How much you'll end up paying for your Medicare premiums depends largely on your income. While work history, plan selection and timing all matter, Medicare can also increase your premiums through the Income-Related Monthly Adjustment Amount (IRMAA) when your income rises. Fortunately, with a little planning you can dampen down the surprises – and keep your expenses to a minimum.
Each fall, Medicare publishes a “base” premium amount, which is the amount that most retirees will pay for coverage in the following year. However, your particular premium is determined by your modified adjusted gross income (MAGI) as reported to the IRS. As a practical matter, your premiums are calculated based on your reported MAGI from two years earlier – so your 2026 Medicare premiums would usually be based on your 2024 income, and so on. This increase to the base premium amount is referred to as IRMAA.
The impact of IRMAA can be especially detrimental for people who still have sizable income in retirement. In particular, a large IRA that incurs sizable required minimum distributions (RMDs) may cause you to pay inflated Medicare premiums. It’s important to get out in front of these issues and take a thoughtful approach to how you take your RMDs. One tactic: Begin tapping your IRAs before age 73 to help bring down your balances, along with your subsequent RMDs.
Another group at risk of inflated premiums: Business owners who may not be actively involved in the activity, but for tax reporting purposes have business income flowing through their personal return. In those instances, you may not be working, but the income passing through from the business can impact your premiums.
Each December, Medicare recipients will receive a notice telling them if their premiums for the upcoming year have been adjusted under the IRMAA rules. For 2026, as an example, Medicare recipients whose MAGI was above $109,000 (or $218,000 for a couple) from two years prior (2024 in this case) will pay a higher premium under IRMAA.
Remember, though, that you are not necessarily locked into a permanent premium increase. Medicare premiums are recalculated each year, meaning just because you were subject to IRMAA one year doesn’t mean you will be the next – or vice versa. If your income spikes one year because of a large capital gain or Roth conversion, your Medicare premium two years later could reflect that – but it will reset to the base amount in the following year.
Your total Medicare Part B monthly premium is calculated by adding your IRMAA to the standard monthly premium, which for 2026 is $202.90. Your Medicare prescription drug premium (Part D), is also subject to an IRMAA, but the base premium will vary per person based on the type of coverage selected and where you live. The average base premium for Part D is $46.50, which was used for the calculations below.
If you filed your taxes as:
And your MAGI was:
Your Part B monthly premium (IRMAA + standard premium):
Your prescription drug coverage monthly premium (IRMAA + average premium):
Single, Head of Household, Qualifying Widow(er) with Dependent Child, or Married: Filing Separately (and you did not live with your spouse in tax year)
$109,000.01 - $137,000.00 $137,000.01 - $171,000.00 $171,000.01 - $205,000.00 $205,000.01 - $500,000.00 Greater than or equal to $500,000
$284.10 $405.80 $527.50 $649.20 $689.90
$61.00 $84.00 $106.90 $129.80 $137.50
Married: Filing Separately (and you lived with your spouse in the tax year)
$109,000.01 - $391,000 Greater than or equal to $391,000
$649.20 $698.90
$129.80 $137.50
Married: Filing Jointly
$218,000.01 - $274,000.00 $274,000.01 - $342,000.00 $342,000.01 - $410,000.00 $410,000.01 - $750,000.00 Greater than or equal to $750,000
$284.10 $405.80 $527.50 $649.20 $689.90
$61.00 $84.00 $106.90 $129.80 $137.50
If you find yourself facing an IRMAA, you are permitted to file an appeal to get your premiums reduced, but you must attest to having had a “life-changing event.” Some common examples of this would be a decrease in income due to retirement or a change in marital status. You only have 60 days from the time you get notification of your increased premium to file your appeal, so you’ll need to stay on top of this.
Medicare is a complex landscape, and pre-retirees often enter it with little experience in how it works. For guidance on IRMAA, consult with your Baird Financial Advisor team. They can help you keep your Medicare costs in check.
Editor’s Note: This article was originally published October 2021 and was updated January 2026 with more current information.
This information has been developed by a member of Baird Wealth Solutions Group, a team of wealth management specialists who provide support to Baird Financial Advisor teams. The information offered is provided to you for informational purposes only. Robert W. Baird & Co. Incorporated is not a legal or tax services provider and you are strongly encouraged to seek the advice of the appropriate professional advisors before taking any action. The information reflected on this page are Baird expert opinions today and are subject to change. The information provided here has not taken into consideration the investment goals or needs of any specific investor and investors should not make any investment decisions based solely on this information. Past performance is not a guarantee of future results. All investments have some level of risk, and investors have different time horizons, goals and risk tolerances, so speak to your Baird Financial Advisor before taking action.
