IRMAA explained: Medicare's income surcharge, the two-year lookback, and how to stay under the lines

Medicare isn't priced by your income until it suddenly is. Cross a line by a single dollar and your Part B and Part D premiums step up for the whole year — and the income that counts is from two years ago. That surcharge is IRMAA, the income-related monthly adjustment amount. This post lays out the 2026 lines, shows what crossing one costs a couple, and explains how Runway builds it into your plan.

What is IRMAA, and which premiums does it affect?

Medicare describes IRMAA as an extra amount added to your monthly premium if your modified adjusted gross income, as reported on your IRS tax return from two years ago, is above a certain amount. It applies to both Part B (medical insurance) and Part D (drug coverage). The standard 2026 Part B premium is $202.90 a month; the IRMAA tiers add to that (CMS 2026 premiums fact sheet).

What are the 2026 IRMAA tiers?

These are the 2026 amounts for a married couple filing jointly, per person per month, from CMS (Part B) and Medicare's Part D income fact sheet, with the yearly cost for two people on Medicare calculated by Runway's engine. MAGI is from your 2024 return.

For a single filer the first line is $109,000, and one dollar over costs one person $1,148.40 a year. Notice that each line is a cliff, not a slope: the surcharge steps up all at once.

Why does it use income from two years ago?

Medicare doesn't have your current-year return when it bills you, so it uses the most recent one the IRS has shared. Medicare's Part D fact sheet spells it out: for 2026 premiums the income that counts is "yearly income in 2024." The practical consequence is that a one-time spike — a Roth conversion, a large capital gain, the sale of a property — shows up in your Medicare premiums two years later, long after you've forgotten the decision.

What does crossing a line actually cost?

Take a couple (both 65 or older) with $200,000 of income who are deciding how much to convert from a traditional IRA to Roth. Runway's engine prices the tax and the surcharge together:

That's why filling a tax bracket isn't the whole story for retirees on Medicare: the cheapest place to stop is sometimes a few thousand dollars below a line. At the line itself, one extra dollar of income cost $0.22 in federal tax in the engine and $2,296.80 in surcharge.

Can I lower IRMAA if my income dropped?

Often, yes. Because Medicare looks back two years, your first years of retirement can be billed off your last working-year income. Medicare's fact sheet says that if your income significantly changes you can visit SSA.gov/medicare/lower-irmaa and report new information, and it lists reasons such as marrying, divorcing, becoming widowed, or "You or your spouse stopped working or reduced work hours." The Social Security Administration decides these requests; the fact sheet explains what to send.

How does Runway use IRMAA?

The Withdrawal Plan page includes your Medicare premium — base plus IRMAA — as part of each year's cost, and the Long-Term Projection models the two-year lookback year by year rather than using this year's income. The Healthcare page (Pro) shows the premium at each Medicare milestone for your household. For the pre-65 side of healthcare, see our guide to the ACA subsidy cliff; for how RMDs push income up later, see RMDs explained.

How were these numbers computed?

Part B and Part D amounts are the 2026 figures published by CMS and Medicare (linked above); Runway's engine adds them per person per month and multiplies by 12 and by the number of people on Medicare. The conversion example assumes a married couple filing jointly, both 65 or older, with $200,000 of ordinary income and the standard deduction plus the additional deduction for age 65; "MAGI" is approximated as ordinary income, so tax-exempt interest and other add-backs are not included. Tax is the engine's 2026 federal calculation.