In 2027 Medicare will charge higher-income retirees an extra $600 to more than $2,000 a year in surcharges on Part B and Part D. These income-related monthly adjustment amounts, known as IRMAA, are based on your tax return from two years earlier.
That means your 2025 modified adjusted gross income decides what you pay in 2027. A single person with income above $106,000 or a couple above $212,000 will pay more. Yet many people in their 50s and early 60s still have time to arrange their finances so they stay below those lines.
The difference can equal the cost of a nice vacation each year. This column lays out exactly which numbers matter, which moves work, and which common mistakes to avoid.
What Counts as Income for IRMAA
Medicare uses your modified adjusted gross income, or MAGI, from two years prior. MAGI adds your adjusted gross income to tax-exempt interest from municipal bonds and foreign income.
For 2027 the brackets start at $106,000 for singles and $212,000 for married couples filing jointly. Once you cross those lines the surcharges jump in four tiers. In 2025 a single person earning $106,001 to $133,000 pays an extra $74.40 a month on Part B.
The same person earning above $173,000 pays $237.80 extra each month. Couples face twice those income thresholds but the same dollar surcharges. Social Security benefits are not counted in the MAGI test, yet required minimum distributions from traditional IRAs are.
That is why many retirees get surprised when they turn 73.
Roth Conversions in Your 60s
Converting traditional IRA money to a Roth IRA in years when your income is low can cut future IRMAA charges. Suppose you are 62, still working part time, and your taxable income sits at $80,000.
You could convert $25,000 from a traditional IRA and stay under the 2025 single threshold of $106,000. You pay tax on the conversion at today's lower rate. Later, when you are 65 and on Medicare, that money and its growth sit outside your MAGI.
The Social Security Administration publishes new brackets each fall. In October 2026 we will learn the exact 2027 numbers, but they usually rise with inflation by about 3 percent.
Planning conversions before you sign up for Medicare gives you the most control.
Timing Capital Gains and Dividends
Selling appreciated stock or mutual funds can push you into a higher IRMAA bracket for two years. If you plan to sell a large block of shares in 2025, consider spreading the sales over 2024 and 2025 so neither year's MAGI crosses the line.
Qualified dividends and long-term capital gains are included in MAGI. A couple with $180,000 of wages plus $50,000 of dividends already sits at $230,000 and will owe the first-level surcharge starting at age 65.
Moving $20,000 of dividend-paying stocks into a tax-deferred account or waiting until after 65 to sell can keep them under the $212,000 line for the first year of Medicare.
Charitable Gifts From Your IRA
Once you reach 70 and a half you can make qualified charitable distributions directly from your IRA to a charity. These gifts do not count toward your adjusted gross income and therefore do not raise your MAGI.
In 2025 the limit is $105,000 per person. Retirees who give $5,000 or $10,000 a year to church or favorite causes can satisfy their required minimum distribution this way and keep their taxable income lower.
That lowers both income tax and the chance of an IRMAA surcharge two years later. The charity receives the full amount with no tax withheld.
Life-Changing Events That Let You Appeal
If your income drops because of retirement, divorce, or death of a spouse, you can ask Medicare to recalculate your premium. You file Form SSA-44 with proof such as a marriage certificate or pension award letter.
In 2024 more than 300,000 people successfully appealed their IRMAA charges after a life event. The appeal must be filed within three years. Many retirees who stop working at 63 or 64 forget to file the form when they turn 65.
Doing so can remove the surcharge for the rest of that year and the next.
Numbers to Watch in 2025 and 2026
Track your expected 2025 MAGI starting now. Use last year's tax return as a guide and add any planned Roth conversions, bonuses, or asset sales. Software such as TurboTax has a what-if worksheet that shows the effect on your taxable income.
If you are married, run the numbers both as married filing jointly and, if one spouse has much lower income, as married filing separately. Filing separately usually triggers the highest surcharge, so it rarely helps.
The Medicare trustees report from 2025 shows that 15 percent of beneficiaries paid an IRMAA surcharge last year, up from 9 percent in 2010.
Working With a Tax Adviser
A certified public accountant who understands Medicare rules can model your income for the next five years. Many charge $300 to $600 for a single planning session. That fee can pay for itself if it keeps you out of the $74-a-month surcharge for even two years.
Bring your last two tax returns, latest Social Security statement, and list of all investment accounts. Ask the adviser to run scenarios with different Roth conversion amounts and charitable gifts.
The goal is to keep your 2025 MAGI under $106,000 if single or $212,000 if married so your 2027 Medicare bills stay at the base rates.
Part B Monthly Premiums by Income Level in 2025
| Filing Status | MAGI Range | You Pay |
|---|---|---|
| Single | Up to $106,000 | $185.00 |
| Single | $106,001 to $133,000 | $259.40 |
| Single | $133,001 to $167,000 | $370.00 |
| Single | $167,001 to $200,000 | $481.00 |
| Single | Above $200,000 | $604.00 |
| Married Joint | Up to $212,000 | $185.00 |
Lowering your Medicare premiums takes planning two years ahead, yet the savings last the rest of your retirement. Start by pulling your 2023 and 2024 tax returns and estimating your 2025 income.
Run the numbers with the brackets shown here. If you expect to be close to a cutoff, talk with a tax adviser before the end of 2025. Small changes such as a Roth conversion or a qualified charitable distribution can save you hundreds or even thousands of dollars a year once you are on Medicare.
Your future self will thank you for protecting your wallet today.
Sources
- Centers for Medicare and Medicaid Services, 'Medicare Premiums and IRMAA Brackets,' CMS.gov (2025)
- Social Security Administration, 'Medicare Income-Related Monthly Adjustment Amount,' SSA.gov (2024)
- Medicare Trustees Report, '2025 Annual Report of the Boards of Trustees,' CMS.gov (2025)
- Internal Revenue Service, 'Publication 554, Tax Guide for Seniors,' IRS.gov (2024)
- Kiplinger, 'How to Avoid Higher Medicare Premiums,' Kiplinger.com (2025)
- AARP, 'IRMAA Surcharges Explained,' AARP.org (2024)