Federal retirees, you’ve planned for Medicare. You know the premiums. But what you may not know is that your income could make those premiums significantly more expensive, and that the number the government uses to calculate your surcharge is from two years ago.
That’s IRMAA: the Income-Related Monthly Adjustment Amount. It’s a surcharge added on top of your standard Medicare Part B and Part D premiums if your income exceeds certain thresholds. For 2026, the standard Part B premium is $185 per month. Depending on your income, IRMAA can push that figure well above $500 per month, per person.
How the Calculation Works
Medicare bases your IRMAA surcharge on your Modified Adjusted Gross Income (MAGI) from two years prior. Your 2026 premiums are determined by your 2024 tax return. That two-year lookback is where the surprise comes in.
Surcharges are applied in tiers, starting for individuals with income above $106,000 and married couples filing jointly above $212,000. From there, five income brackets apply progressively higher surcharges, with the highest tier hitting individuals earning above $500,000 and couples above $750,000.
Why Federal Retirees Are Particularly Exposed
Several events common to federal retirement can trigger IRMAA without warning:
- Taking a large Required Minimum Distribution (RMD)
- Converting a traditional IRA or TSP to a Roth
- Receiving a pension lump sum
- Selling a home or investment property
- Taking two RMDs in one year due to a delayed first distribution
Any one of these can spike your income in a single year, and that spike shows up in your Medicare bill two years later, often long after the decision that caused it.
What You Can Do
IRMAA is not always avoidable, but it is manageable with the right planning. Spreading Roth conversions across multiple years, timing asset sales strategically, and coordinating RMD withdrawals with other income sources can all help keep you in a lower surcharge tier, or out of IRMAA territory entirely.
If your income drops significantly due to retirement, divorce, or the death of a spouse, you can also appeal your IRMAA determination using Form SSA-44, which allows for a reduction based on a qualifying life-changing event.
The key is knowing this is coming before it does.
A Federal Retirement Consultant (FRC®) can help you map out your retirement income in a way that accounts for IRMAA exposure, before a single financial decision triggers a two-year premium increase you didn’t see coming. Schedule your free consultation today.
