning before the sale closes; it cannot be restructured retroactively in most situations.

5. File a Life-Changing Event (LCE) appeal with SSA

IRMAA is based on your income from two years prior — but if your income has significantly decreased due to a qualifying life event, you can appeal using a more recent tax year. Qualifying events include:

• Retirement or reduction in work hours
• Loss of income-producing property (e.g., foreclosure not your fault)
• Death of a spouse
• Divorce (or marriage)
• Employer pension termination

File SSA Form SSA-44 with your most recent tax return or income estimate. If approved, SSA recalculates your premium using the lower income. This is the one real-time correction mechanism in the system.

6. Be careful about what counts in MAGI — muni bonds included

A common misconception: municipal bond interest is tax-exempt for income tax purposes, but it is added back to AGI when calculating MAGI for IRMAA. A retiree who holds $2M in muni bonds earning 3% earns $60,000 in "tax-exempt" income — but every dollar of it counts toward their IRMAA threshold. This doesn't mean you shouldn't hold munis; it means your tax-equivalent yield analysis needs to include the IRMAA impact on top of your marginal income tax rate.

The IRMAA–Roth conversion tradeoff

The most common tension for $2M–$20M households: a large Roth conversion in the years before Medicare enrollment reduces future RMDs and long-term IRMAA exposure, but it also raises current-year MAGI — triggering IRMAA surcharges two years later. The math is nuanced:

• A $100,000 Roth conversion at age 65 increases 2024 MAGI by $100,000, potentially pushing a couple from Tier 1 to Tier 2 — adding $3,478/year to Medicare costs in 2026 and 2027 (two years of elevated premiums).
• But that same $100,000 converted reduces future RMDs. If the $100K would have generated a 4% RMD ($4,000+/year) for 15+ years, the long-run IRMAA savings from lower future MAGI may far exceed the short-term surcharge cost.
• The breakeven depends on your RMD growth rate, your expected future tier, and whether you're already near a tier boundary (converting $30K to stay within Tier 1 is often better than converting $130K and jumping to Tier 3).

A fee-only advisor with financial planning software can model the Roth conversion × IRMAA tradeoff explicitly: what size conversion in each year keeps you just below a tier threshold, while still meaningfully reducing long-run traditional IRA balances?

Medicare surcharges in the broader wealth plan

For a $2M–$20M household, IRMAA is one of several income-sensitive levies that all respond to the same MAGI number. When planning around the threshold, you're simultaneously managing:

• IRMAA tiers — Medicare Part B and D surcharges
• The 3.8% Net Investment Income Tax (NIIT) — applies above $200,000 (single) / $250,000 (MFJ) on investment income
• The 20% LTCG rate — applies above $583,750 (single) / $700,050 (MFJ) in 2026
• Social Security inclusion rate — 85% includable when combined income exceeds $44,000 (MFJ)
• Medicare RMD interaction — large inherited IRA distributions in the 10-year window can temporarily spike MAGI

These don't move independently. Optimizing for IRMAA alone while ignoring the NIIT or LTCG rate interaction can produce a suboptimal overall result. The right planning approach treats MAGI as a shared budget that you allocate deliberately across income types, timing, and accounts.

What a fee-only advisor actually does with IRMAA planning

• Roth conversion sizing: Model which conversion amount keeps MAGI below the next tier threshold — not the largest amount that's "beneficial," but the optimal amount that balances tax savings vs. IRMAA costs
• RMD projection: Project your traditional IRA and 401(k) balances forward 10–15 years at realistic return assumptions to show which years produce the largest MAGI — and where Roth conversions now will matter most
• QCD vs. DAF optimization: If you're charitably inclined, a QCD often beats a DAF contribution for IRMAA management (the QCD reduces MAGI; the DAF does not)
• Installment sale structuring: Before a business or real estate transaction closes, model the IRMAA impact of a lump sum vs. multi-year installment
• LCE appeal coordination: If you retired mid-year and your income dropped dramatically, file SSA-44 before year-end with an income estimate
• State tax interaction: Some states (California, New York) do not fully conform to federal Medicare treatment, and the after-state-tax cost of higher-tier IRMAA is higher than the federal-only number suggests

Get matched with an IRMAA planning specialist

A fee-only advisor who builds Medicare premium projections into your retirement income plan — not a product salesperson. Free match, no obligation.

Fee-only · No commissions · Free match · No obligation