Understanding IRMAA: Costs, Calculations, and Future Projections

What is IRMAA?

IRMAA stands for Income-Related Monthly Adjustment Amount. It is an extra charge added to your Medicare Part B and Part D premiums if your modified adjusted gross income (MAGI) from two years prior exceeds a certain threshold.

Unlike standard Medicare premiums, IRMAA is a surcharge specifically for higher-income beneficiaries. It is not paid by everyone; it applies only if your income places you in specific higher tax brackets.

Income Thresholds & Inflation

There are two distinct parts to IRMAA: the surcharge value (how much you pay) and the income brackets (how much income triggers the charge).

The First Paying Tier

IRMAA is not a gradual tax; it works in "tiers" or "brackets." If your income falls within a specific range, you pay the set surcharge for that range. The first tier where you begin paying a surcharge is defined as:

First Paying Tier (Single Filer):
Greater than $106,000 and less than or equal to $133,000.

Inflation Adjustments - 2.5%

While the surcharge costs (the money you pay) tend to rise quickly, the income brackets (the money you earn) also adjust upwards to account for inflation. These brackets typically increase at a rate of approximately 2.5% per year.

This is an important protection; it means your income can grow slightly each year to keep up with the cost of living without necessarily pushing you into a higher, more expensive surcharge bracket.

The Two Components of Cost

When you are in an IRMAA bracket, your total cost is composed of two surcharges:

• Part B Surcharge: Covers medical insurance (doctor visits, outpatient care).

• Part D Surcharge: Covers prescription drug coverage.

How to Calculate Your Current Liability

To understand the financial impact, we break down the calculation into monthly and annual costs using the current surcharge figures. We will be using IRMAA Tier 3 for the below example.

You can grab an updated copy of the 2026 IRMAA premiums here: https://www.cms.gov/newsroom/fact-sheets/2026-medicare-parts-b-premiums-deductibles

1. Monthly Calculation

First, combine the surcharges for both Part B and Part D.

2. Annual Calculation (Per Person)

To find the annual burden for a single individual, multiply the monthly total by 12 months.

$240.40 × 12 = $2,884.80

3. Calculation for Couples

If you are a married couple filing jointly, and both spouses are 65 or older and subject to the same income tier, the cost doubles.

$2,884.80 × 2 = $5,769.60 per year (household)

Projecting Future Costs - 6%

Healthcare costs generally rise faster than standard inflation. Historically, the cost of these IRMAA surcharges has grown at a rate of approximately 6% per year over the last 5 years.

The table below estimates the future annual cost for a couple (currently paying $5,769.60) assuming this historical 6% annual increase continues.

Key Takeaway: While the income brackets may widen by 2.5% annually, the cost you pay is projected to grow much faster at 6% annually. In 15 years, the annual cost of IRMAA alone for a couple could be more than double what it is today.