Medicare & IRMAA

How SmartRetireCalc models Medicare income-related surcharges — the official 2026 schedule, the two-year lookback, projected future thresholds, and projected surcharge dollars.

IRMAA (Income-Related Monthly Adjustment Amount) is an addition to the standard Medicare Part B and Part D premiums, charged when your Modified Adjusted Gross Income (MAGI) exceeds published thresholds. The standard Part B premium is $202.90/month, paid by every enrollee regardless of income; IRMAA is the extra amount added on top of that for higher earners. The main retirement projection models only the surcharge add-ons, not the base premium.

Official 2026 Official 2026 schedule

These are the 2026 tiered IRMAA adjustments for individual filers (CMS announcement, 2025-11-14), added to the standard $202.90/month Part B premium. Married filing jointly thresholds are double the Single thresholds through the fourth tier; the top MFJ tier begins at $750,000 and above.

Two-year lookback

IRMAA uses a two-year lookback: your 2024 income determines your 2026 premiums. The full multi-year retirement projection models this explicitly — each premium year’s IRMAA is assessed on the modeled MAGI from two years earlier. Once that earlier year falls inside the projection, the engine uses that year’s modeled MAGI, so a large Roth conversion correctly raises Medicare premiums about two years later rather than in the same year. For the first Medicare years — whose lookback tax year precedes the projection — you can enter MAGI from your actual tax returns; a blank year is estimated from projected income and labeled as an estimate.

IRMAA MAGI in the projection is modeled adjusted gross income for the year — ordinary income plus the taxable portion of Social Security (never the full benefit), plus taxable pension/annuity income and Roth conversions. Deductions lower taxable income but not AGI, so they do not lower IRMAA MAGI. Tax-exempt municipal-bond interest (added back for real IRMAA MAGI) is not modeled. For a married couple the surcharge applies to each spouse who has reached Medicare age.

Married filing separately

A taxpayer who is married filing separately and lived with their spouse follows a three-band schedule (SSA POMS HI 01101.020), not the Single or MFJ tiers and not a simple “base or top” switch:

• MAGI at or below the base threshold (the Single first-tier threshold, $109,000 for 2026) — no surcharge.
• Above the base threshold but below the MFS high-income threshold ($391,000 for 2026) — the second-highest IRMAA tier’s Part B and Part D surcharges.
• At or above the MFS high-income threshold — the top tier’s surcharges.

Both the base and the MFS high-income threshold are admin-configurable per year. This three-band path is used by the standalone Medicare Cost Calculator below; the main retirement projection supports only Single and MFJ filing.

Projected assumption Projected future MAGI thresholds

Threshold projection is separate from surcharge-dollar projection (next section) and is applied only to calendar-anchored premium years after 2026:

• The four ordinary tiers are projected under the statutory CPI-based framework (42 U.S.C. §1395r(i)(5)(A)): indexed by the increase in CPI-U, floored at zero so thresholds never decrease, and rounded to the nearest $1,000(§1395r(i)(5)(B)).
• The engine uses the plan/scenario inflation assumption as the planning proxy for CPI (growth applied to the published 2026 values, not a literal 2006 base index).
• MFJ lower tiers are held at the Engine’s statutory relationship of 2× the projected Single tier (§1395r(i)(2)), not indexed independently.
• The high-income tier ($500,000 Single / $750,000 MFJ) is frozen through premium year 2027 by statute (§1395r(i)(5)(C)), then indexed from a later (August 2026) base — one year behind the ordinary tiers.

An unanchored projection, or one anchored to 2026 or earlier, keeps the caller’s thresholds verbatim — no silent indexing.

