How Can Ohio Retirees Avoid Medicare IRMAA Surcharges?

How Can Ohio Retirees Avoid Medicare IRMAA Surcharges?

Quick answer: Medicare IRMAA — the Income-Related Monthly Adjustment Amount — is a surcharge added to Medicare Part B and Part D premiums for retirees whose income exceeds certain thresholds. IRMAA is calculated based on Modified Adjusted Gross Income (MAGI) from two years prior, meaning income decisions today affect Medicare premiums two years later. For Ohio retirees, the most common IRMAA surprises come from large one-time income events: Roth conversions, real estate sales, large IRA withdrawals, and capital gains realizations. Avoiding IRMAA generally involves managing income to stay below tier thresholds, spreading large income events across multiple years, using Roth IRA withdrawals (which don't count toward IRMAA), and submitting an SSA-44 appeal when a "life-changing event" reduces income significantly. This article is educational; specific Medicare and tax planning advice requires qualified professionals.

Key Takeaways

• IRMAA is a Medicare premium surcharge based on income from two years prior.
• IRMAA tiers operate as cliffs — crossing a threshold by even one dollar triggers the full higher premium for the year.
• Both Medicare Part B and Part D premiums are affected by IRMAA.
• For married couples, the higher tier typically applies to both spouses, doubling the household impact.
• Roth IRA qualified withdrawals don't count toward MAGI for IRMAA purposes.
• The SSA-44 form allows retirees to appeal IRMAA when a life-changing event (such as retirement, marriage, divorce, or loss of a spouse) has reduced income.
• Multi-year income planning is the most effective tool for avoiding IRMAA surprises.

Table of Contents

• What Medicare IRMAA Is
• How the Two-Year Lookback Works
• What Income Counts Toward IRMAA
• How IRMAA Tiers Work
• Common Triggers for IRMAA Surprises
• Strategies to Avoid or Minimize IRMAA
• How to Appeal IRMAA Using Form SSA-44
• Frequently Asked Questions

What Medicare IRMAA Is

IRMAA stands for Income-Related Monthly Adjustment Amount. It's an additional premium that Medicare beneficiaries pay on top of the standard Medicare Part B and Part D premiums when their income exceeds certain thresholds.

The concept is straightforward: Medicare premiums are partially subsidized by the federal government for most beneficiaries, but higher-income beneficiaries pay a larger share of the actual cost. IRMAA is the mechanism for adjusting premiums upward at higher income levels.

A few structural points worth understanding:

IRMAA applies separately to Part B and Part D. A retiree subject to IRMAA pays a higher premium for Medicare Part B (which covers doctor visits and outpatient care) and an additional surcharge added to whatever Part D prescription drug plan premium they're paying.

The premium increase is tiered, not gradual. IRMAA has discrete income tiers. Each tier corresponds to a specific surcharge amount. Income within a tier produces the same premium; income that crosses a tier threshold triggers the next tier's higher premium.

IRMAA is recalculated annually. Each year, the Social Security Administration looks at your tax return from two years prior and determines your IRMAA tier for the upcoming year. A retiree might be in one IRMAA tier in 2026 and a different tier in 2027 based on different annual income.

Both spouses are typically affected. For married couples filing jointly, the household income is what's measured, and IRMAA generally applies to both spouses' Medicare premiums. The household impact is essentially doubled.

Premium amounts are set annually. The Centers for Medicare & Medicaid Services publishes IRMAA premium amounts each year. The specific dollar amounts change, so retirees should reference current CMS guidance for actual premium figures rather than relying on older information.

This article is part of my broader guide on how to plan a tax-efficient retirement in Ohio, which covers how IRMAA interacts with the rest of the retirement tax picture.

How the Two-Year Lookback Works

This is the single most important — and most commonly misunderstood — feature of IRMAA. Your IRMAA tier for the current year is based on income from your tax return from two years ago.

The practical implication: A large income event in 2026 affects Medicare premiums in 2028. By the time the higher premium notification arrives in late 2027 or early 2028, the income that caused it occurred 18-24 months earlier. The planning window for that year is closed.

An example of how this plays out:

A retiree completes a $200,000 Roth conversion in 2026 to take advantage of a particularly favorable tax year. The conversion is included in 2026 MAGI. In late 2027, the Social Security Administration calculates 2028 Medicare premiums using the 2026 tax return. The retiree receives notification that their 2028 Part B and Part D premiums will be at a higher IRMAA tier. The increase applies for all 12 months of 2028.

Why the lookback matters for planning:

• Income decisions made today affect Medicare premiums in two years
• By the time the premium increase arrives, the underlying decision can't be changed
• Multi-year planning is essential for avoiding IRMAA surprises
• The forward-looking nature of IRMAA planning is what separates it from most other tax decisions

For Ohio retirees enrolled in Medicare or approaching enrollment, the two-year lookback should shape how Roth conversions, large withdrawals, and other significant income events are planned. The goal isn't simply to avoid high income — it's to be aware that today's income decisions have a two-year-delayed effect on healthcare costs.

