7 Million

In approximately 2 weeks, individuals that are on Medicare will be receiving notifications if they will be getting a surcharge on their Medicare premiums. Why is this? Each year the Centers for Medicare and Medicaid Services evaluate the income for every person receiving Medicare and determine if a surcharge is applicable due to the amount of income they are generating during retirement.

The number behind the headline: roughly 7 million people on Medicare pay that surcharge — known as IRMAA. This means there were 7 million clients that could have been helped prior to retirement in order to ease the burden of these costs.

That being said, it may be too late for these 7 million people. However, there are millions of individuals that are nearing retirement that are in the same boat and do not know it.

IRMAA stands for the Income-Related Monthly Adjustment Amount. IRMAA is a surcharge that is added to your monthly Medicare costs, based on the amount of income you are receiving in retirement from various sources such as: pension, Social Security, W-2 wages, investments, or a combination of these different types.

The surcharge applies to both Medicare Part B (doctor visits and outpatient care) and Part D (prescription drug coverage). It sits on top of the standard premium — in 2023, for example, the standard Part B premium was $164.90 per month, and beneficiaries above the income thresholds paid anywhere from modest additions to several hundred dollars more per month, per person. For a married couple where both spouses are on Medicare, the surcharge doubles.

What makes IRMAA feel like an ambush is the lookback: the surcharge is determined by your modified adjusted gross income (MAGI) from two years prior. Your 2023 IRMAA notice was based on your 2021 tax return. By the time the letter arrives, the income that triggered it is old news. You can see exactly where the income thresholds fall on our IRMAA brackets page, and walk through the mechanics in how IRMAA is calculated.

IRMAA is not a one-time determination. The Social Security Administration re-evaluates every Medicare beneficiary's income every single year, and each fall — typically November into December — it mails determination notices for the coming year. That is the "approximately 2 weeks" this article originally pointed to when it was published in late October 2023: the annual wave of letters telling millions of retirees their premiums were about to include a surcharge.

Because the determination resets annually, a beneficiary can pay IRMAA one year and not the next — or drift into a higher tier after a large capital gain, a Roth conversion done without planning, or a required minimum distribution pushes MAGI over a threshold. We cover this annual cycle in detail in Is IRMAA Calculated Every Year?

The thresholds themselves also move. They are adjusted over time, and each year's brackets determine who lands in the surcharge population — see the 2025 IRMAA brackets for a current example of how the tiers are structured. Cross a threshold by even one dollar of MAGI, and the full surcharge for that tier applies.

Here is the uncomfortable part of the story: for the 7 million people receiving those notices, the planning window had largely closed. IRMAA's two-year lookback means the income that set their surcharge was earned and reported before the letter was ever printed. Once retirement income sources are locked in — pensions in pay status, Social Security claimed, required minimum distributions underway — there is far less room to maneuver.

But millions of individuals nearing retirement are in the same boat and do not know it. For them, the outcome is not yet decided. The years just before and just after retirement — before RMDs begin, before Social Security is claimed, while there is still flexibility in which accounts to draw from — are precisely when IRMAA exposure can be reduced.

• Know where the income will come from. Pension, Social Security, W-2 wages, and investment income all count toward MAGI. The mix matters as much as the total.
• Watch the two-year lookback. Income at age 63 sets Medicare premiums at 65. Planning has to start before enrollment, not after.
• Manage MAGI deliberately. The levers for keeping income under the thresholds are covered in our guide on how to reduce MAGI.

An IRMAA determination is not always the final word. If the income on the two-year-old tax return no longer reflects reality — because of a life-changing event such as retirement or work stoppage, marriage, divorce, or the death of a spouse — the Social Security Administration allows beneficiaries to request a redetermination.

The request is filed on Form SSA-44, along with documentation of the event and an estimate of the new, lower income. For many new retirees this is the single most valuable step: the tax return SSA used reflects full working-years income that simply no longer exists.

The full process — who qualifies, what evidence to gather, and how the timeline works — is laid out in our guide to the IRMAA appeal.

When this article first ran on the IRMAA Certified Planner site in October 2023, its closing observation was that very few financial professionals knew how to set up retirement plans to help mitigate IRMAA. That gap is the opportunity. Seven million current beneficiaries represent seven million households where an advisor could have modeled the surcharge before it happened — and millions more pre-retirees are approaching the same cliff today.

For advisors, IRMAA planning is a concrete, demonstrable value-add: project a client's MAGI across retirement, show which years cross a threshold, and quantify what a distribution-order change or conversion strategy does to lifetime Medicare costs. It turns an invisible surcharge into a planning conversation clients remember.

RetirementAdvisorPro was built for exactly this analysis — modeling IRMAA exposure year by year alongside Social Security, taxes, and withdrawal strategy, so the 7 million story becomes a planning opportunity instead of a surprise in the mailbox.