Projected assumption Projected surcharge dollars

The official 2026 Part B and Part D surcharge amounts in the table above are used exactly for premium year 2026. For calendar-anchored premium years 2027 and later, the engine projects each monthly surcharge component:

• The Part B and Part D monthly surcharges are projected separately, each grown from its own 2026 official monthly amount.
• Each monthly component is grown by 5.5% per year, compounded using the full factor from 2026 (not re-compounded from already-rounded intermediate years), then rounded to the nearest cent — the same money rounding the engine uses elsewhere. It is not rounded to a whole dollar.
• The annual IRMAA cost for a person is the projected Part B monthly plus the projected Part D monthly, multiplied by 12; a married household with two Medicare-age spouses is assessed per spouse.
• 5.5% is a Medicare cost-growth planning assumption — not statutory CPI indexing. It is independent of the scenario inflation assumption (which drives the MAGI thresholds above).
• An unanchored calculation, or one anchored to 2026 or earlier, retains the frozen 2026 surcharge amounts.

Roth conversion timing

The Roth Conversion Optimizer’s IRMAA impact analysis checks whether modeled conversions actually fall within the lookback window of Medicare eligibility (age 65), so a conversion plan that ends early enough (for example, by age 63) is correctly shown as not raising Medicare premiums, instead of flagging every MAGI tier crossing regardless of timing. The main projection’s Fill-to-IRMAA strategy sizes each year’s conversion against the MAGI threshold above (using the projected thresholds for anchored future years), not against the surcharge dollars.

The standalone Medicare Cost Calculator

The Medicare Cost Calculator is a separate tool that estimates a first-year Medicare premium from a date of birth, filing status, work-credit history, employer-coverage situation, and a MAGI figure. It is computed server-side by RetireCalc.Engine.Medicare.MedicareEstimator and does not feed the retirement projection. It models:

• Part A premium — $0 with 40+ work quarters (or when not sure), $311/month with 30–39 quarters, and $565/month with fewer than 30 (2026 CMS buy-in premiums).
• Part B — the standard $202.90/month base premium, plus the IRMAA surcharge for the entered MAGI and filing status (Single, MFJ, or the three-band MFS path described above), plus any late-enrollment penalty. The $283 annual Part B deductible is shown for reference but is not added into the monthly premium.
• Part B late-enrollment penalty — 10% of the base premium for each full 12-month period Part B could have been held but was not (counted only when the person is past 65 and not covered by an employer plan). It is permanent for as long as Part B is held.
• Initial Enrollment Period — the 7-month window from three months before the 65th-birthday month through three months after, computed from the entered date of birth.
• Delaying Part B — active employer coverage alone does not make it safe to delay. Under Medicare Secondary Payer rules (42 CFR 411.170/411.172), only an employer with 20 or more employees makes the group plan the primary payer; with fewer than 20 employees Medicare generally pays first even while working, so delaying is generally not advisable. When employer size is not confirmed the calculator says the answer is indeterminate.
• HSA interaction — if someone with active employer coverage is still contributing to an HSA, the calculator warns that enrolling in any part of Medicare (including premium-free Part A) ends HSA-contribution eligibility that month, and that premium-free Part A can be backdated up to six months (IRS Publication 969).

Official sources

• CMS announcement, 2025-11-14 — 2026 IRMAA MAGI tiers, Part B / Part D income-related surcharge amounts, and the Part A buy-in premiums
• SSA POMS HI 01101.020 — the married-filing-separately three-band IRMAA schedule
• 42 CFR 411.170 / 411.172; IRS Publication 969 — Medicare Secondary Payer employer-size rule and HSA / premium-free Part A interaction
• 42 U.S.C. §1395r(i)(2) — married-filing-jointly thresholds set at 2× the individual amounts
• 42 U.S.C. §1395r(i)(3)(C) — tier boundary definitions — inclusive ordinary tiers, 'at least' high-income tier
• 42 U.S.C. §1395r(i)(5) — CPI-based threshold indexing, zero floor, nearest-$1,000 rounding, high-income tier freeze through 2027
• 2026 Medicare Trustees Report — basis for the 5.5% Medicare cost-growth planning assumption (not a statutory rule)