[PODCAST] The IRMAA Tax — Hidden, Nasty, Retroactive. Everything You Need to Do from the Creators of IRMAA Certified Planner With Laurence Kotlikoff

In November 2023, economist Laurence Kotlikoff devoted a full episode of Economics Matters — The Podcast to a Medicare cost most retirees have never heard of: the Income-Related Monthly Adjustment Amount, better known as IRMAA. His guests were Mark Annese and Dan McGrath, the creators of the IRMAA Certified Planner program—the certification and training effort whose planning work now continues in RetirementAdvisorPro.

The episode's title says it all: "The IRMAA Tax — Hidden, Nasty, Retroactive. Everything You Need to Do."

Here is how the episode was introduced on Kotlikoff's Substack:

"Economics Matters — the Podcast wants you to know all the dirty little secrets of IRMAA, Medicare Part B Premium, which is simply a tax by another name. IRMAA refers to Medicare Income-Related Monthly Adjustment Amount. It's a nasty tax that is assessed when you join Medicare Part B or Medicare Part C. It's based on a special measure of Modified Adjusted Gross Income two years back in time. It will cost you anywhere from almost $2K per year to almost $7K. There are ways to limit your IRMAA tax and my guests, Mark Annese and Dan McGrath, are the experts with all the secrets."

Laurence Kotlikoff is a Professor of Economics at Boston University and one of the most widely read voices in personal finance economics. He has spent decades writing about Social Security claiming, tax-efficient retirement planning, and lifetime household finance, and his commentary appears regularly in national financial media.

That background is exactly why his framing of IRMAA matters. Kotlikoff doesn't treat IRMAA as a premium adjustment or an administrative footnote—he calls it what it functions as economically: a tax by another name. When your income crosses a threshold and the government takes more of your money as a result, the label on the invoice is a distinction without a difference.

For financial advisors, having an economist of Kotlikoff's stature spotlight IRMAA was a meaningful moment. It signaled that Medicare surcharge planning is not a niche curiosity—it is a core retirement income planning discipline, sitting alongside Social Security timing and tax-aware withdrawal strategy.

Most Americans first learn about IRMAA the hard way: a determination letter from the Social Security Administration announcing that their Medicare Part B and Part D premiums will be higher than everyone told them to expect. There's no line for IRMAA on a tax return, no withholding notice, and no warning during Medicare enrollment that your income two years ago is about to set your premium.

As the episode discusses, the surcharge is assessed when you join Medicare Part B or a Medicare Advantage (Part C) plan, and it applies to Part D prescription drug coverage as well. In 2023, the year this episode aired, the standard Part B premium was $164.90 per month—but IRMAA could push a high-income enrollee's Part B premium to several times that amount, and both spouses pay it if both are enrolled.

Hidden also describes who gets caught. IRMAA doesn't only hit the wealthy. One-time income events—selling a home or a business, a large capital gain, an inherited IRA distribution, or a poorly timed Roth conversion—can push an otherwise moderate-income retiree over a threshold. Understanding how IRMAA is calculated is the first defense.

Unlike ordinary income tax brackets, which are marginal, IRMAA brackets are cliffs. Exceed a threshold by a single dollar and you owe the entire surcharge for that tier—for the full year, on both Part B and Part D.

In 2023, IRMAA began at Modified Adjusted Gross Income above $97,000 for single filers and $194,000 for married couples filing jointly. From there, five surcharge tiers stacked progressively higher premiums on top of the $164.90 standard Part B premium.

That cliff structure is what produces the cost range Kotlikoff cites in the episode description—"anywhere from almost $2K per year to almost $7K". For a married couple where both spouses are on Medicare, the household impact doubles, because each spouse pays the surcharge on their own premiums.

The feature Kotlikoff finds most striking is the lookback. IRMAA is not based on what you earn this year—it is based on a special measure of Modified Adjusted Gross Income from your tax return two years back in time. Your 2023 Medicare premiums were set by your 2021 tax return.

That makes the surcharge feel retroactive in the truest sense: income you earned before you were even enrolled in Medicare can raise your premiums after you enroll. The classic trap is the final working years—a strong salary, a severance package, or deferred compensation at age 63 lands on the tax return that determines premiums at 65.

The lookback also means IRMAA planning has to happen early. By the time the determination letter arrives, the income year it is based on is long closed. Advisors who model MAGI two years ahead—before Roth conversions, asset sales, and RMDs hit the return—are the ones who keep clients under the cliffs.

There is one safety valve: if your income has since dropped because of a life-changing event such as retirement, you can ask the SSA to use your more recent income instead by filing Form SSA-44. The IRMAA appeal process works—but only for qualifying events, and only if you file.

The second half of the episode's title is the practical part: everything you need to do. Distilled from the conversation and the planning discipline behind it, the playbook looks like this:

1. Know where the cliffs are. Track the current IRMAA thresholds for your filing status, and watch how they adjust each year—the 2025 brackets differ from the 2023 figures discussed in the episode.
2. Project MAGI two years ahead. Because of the lookback, this year's tax decisions are premium decisions for two years from now. Model income before you realize it.
3. Time the big income events. Roth conversions, business or property sales, and large IRA withdrawals should be sized and sequenced against the bracket cliffs, not done in isolation.
4. Appeal when life changes. Retirement, work stoppage or reduction, marriage, divorce, or the death of a spouse are qualifying events—file Form SSA-44 promptly so the SSA uses your current, lower income.
5. Revisit every year. IRMAA is redetermined annually from a new tax return, so a surcharge this year is not a life sentence—and a clean year now doesn't guarantee a clean year later.

None of this requires exotic products. It requires visibility—seeing MAGI, brackets, and the two-year lag on one screen before decisions are made. That is exactly the modeling work RetirementAdvisorPro was built to put in front of financial advisors and their clients.

Kotlikoff's guests, Mark Annese and Dan McGrath, built the IRMAA Certified Planner program to train financial professionals on Medicare's income-related surcharges—a topic that, at the time, almost no planning curriculum covered. As Kotlikoff put it in the episode notes, they "are the experts with all the secrets," having paired the certification with specialized software for reducing clients' IRMAA payments.

That work continues today as RetirementAdvisorPro, planning software that helps advisors model IRMAA exposure, Social Security timing, Roth conversion strategy, and multi-year MAGI management in a single client-ready view.

If this episode put IRMAA on your radar, the best next steps are to review how Medicare IRMAA works and see the current thresholds—then decide, two years ahead of time, which side of the cliff you want to be on.