What Income Counts Toward IRMAA

IRMAA is calculated based on Modified Adjusted Gross Income (MAGI), which is a specific calculation that differs slightly from regular adjusted gross income.

MAGI for IRMAA purposes includes:

• Wages and self-employment income
• Pension income (including OPERS, STRS, and private pensions)
• Traditional IRA, 401(k), 403(b), and 457 withdrawals
• Roth conversion amounts (the conversion itself, not future Roth withdrawals)
• Required Minimum Distributions
• Capital gains and dividends (including qualified dividends)
• Interest income (including tax-exempt municipal bond interest, which is added back for MAGI purposes)
• Rental income
• Social Security benefits (the federally taxable portion)
• Most other taxable income

What does NOT count toward IRMAA MAGI:

• Qualified Roth IRA withdrawals (this is one of the most important features of Roth IRAs for retirement income management)
• Health Savings Account (HSA) withdrawals for qualified medical expenses
• Loans from a 401(k)
• Return of basis from a non-deductible IRA contribution
• Gifts and inheritances received (with some exceptions)
• Life insurance proceeds

The municipal bond surprise. Tax-exempt municipal bond interest is generally added back into MAGI for IRMAA purposes, even though it's not subject to federal income tax. This catches many retirees off guard. The federal tax exemption doesn't shield muni bond interest from affecting Medicare premiums.

The Roth conversion implication. The conversion amount counts in the year it occurs. This makes Roth conversion planning particularly important for IRMAA — converting too much in a single year can trigger a tier jump that affects Medicare premiums for two years afterward.

The Roth withdrawal advantage. Qualified Roth IRA withdrawals don't count toward MAGI for IRMAA. This makes Roth balances especially valuable for managing income in years when staying below an IRMAA threshold matters.

How IRMAA Tiers Work

IRMAA operates on a tiered structure with several distinct income brackets. Each tier corresponds to a specific Part B premium amount and a specific Part D surcharge amount.

The tier structure has several characteristics worth understanding:

Cliff thresholds. IRMAA tiers are cliff thresholds, not gradual phase-ins. Crossing a threshold by even one dollar triggers the full higher tier premium. A retiree with $1 over a threshold pays the same higher premium as one with $50,000 over the threshold.

Single vs. married thresholds. Single filers and married couples filing jointly have different threshold amounts. The married thresholds are not simply double the single thresholds — they're set at specific levels that don't follow a doubling pattern.

Multiple tiers above the lowest threshold. Once income crosses the first IRMAA threshold, there are several progressively higher tiers, each with progressively higher premium amounts. Retirees with very high income can pay several hundred dollars per month in IRMAA surcharges.

Inflation adjustments. IRMAA thresholds are adjusted annually, generally for inflation. This means the same nominal income can fall into different tiers in different years.

Why cliffs matter for planning: Because IRMAA tiers are cliffs, planning often focuses on managing income to stay just below a threshold rather than minimizing income generally. A retiree with income $5,000 above a threshold pays the same IRMAA as one with income $5,000 below the threshold but only $1 above — yet the actual tax cost of that $5,000 of income is the IRMAA increase plus the regular tax on the income.

The marginal effect. The combined marginal effect of regular income tax plus IRMAA tier triggering can be very high — sometimes effectively 50% or more on the dollars that push you across a threshold. This is one reason multi-year planning that smooths income across years often produces better outcomes than concentrating income in single years.

The Social Security Administration and CMS publish current IRMAA tier amounts each year. For planning purposes, retirees should reference the current year's specific thresholds rather than rely on older figures.

Common Triggers for IRMAA Surprises

Several patterns come up repeatedly when retirees experience unexpected IRMAA increases.

Large Roth conversions. Converting a substantial amount from a traditional IRA to a Roth IRA in a single year is one of the most common IRMAA triggers. The conversion is fully included in MAGI for the year. Multi-year conversion planning sized to stay below IRMAA thresholds avoids this.

Real estate sales. Selling a home (particularly a non-primary residence) or other real estate can produce a large capital gain that pushes a retiree across multiple IRMAA tiers. Primary residence sales benefit from the federal exclusion (up to $250,000 for single filers, $500,000 for married couples), but the excess above the exclusion is included in MAGI.

Selling appreciated investments. Realizing significant capital gains from a brokerage account — whether for cash flow, rebalancing, or other reasons — can trigger IRMAA. Tax-loss harvesting and gain-loss offsetting can help, but a large concentrated gain may not have available offsets.

