Most retirees think of Medicare as a safety net — a predictable, reliable program that helps cover health expenses once you turn 65. But there’s a lesser-known trap built into the system that has blindsided millions of retirees. It’s called the Income-Related Monthly Adjustment Amount, or IRMAA.

And if you’re not careful, this little acronym can cost you tens of thousands of dollars in extra Medicare premiums over the course of your retirement.

What exactly Is IRMAA?

Think of IRMAA as a surtax on success. The government designed Medicare Part B (doctor visits, outpatient care) and Part D (prescription drug coverage) to be affordable for the average retiree. But if your income in retirement rises above certain thresholds, Uncle Sam adds a surcharge to your monthly premiums.

These surcharges are tiered. The higher your income, the steeper the extra charge. And it doesn’t take a million-dollar income to get caught. Even a modest bump — say, from a one-time Roth conversion, a home sale or an unusually large required minimum distribution, or RMD — can push you into the IRMAA zone.

How the thresholds work

Here’s the part many retirees miss: IRMAA isn’t based on this year’s income. It’s based on your Modified Adjusted Gross Income, or MAGI, from two years ago as reported on your tax return.

For 2025, the base Medicare Part B premium is about $174.70 per month per person. But cross the first income threshold — $103,000 for individuals or $206,000 for married couples filing jointly — and your premium can jump by hundreds of dollars per month.

And IRMAA doesn’t just hit Part B. It also increases Part D premiums, meaning the pain doubles.

Here’s an example:

• Married couple with MAGI of $220,000 (just $14,000 over the threshold).
• Their Part B premiums each rise by about $69 per month.
• Their Part D premiums each rise by about $12 per month.
• Total extra cost: roughly $1,944 per year.

Now imagine they live another 20 years in retirement. That’s nearly $40,000 lost to IRMAA — just for being a little over the line.

Cross into higher tiers and the numbers balloon. Some retirees pay an extra $6,000-$10,000 per year in IRMAA charges alone.

Why it feels like a “stealth tax”

Here’s why IRMAA catches so many off guard:

1. It’s not in the Medicare brochure. When you enroll, you see the base premium. The surtax isn’t advertised.
2. The thresholds don’t rise much. They’re not indexed generously to inflation, so more retirees get pulled in every year.
3. It feels sudden. Go one dollar over a threshold, and you pay the full surcharge. There’s no gradual ramp — just a cliff.

That’s why financial planners often call IRMAA the “stealth tax” of retirement.

Common ways retirees get tripped Up

Even careful savers fall into the IRMAA trap. Here are the most common culprits:

• Required Minimum Distributions, or RMDs: Once you hit age 73, Uncle Sam forces you to withdraw from pre-tax accounts. These withdrawals count as income, often pushing retirees above IRMAA thresholds.
• Roth conversions: Converting a chunk of IRA money to a Roth can be smart long-term, but the income spike can trigger IRMAA two years later.
• Capital gains from selling a home or investment: Even if you’re “downsizing,” the gain may inflate your MAGI.
• Part-time work or consulting: Many retirees enjoy working a little on the side, not realizing the extra income has IRMAA consequences.

The high-cost surprise

Let’s look at another example.

Mary and John are both 68. They sell a rental property and realize $120,000 in capital gains. Their MAGI jumps to $260,000 that year.

Two years later, they each get a notice: Their Medicare premiums are rising by about $230 per person, per month. That’s an extra $5,520 a year they hadn’t budgeted for.

Over the next decade, if their income stays high from RMDs, they’ll spend more than $55,000 in IRMAA surcharges — money that could have gone to travel, family or simply preserving their nest egg.

Can you avoid IRMAA?

The short answer: You may not avoid it completely, but you can plan around it. Here are a few strategies retirees use:

1. Income smoothing: Instead of large one-time income spikes (from Roth conversions, for instance), spread them out over several years to stay under thresholds.
2. Tax-efficient withdrawals: Balance withdrawals between taxable, tax-deferred and Roth accounts. This keeps reported income in check.
3. Qualified Charitable Distributions, or QCDs: If you’re charitably inclined, donate directly from your IRA after age 70½. This satisfies RMDs without raising MAGI.
4. Use of annuities: Certain annuities can provide steady income without inflating MAGI the same way large IRA withdrawals do.
5. Appeals: If your income dropped because of a “life-changing event” (like retirement, divorce or loss of income), you can appeal to Medicare to reduce your IRMAA.

Why planning ahead matters

The real danger of IRMAA isn’t just the money — it’s the shock factor. Retirees already worry about rising health care costs. Adding an unexpected $3,000-$10,000 annual bill can throw even a solid retirement plan off balance.

The good news? With early planning, IRMAA doesn’t have to drain your nest egg. Working with an advisor who understands Medicare’s hidden rules can help you structure your retirement income wisely, avoid unnecessary cliffs and keep more of your hard-earned savings.

The bottom line

Retirement planning isn’t just about building a nest egg — it’s about protecting it from hidden leaks. And IRMAA is one of the biggest leaks most retirees don’t see coming.

So before you make that big IRA withdrawal, sell that property or take on part-time work, ask yourself: “Will this push me into IRMAA territory?”

Because the real penalty isn’t just paying more for Medicare — it’s losing control over a retirement you worked a lifetime to build.

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.