IRMAA: How Your Income Shapes Your Medicare Costs
Your income influences your Medicare premiums through something called IRMAA, (Income-Related Monthly Adjustment Amount). Understanding it now can prevent surprises later and protect your wealthspan, the years you can live with financial freedom, health, and purpose.
Why Medicare costs can surprise you
Most retirees assume Medicare is a fixed cost.
It isn’t.
Your income, specifically, your modified adjusted gross income (MAGI) from two years ago sets the stage for what you’ll pay today.
IRMAA is how Medicare adjusts premiums for higher-income earners. Even a modest increase in income say, a Roth conversion or selling appreciated stock, can bump you into a higher tier. That can mean hundreds more per month in Medicare costs.
How IRMAA works in plain English
Think of IRMAA as a financial echo from your past income.
The IRS looks back two years to determine today’s Medicare premiums.
If your reported income rises above certain thresholds, you pay a surcharge on top of your standard Part B and Part D premiums. Cross the line by even a dollar, and you may find yourself paying thousands more over the next year.
That’s the “income cliff” effect: one small step over, one big cost increase.
Why this matters for your wealthspan
Healthcare is often one of the biggest and least predictable retirement expenses. And IRMAA adds another variable to the mix.
It’s not just about paying more, it’s about what those dollars could have done for your life:
Traveling with family
Investing in new experiences
Funding health or longevity initiatives
Supporting causes you care about
Proactive planning turns those “surprises” into choices.
Steps to manage IRMAA proactively
Here are a few ways to stay ahead of IRMAA:
Time Roth conversions strategically. Consider partial conversions over multiple years rather than all at once.
Manage withdrawals. Coordinate distributions across taxable, tax-deferred, and tax-free accounts to smooth income levels.
Use Qualified Charitable Distributions (QCDs). These reduce taxable income while supporting causes you love.
Appeal when life changes. Retirement, divorce, or the death of a spouse may allow you to request a lower premium through the Social Security Administration.
Each of these strategies supports the same goal: keeping your freedom of choice in retirement.
The freedom perspective
IRMAA isn’t a punishment, it’s a planning opportunity.
It reminds us that wealth is a tool, not a goal.
Every thoughtful financial decision extends your wealthspan; the years when you can live life on your own terms, with financial stability, energy, and purpose.
Further Reading & Reliable Resources
If you’d like to dive deeper into how IRMAA and Medicare premiums work, these resources offer clear, verified information:
Medicare.gov — “Part B costs”
https://www.medicare.gov/your-medicare-costs/part-b-costs
(Official explanation of Part B premiums and IRMAA surcharges.)Medicare.gov — “Part D costs”
https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage
(Details on income-related adjustments for prescription coverage.)Social Security Administration — “Medicare Premiums: Rules for Higher-Income Beneficiaries” (SSA Publication No. 05-10536)
https://www.ssa.gov/benefits/medicare/medicare-premiums.html
(Outlines how income affects premiums and how to appeal.)Centers for Medicare & Medicaid Services (CMS) — IRMAA Appeals Process
https://www.cms.gov/newsroom/fact-sheets/income-related-monthly-adjustment-amount-irmaa
(Official guidance for filing a life-changing event appeal.)
Next Step
A wealthspan-focused income plan helps you stay one step ahead of IRMAA.
Schedule a strategy session today to learn how to structure your income, manage taxes, and protect your freedom throughout retirement.
Your Next Step
Schedule Your Wealthspan Review™Disclaimer: The information provided is for educational purposes only and does not constitute investment, tax, or financial advice. Consult with a licensed professional before making financial decisions.
