IRMAA Two-Year Lookback Planning

Medicare sets your premium surcharge using your tax return from two years ago, so the income that decides your 2026 Medicare bill is the income you reported in 2024. That lag is the whole reason to plan before the year you think matters.

Why does a one-time income spike at 63 raise your Medicare premium at 65? Because Medicare looks two years back. Your 2026 surcharge is set by the income on your 2024 tax return, and that two-year lag is the single most important thing to understand about IRMAA, and the most overlooked.

What IRMAA is

IRMAA stands for income-related monthly adjustment amount. It’s a surcharge added on top of your standard Medicare Part B and Part D premiums once your income climbs above certain thresholds. For 2026, the standard Part B premium is $202.90 a month. Cross the first income line and a surcharge stacks on top, and it climbs in tiers from there.

The two-year lookback, in numbers

Here’s the mechanism. The Social Security Administration uses your modified adjusted gross income from two years prior to set this year’s surcharge. So:

Your 2026 IRMAA is based on your 2024 income.
Your 2027 IRMAA will be based on your 2025 income.

For 2026, a single filer pays no surcharge at or below $109,000 of income, and a married couple filing jointly pays none at or below $218,000. Step over those lines and the surcharge begins, then rises through five more tiers as income grows.

2026 income (married filing jointly)	Monthly Part B per person
$218,000 or less	$202.90
over $218,000 to $274,000	$284.10
over $274,000 to $342,000	$405.80
over $342,000 to $410,000	$527.50
over $410,000 to under $750,000	$649.20
$750,000 or more	$689.90

The cliff that makes this brutal

IRMAA isn’t a gradual phase-in. It’s a cliff. Earn one dollar over a threshold and the full surcharge for that tier hits, on both spouses’ premiums, for the whole year. A single dollar of extra income can cost a couple hundreds. That’s what makes the planning worth it: the penalty for missing a line by a little is the same as missing it by a lot.

The planning problem the lag creates

The two-year lag is what trips people. In the year you’re actually planning, say the year you retire and do a big Roth conversion, you don’t feel any IRMAA pain. It shows up two years later, after you’ve forgotten the conversion. So you have to plan with the future in view: a high-income year today is a high Medicare premium two years out. Conversions, capital gains, a business sale, a fat final paycheck, all of it counts toward a surcharge you won’t see on the bill until later.

For higher-net-worth households

When your income regularly brushes these thresholds, IRMAA becomes a year-by-year game of staying under the next line, or accepting a tier on purpose because the long-term tax saved is worth more than the one-year surcharge. Two things help. If a major life event cut your income, retirement among them, you can appeal using Form SSA-44 and have Medicare use your current lower income instead of the two-year-old figure. And large RMDs are a permanent IRMAA driver, which is exactly why trimming the pre-tax balance with conversions in your 60s pays off twice. See Roth Conversion Ladder Strategy for 2026.

IRMAA is one of those rare costs you can see coming two years out. The retirees who get surprised are the ones who only looked at this year’s tax. Look two years ahead and the surcharge becomes something you steer, not something that happens to you.