The Medicare High-Income Surcharge: How One Dollar Over a Line Can Cost More Than $1,100 a Year

Here is a number worth your attention before New Year's Day. The surcharge you pay on Medicare in 2026 is set by the income you reported for 2024, your modified adjusted gross income from the return you filed in 2025.

If that 2024 figure landed one dollar over a Medicare line, you can owe an extra $1,148.40 in premiums for 2026, but only if you carry both Part B and a Part D drug plan for all twelve months. Part B by itself adds $974.40.

More than a thousand dollars, per person. That is the Medicare high-income surcharge, known as the Income-Related Monthly Adjustment Amount, or IRMAA. It is built on cliffs, not gentle slopes.

About 8 percent of enrollees pay it, and many never see it coming, because the surcharge generally rests on income from two years earlier.

What the Surcharge Is, and Who Pays It

Nearly everyone on Medicare Part B pays a monthly premium. For 2026 the standard premium is $202.90 a month, up 9.7 percent from $185 in 2025, a figure the Centers for Medicare and Medicaid Services released in November 2025.

The annual Part B deductible rises to $283. Most people pay the standard premium and no more. But higher earners pay a surcharge on top of it, on both Part B and the Part D drug plan if they are enrolled in one.

The government calls this IRMAA. The Centers for Medicare and Medicaid Services estimates about 8 percent of beneficiaries owe it. This is not a tax you mail to the IRS. It is added to your monthly Medicare premium and, for most people, pulled straight out of the Social Security check before it reaches the bank.

The surcharge is based on modified adjusted gross income, or MAGI. That is your adjusted gross income plus any tax-exempt interest. It sweeps in wages, pension payments, IRA withdrawals, the taxable part of Social Security, interest, dividends, and capital gains.

In short, almost everything that shows up on your return counts toward the figure Social Security uses.

The Two-Year Lookback That Snags New Retirees

Here is the part that trips people up. Social Security does not look at what you earn this year. It generally reaches back two years to your income, and it reads that figure from the tax return you filed the following spring.

Your 2026 surcharge is generally set by your 2024 income, which you reported on the return you filed in 2025. Your 2027 surcharge generally comes from your 2025 income. And the income you earn in 2026, including anything you add this December, generally sets your 2028 premium.

There is one wrinkle. When the two-year-old return is not yet available to Social Security, the agency can use a return from three years back instead. If that happens and your newer return shows different income, you can send the more recent figures and ask Social Security to use them.

For a worker who just retired, this timing can sting. You may have stopped a six-figure job in 2025, yet your first Medicare premium can still rest on your highest earning year.

The good news is that the surcharge does not usually follow you forever. Each year's premium generally rests on one tax year two years back, so a single big income year usually affects only one year of premiums.

A 2026 spike generally raises your 2028 premium. If your 2027 income drops back down, that lower figure generally sets your 2029 premium, and the surcharge lifts. The lesson is to know which year sets each premium and plan that year on purpose.

The Cliff: Why One Dollar Matters So Much

Most of the tax code phases in slowly. Cross a line and only the next dollar is taxed at the higher rate. IRMAA does not work that way. Its brackets are cliffs. Go even one dollar past a threshold and the full surcharge for that whole tier kicks in.

Take 2026 as an example. Income of $109,000 or less for a single filer, or $218,000 or less for a married couple filing jointly, still pays the standard premium. Go above those lines and the Part B premium jumps from $202.90 to $284.10 a month, an added $81.20, plus a $14.50 Part D surcharge for those in a drug plan.

That is $95.70 a month. For someone enrolled in both Part B and Part D all twelve months, it works out to $1,148.40 a year. Part B alone accounts for $974.40 of that. For a married couple where both spouses are on Medicare, double it.

The tiers climb from there. At the top, a single filer at $500,000 or more, or a couple at $750,000 or more, pays an extra $487 a month for Part B. The cliff is why a tiny year-end decision can cost more than the decision itself was worth.

Roth Conversions, Home Sales, and Other Surprises

Because IRMAA keys off MAGI, the things that build wealth can quietly raise your Medicare bill. A Roth conversion done in December adds to your income this year. Selling a rental property or a block of appreciated stock throws off a capital gain.