Inheriting retirement accounts. Inherited IRA distributions (subject to the SECURE Act's 10-year rule for most non-spouse beneficiaries) can produce significant taxable income. Beneficiaries who didn't plan for the distribution timing can find themselves pushed into higher IRMAA tiers in years when they inherit.

Required Minimum Distributions. Once RMDs begin, they're mandatory. Retirees with substantial tax-deferred balances may find their RMDs alone are large enough to trigger IRMAA, particularly when combined with other taxable income.

One-time business or property liquidations. Selling a business, taking a deferred compensation lump sum, or other large one-time income events can have outsized IRMAA effects in the year they occur.

Retroactive income recognition. Less commonly, situations like settlement payments, late royalty distributions, or other unexpected income can push a year's MAGI higher than expected.

Death of a spouse. Following the death of a spouse, the surviving spouse may shift from married filing jointly thresholds to single filer thresholds — which are lower. The same household income that didn't trigger IRMAA under joint filing may trigger it under single filing.

For Columbus-area retirees, the practical implication is that any large income event should be modeled for its IRMAA impact two years out, not just its current-year tax cost. The combined effect can change the analysis significantly.

Strategies to Avoid or Minimize IRMAA

Several strategies can reduce IRMAA exposure for retirees who plan ahead.

Spread large income events across multiple years. When a large Roth conversion, real estate sale, or other significant income event is anticipated, spreading the income across two or more tax years can keep each year below an IRMAA threshold. The income still occurs — but it doesn't all hit one year.

Use Roth IRA withdrawals to manage income. Qualified Roth withdrawals don't count toward MAGI. In years when staying below an IRMAA threshold matters, drawing from Roth balances for spending needs rather than traditional accounts can keep MAGI lower.

Time Roth conversions strategically. Conversions before Medicare enrollment don't trigger IRMAA (since you're not yet on Medicare). The pre-Medicare years (often the gap between retirement and age 65) can be a strategic window for larger conversions without IRMAA impact.

Manage capital gains realization. Realizing capital gains in years with otherwise lower income can keep total MAGI below IRMAA thresholds. Tax-loss harvesting and selective realization can also help manage the gain side of the calculation.

Consider Qualified Charitable Distributions. For retirees subject to Required Minimum Distributions, QCDs allow the RMD to satisfy the requirement without being included in MAGI. This can reduce IRMAA exposure for charitably inclined retirees.

Watch the threshold edges. When MAGI is projected to come in near an IRMAA threshold, even modest planning adjustments can keep income below the threshold. Examples include accelerating deductible expenses, delaying income recognition where possible, or adjusting timing of optional distributions.

Plan for spouse-death IRMAA transition. Retirees with one spouse significantly older or in poor health should consider that the surviving spouse will face single-filer IRMAA thresholds. Strategies that build Roth balances or plan for distribution timing can reduce this exposure.

Model IRMAA in advance. Multi-year tax modeling — looking forward 3-5 years rather than just one year at a time — helps identify upcoming IRMAA pressure points before they become unavoidable. This is one of the highest-value uses of coordinated financial and tax planning.

Consider the Medicare timing question. Some retirees who continue working past Medicare eligibility can delay Part B enrollment without penalty if they have employer coverage. This delays IRMAA exposure until Part B enrollment.

How to Appeal IRMAA Using Form SSA-44

When a "life-changing event" reduces a retiree's income meaningfully, the Social Security Administration allows an appeal of the IRMAA determination through Form SSA-44.

Qualifying life-changing events include:

• Marriage
• Divorce or annulment
• Death of a spouse
• Work stoppage (retirement)
• Work reduction (significant decrease in work hours or earnings)
• Loss of income-producing property
• Loss of pension income
• Receipt of settlement payment from a former or current employer due to bankruptcy or closure

How the appeal works:

When a qualifying life-changing event has reduced your income substantially compared to the two-year-prior amount that the SSA is using, you can submit Form SSA-44 with documentation. If approved, the SSA recalculates IRMAA based on your more current (lower) income rather than the two-year-old amount.

The most common scenario: A retiree's last working year produces high income that the SSA uses for the first one or two years of Medicare. By the second year of retirement, the retiree's actual income is much lower. SSA-44 allows the IRMAA determination to be based on the lower actual income rather than the higher pre-retirement income.

Practical implications:

• Submit Form SSA-44 promptly after the life-changing event
• Include supporting documentation (retirement letter, marriage certificate, etc.)
• The form is available on the SSA website
• The SSA may request additional information; respond promptly
• Approval can produce meaningful Medicare premium savings, particularly in the first years of Medicare for retirees whose income dropped substantially at retirement

For Ohio retirees who recently retired and are paying IRMAA based on their last working year, the SSA-44 appeal is one of the most overlooked tools for reducing Medicare premiums.

