That’s how I describe one of the sneakiest traps in retirement: the Income-Related Monthly Adjustment Amount, better known as IRMAA.

For many retirees, IRMAA feels like a punishment that comes out of nowhere. You spend decades saving and planning. You finally start collecting Social Security and enroll in Medicare. Then — bam! — you open your statement and notice your Medicare premiums are hundreds of dollars higher than your neighbor’s.

What happened?

You triggered IRMAA.

What exactly Is IRMAA?

IRMAA is an additional charge on your Medicare Part B and Part D premiums if your income is above certain thresholds. It’s not technically a tax, but it sure feels like one.

The Social Security Administration, or SSA, looks at your Modified Adjusted Gross Income, or MAGI, from two years ago to determine if you’ll pay extra. For example, your 2025 Medicare premiums are based on your 2023 tax return.

If your income was above $103,000 (single) or $206,000 (married filing jointly) in 2023, you’ll likely pay more for Medicare in 2025. The higher your income, the higher your IRMAA tier — and the more you’ll pay.

And we’re not talking about pocket change.

At the top tier, you could pay over $500 per month per person for Medicare Part B alone. Add Part D, and the total can exceed $600-$700 a month.

Why retirees get caught off guard

Here’s the kicker: you don’t have to be wealthy to fall into an IRMAA bracket. Many retirees accidentally trigger it through one-time financial events that temporarily inflate their income.

Let’s look at a few examples I’ve seen firsthand:

1. The home sale surprise: After 30 years in their home, John and Susan decided to downsize. They sold their house for a nice gain — most of it tax-free, but not all. The portion above the IRS exclusion pushed their income over the IRMAA threshold. Two years later, they were hit with an unexpected $300 monthly increase in Medicare premiums.
2. The RMD ripple effect: Tom turned 73 and took his first Required Minimum Distribution, or RMD, from his traditional IRA. He didn’t realize that large withdrawal counted as income. The extra $25,000 pushed him into the next IRMAA tier. His Medicare premiums went up by nearly $1,000 for the year.
3. The Roth conversion shock: Mary decided to do a Roth conversion to lower future taxes. It was a smart move — but the timing hurt. The conversion inflated her income for that year, triggering IRMAA two years later.

In every one of these cases, the retirees didn’t know they’d crossed an invisible line. There was no warning letter from the IRS or SSA — just a bigger bill down the road.

How IRMAA is calculated

The calculation starts with your Adjusted Gross Income, or AGI, and adds back tax-exempt interest — that’s your Modified AGI.

Then, the SSA applies income tiers. For 2025, these brackets (based on 2023 income) roughly look like this for married couples filing jointly:

Those numbers reset each year, but the pattern remains: Once your income crosses a threshold, you pay more — sometimes hundreds per month — until SSA reviews your next income year.

Can you appeal an IRMAA decision?

Yes, but only in certain situations.

If your income dropped due to a “life-changing event” such as retirement, marriage, divorce or the death of a spouse, you can file Form SSA-44 to request a reduction.

However, selling property, taking IRA distributions or doing Roth conversions do not typically qualify for an appeal. That’s why planning ahead is critical.

How to reduce or avoid IRMAA

The key to avoiding IRMAA is controlling taxable income in retirement. Here are a few strategies that can help:

1. Tax diversification before retirement

Build a mix of taxable, tax-deferred and tax-free accounts before you retire. Having assets in a Roth IRA, life insurance cash value or after-tax accounts gives you flexibility. You can draw income from the right source each year to stay under the IRMAA line.

2. Strategic Roth conversions

Roth conversions can be powerful if done gradually. Instead of converting large amounts in one year (which spikes income), consider spreading conversions over several years — especially before age 63, since IRMAA looks back two years.

3. Manage RMDs

If you’re 73 or older, RMDs are mandatory. But you can reduce their future impact by doing partial Roth conversions earlier or by using Qualified Charitable Distributions, or QCDs. QCDs allow you to send up to $100,000 per year directly from your IRA to a qualified charity, satisfying your RMD without increasing taxable income.

4. Watch out for capital gains

If you’re selling investments, property or other assets, pay attention to how those gains affect your income. A big sale could trigger IRMAA two years later — so it may be worth spreading sales over two tax years if possible.

5. Coordinate with your advisor and CPA

A retirement income plan isn’t complete without a tax plan. Make sure your advisor, CPA and financial planner are talking to each other. IRMAA is one of those areas where proactive communication can save thousands.

The bottom line

IRMAA isn’t a punishment — it’s the government’s way of asking higher-income retirees to pay more for Medicare. But for many, it feels like an unfair surprise.

The good news? With the right planning, you can see it coming — and often avoid it altogether.

Think of IRMAA as a weather warning. You can’t control the storm, but you can prepare your shelter.

Don’t wait until your Medicare statement delivers the bad news. Talk with a qualified retirement income planner who understands how taxes, Medicare and distributions interact.

Because in retirement, every dollar counts — and it’s not what you earn; it’s what you keep that determines your peace of mind.

Call to action

If you’d like to see how IRMAA could impact your future Medicare premiums — and how to potentially reduce or avoid it — schedule a conversation with a qualified retirement income specialist. The earlier you plan, the more control you’ll have over your income and your health care costs.

Lyle Boss, The REAL BOSS Financial, endorsed by Glenn Beck as the premier retirement advisor for Utah and the Mountain West States. Boss Financial, 955 Chambers St. Suite 250, Ogden, UT 84403. Telephone: 801-475-9400. https://www.safemoneylyleboss.com/