Why does IRMAA use tax returns from two years ago?

Medicare uses your most recent IRS tax return at the time of determination, which is generally two years old (your 2024 return for your 2026 premium, for example). This is the most recent verified data available. If your income has dropped since that return because of a life-changing event, you can request a new determination using more current data.

Yes. The Social Security Administration accepts appeals based on life-changing events including marriage, divorce, death of a spouse, work stoppage, work reduction, loss of income-producing property, loss of a pension, or receipt of a settlement payment from a former employer. You file Form SSA-44 with documentation. SSA can recalculate your IRMAA based on the more recent income.

Does IRMAA last forever once I am subject to it?

No. IRMAA is recalculated each year based on the tax return from two years prior. If your income falls below the threshold in a future tax year, the IRMAA stops applying once SSA processes that updated return. There is no permanent IRMAA tier.

Is IRMAA based on individual or household income?

IRMAA tiers are different for single tax filers and joint filers. The income measure used is Modified Adjusted Gross Income (MAGI), which includes most income plus tax-exempt interest. The thresholds are different for the two filing statuses.

Understanding IRMAA: When Medicare Premiums Increase | Empathy Insurance Advisors (Empathy Healthcare Solutions Inc.)

What IRMAA is

IRMAA stands for Income-Related Monthly Adjustment Amount. It is an additional amount that some Medicare beneficiaries pay on top of the standard Part B premium and any Part D plan premium. Congress established IRMAA so that higher-income beneficiaries pay a greater share of the cost of their Medicare benefits. Most Medicare beneficiaries do not pay IRMAA — only those with income above the first tier threshold.

The Social Security Administration determines IRMAA based on the income reported on your federal tax return. Medicare adjusts the premium accordingly, and Social Security typically deducts the higher amount from your monthly Social Security benefit (or bills you directly if you are not yet collecting benefits).

How IRMAA is calculated

IRMAA uses Modified Adjusted Gross Income (MAGI), which for most people equals Adjusted Gross Income from your tax return plus any tax-exempt interest. This is different from taxable income or wages — investment income, capital gains, retirement plan distributions, and Social Security all factor in.

There are five income tiers above the standard premium level. The exact dollar thresholds change each year, but the structure is consistent: as income rises through the tiers, the IRMAA amount on Part B and Part D increases. Single filers and joint filers have different thresholds — joint filers can have roughly twice the income of single filers before hitting the same tier.

The tiers use a cliff structure rather than a phased calculation. Crossing a threshold by even one dollar moves you to the next tier and the higher IRMAA amount. For people whose income falls just above a threshold, tax planning to manage MAGI in the year that determines the future IRMAA can be worth discussing with a tax advisor.

Why it uses tax returns from two years prior

SSA uses the most recent tax return on file with the IRS at the time of the IRMAA determination. Because tax returns for a year are not finalized and reported to SSA until the following year, the most recent verified data is generally two years old. For example, your 2026 IRMAA determination uses your 2024 tax return.

The two-year lag can create timing issues when income drops. If you retired in 2025, your 2024 tax return may still show working-year income that triggers IRMAA in 2026 — even though your current income is much lower. The appeal process exists to address this kind of situation.

How to appeal IRMAA

You can appeal an IRMAA determination if you experienced a life-changing event that reduced your income. SSA recognizes the following events:

Marriage
Divorce or annulment
Death of a spouse
Work stoppage (you stopped working)
Work reduction (your hours or pay decreased)
Loss of income-producing property (other than a sale)
Loss of a pension
Receipt of a settlement payment from a former employer

To appeal, you file Form SSA-44 (Medicare Income-Related Monthly Adjustment Amount — Life-Changing Event) with SSA. Include documentation of the life-changing event (marriage certificate, divorce decree, death certificate, employer letter, etc.) and evidence of the reduced income (a more recent tax return, paystubs, or your estimate for the year). SSA reviews the request and recalculates if approved.

Routine income changes that are not the result of a life-changing event are not generally accepted as appeal grounds. The IRMAA process for those situations is to wait for the tax return showing the reduced income to be processed and roll forward through the standard two-year cycle.

Common situations that trigger IRMAA

IRMAA most commonly affects beneficiaries in the years just after retirement, when working-year income is still showing on the relevant tax return. Roth IRA conversions, large capital gains realizations, and required minimum distributions can also push retirees into a higher tier than they expected. Selling a primary residence or receiving a one-time settlement can have the same effect.

For people approaching age 65, modeling expected income for the years that will determine future IRMAA is worth doing alongside the broader Medicare enrollment decision. A licensed advisor or tax professional can help anticipate and, where possible, manage IRMAA exposure.

How to find your specific IRMAA amount

SSA mails an IRMAA determination notice each year, usually in the fall, telling you what your premium will be the following year. Current-year amounts and the precise tier dollar thresholds are published by Medicare each autumn for the upcoming year. For your specific determination, the SSA notice you receive is the authoritative answer.

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