Frequently Asked Questions

What is Medicare IRMAA? IRMAA is the Income-Related Monthly Adjustment Amount — a surcharge on Medicare Part B and Part D premiums for higher-income beneficiaries. It's based on Modified Adjusted Gross Income (MAGI) from two years prior.

How is IRMAA calculated? The Social Security Administration determines your IRMAA tier by looking at your tax return from two years before the current year. Your MAGI from that prior return determines which IRMAA tier applies to your current Medicare premiums.

Does IRMAA apply to both Medicare Part B and Part D? Yes. Both Part B and Part D premiums can be increased by IRMAA. Part B has a direct premium increase. Part D has a surcharge added to whatever Part D plan premium you pay.

Do Roth IRA withdrawals count toward IRMAA? Qualified Roth IRA withdrawals do not count toward MAGI for IRMAA purposes. This makes Roth balances particularly valuable for managing income in years when staying below an IRMAA threshold matters.

Does municipal bond interest count toward IRMAA? Yes. Tax-exempt municipal bond interest is added back into MAGI for IRMAA purposes, even though it's not subject to federal income tax. This catches many retirees off guard.

How do I appeal IRMAA? File Form SSA-44 with the Social Security Administration if a life-changing event (retirement, marriage, divorce, death of spouse, work stoppage, etc.) has reduced your income significantly compared to the two-year-prior amount being used.

How quickly does IRMAA change? IRMAA is recalculated annually based on income from two years prior. A change in income today affects Medicare premiums two years from now. The two-year lookback is one of the most important features of IRMAA planning.

Does IRMAA apply to married couples differently than singles? Yes. Married couples filing jointly have higher (but not double) IRMAA thresholds than single filers. After the death of a spouse, the surviving spouse generally shifts to single filer thresholds, which can trigger IRMAA on the same income that previously fell below the joint thresholds.

Can I avoid IRMAA by claiming Social Security later? Delaying Social Security can keep MAGI lower in earlier years, which might help with IRMAA — but Social Security claiming decisions involve many factors beyond IRMAA. The best Social Security claiming strategy should be evaluated based on the full retirement picture, not IRMAA alone.

Is there an IRMAA exception for high-deductible health plans? Health Savings Account (HSA) withdrawals for qualified medical expenses are not included in MAGI. HSA contributions during working years reduce MAGI for IRMAA purposes when the contribution is made.

Plan Around IRMAA, Not Into It

For Ohio retirees, Medicare IRMAA is one of the most consequential and most-overlooked elements of retirement income planning. The two-year lookback means that today's income decisions have a delayed effect on Medicare costs — and by the time the higher premium arrives, the planning window has closed.

The pattern that produces better outcomes: multi-year income projection, careful timing of Roth conversions and large income events, strategic use of Roth balances and Qualified Charitable Distributions, and proactive use of Form SSA-44 when life-changing events reduce income.

IRMAA isn't avoided by accident. It's managed deliberately.

For the bigger picture of how IRMAA fits into the broader tax planning framework for Ohio retirees, see my pillar guide on how to plan a tax-efficient retirement in Ohio. For context on how Roth conversions interact with IRMAA, see my piece on Roth conversion strategies for Ohio retirees. For context on how RMDs affect IRMAA, see my piece on Required Minimum Distributions and tax planning.

At Blue Advisors, we work with Columbus-area retirees and pre-retirees to coordinate IRMAA planning with the rest of the retirement income and tax picture. We work in partnership with our clients' tax professionals, not in place of them.

Schedule a conversation: If you're an Ohio retiree or pre-retiree thinking through IRMAA and Medicare premium planning, you can book an introductory call here: calendly.com/jimblue/blue-advisors-meeting.

By James Blue, Fee-Only Advisor | Blue Advisors

James Blue is the founder of Blue Advisors, a fee-only registered investment advisory firm based in Columbus, Ohio, serving retirees, pre-retirees, and busy professionals across Central Ohio and nationally.

This content is provided for informational and educational purposes only and should not be construed as personalized investment, tax, or legal advice. Medicare IRMAA rules, tier thresholds, and premium amounts change annually and may be modified by legislation. Tax laws and rules change frequently, and individual situations vary significantly. The views expressed are those of the author as of the date published and are subject to change without notice. Blue Advisors is a fee-only registered investment advisory firm and is not a tax preparation firm, law firm, or Medicare advisor. Readers should consult a qualified tax professional, the IRS, the Centers for Medicare & Medicaid Services, the Social Security Administration, and where applicable an attorney or licensed insurance professional before making tax, Medicare, or financial decisions. Advisory services are offered only pursuant to a written advisory agreement and to clients in the State of Ohio, the Commonwealth of Pennsylvania, and other jurisdictions where Blue Advisors is properly registered or exempt from registration. Past performance is not indicative of future results. Specific IRMAA tier thresholds, premium amounts, and qualifying events have been kept general — consult current SSA and CMS guidance for specific figures.