A required minimum distribution from a traditional IRA counts too. Any one of these can nudge you over a cliff you did not know was there, and it will show up in your premium two years later.

Here is the trap. These one-time income spikes do not count as life-changing events. When you ask Social Security to lower a surcharge on that basis, a Roth conversion, a property sale, or a large withdrawal is not on the approved list, so a life-event request will be turned down, and the agency is applying the rule correctly.

If the income figure itself was wrong, that is a different matter, and you can ask for a correction. But for a planned spike, the real answer is to plan before you act. If a conversion or a sale would push you just over a line, consider spreading it across two tax years, or keeping the total under the next threshold.

A quick look at your running MAGI before year-end is worth the effort.

How to Ask for Relief or a Correction

If your income fell because of a genuine life change, you can ask Social Security to use a more recent year instead of the older return. The tool is Form SSA-44, titled Medicare Income-Related Monthly Adjustment Amount, Life-Changing Event.

It is free to file, available at ssa.gov, and you can also report the event by phone at 1-800-772-1213. Social Security recognizes eight qualifying events. They are marriage, divorce or annulment, the death of a spouse, you or your spouse stopping work, you or your spouse cutting back hours, the loss of income-producing property through no fault of your own, the loss of pension income, and a settlement payment from an employer's bankruptcy or reorganization.

Retirement is the most common one. Life events are not the only path, though. Social Security will also take a fresh look if the income it used was wrong, or if it used a three-year-old return when a newer one exists.

If you filed an amended return, the IRS sent corrected tax information, or you can supply the two-year-old return the agency did not have, you can ask for a new initial determination based on the right figures. Keep copies of everything.

If a request is denied and you believe the law was misapplied, you can ask for a reconsideration, and that is free as well.

Smart Moves Before December 31

A few habits keep the surcharge from biting. First, know where the nearest cliff sits and estimate your MAGI as the year closes. Remember that your 2026 income generally sets your 2028 premium, so this December's choices land on a bill two years out.

The exact 2028 thresholds are not published yet, since the lower brackets adjust for inflation each year, but the 2026 figures are a fair guide. If you are a few hundred dollars under a line, think twice before adding income in December.

Second, time big decisions. Spread a Roth conversion over several years, or realize capital gains in a year your other income is low. Third, if you are 70 and a half or older and give to charity, use a qualified charitable distribution.

You can send up to $111,000 in 2026 straight from your IRA to a public charity, and that amount is excluded from your adjusted gross income, which also counts toward your required minimum distribution. Because it keeps otherwise taxable IRA money out of your MAGI, it can lower a future surcharge, but only if the smaller MAGI drops you into a lower premium bracket for the year that figure sets.

If you are already well inside a bracket, the gift trims your income without changing your bill, and it does not reduce a surcharge you are paying right now. Fourth, run the numbers with a tax preparer if your income sits near a line.

The surcharge rewards people who pay attention and punishes those who do not. The return you file for this year is the one that generally sets your 2028 premium, so that is where your planning pays off.

Before December 31, add up your income, find the nearest cliff, and decide whether any year-end move is worth the cost of crossing it. If a real life change cut your income, file Form SSA-44 and ask Social Security to use a newer year.

If an old return was wrong, or the agency used a three-year-old return, you can ask for a fresh determination with the right figures. If you give to charity and are past 70 and a half, send it straight from your IRA.

The rules are fixed, but the timing is yours. An afternoon with your numbers can be worth well over a thousand dollars.

Sources

• Centers for Medicare and Medicaid Services, 2026 Medicare Parts A & B Premiums and Deductibles, CMS Fact Sheet (2025)
• Social Security Administration, Form SSA-44, Medicare Income-Related Monthly Adjustment Amount, Life-Changing Event (2025)
• Social Security Administration, POMS HI 01120.055, Beneficiary Provides 2 Year Old Tax Data When SSA Used 3 Year Old Tax Data (2009)
• Internal Revenue Service, Notice 2025-67, Inflation-Adjusted Qualified Charitable Distribution Limit (2025)
• Kiplinger, Medicare Premiums 2026: IRMAA Brackets and Surcharges for Parts B and D (2025)
• CNBC, Standard Medicare Part B premium to jump 9.7 percent in 2026 (2025)