IRMAA Surcharges in 2026: A Maryland Retiree’s Medicare Premium Playbook

Why IRMAA Catches So Many Retirees Off Guard

Many retirees budget carefully for taxes. Fewer think to budget for Medicare premiums, and it’s easy to overlook the possibility of paying more than a neighbor for the exact same Medicare coverage.

That is what IRMAA does. When your income crosses certain thresholds, Medicare adds a surcharge to your Part B and Part D premiums that can total thousands of dollars per year for a single retiree, and roughly double that for a married couple.

The frustrating part is the timing. The income that triggers your 2026 IRMAA was earned back in 2024. By the time you receive the notice, it is too late to change the underlying income. The only way to avoid surprises is to plan ahead.

The Maryland Wrinkle

If you are retiring in Maryland, you have probably figured out that the state is friendlier to retirement income than its reputation suggests. Social Security is fully exempt at the state level. The pension exclusion takes up to $41,200 (2025) off your state taxable income. Residents 65 and older may qualify for an additional senior tax credit.

What many Maryland retirees do not realize is that none of those state-level benefits help with IRMAA.

IRMAA is calculated from federal modified adjusted gross income (MAGI), not Maryland taxable income. So a Maryland retiree can have a relatively modest state tax bill thanks to the pension exclusion, and still trigger thousands of dollars in Medicare surcharges because the same income shows up in full on the federal return.

That gap, between what Maryland forgives and what Medicare counts, is where most of the planning opportunity sits. For a deeper look at Maryland’s state-level tax landscape, see our companion guide on retiring in Maryland and how to minimize taxes on your retirement income.

In this guide, we’ll cover:

• What IRMAA is and how Medicare calculates it
• The 2026 income thresholds and surcharge amounts
• Planning strategies to reduce IRMAA exposure, with notes on how each interacts with Maryland tax planning
• How to appeal a surcharge after a qualifying life event

What Is IRMAA and How Does It Work?

IRMAA stands for Income-Related Monthly Adjustment Amount. It is a surcharge that Medicare adds to your Part B and Part D premiums when your income exceeds certain thresholds. It is not a penalty. It is a tiered pricing structure that applies higher premiums to higher-income beneficiaries.

If your income stays below the first threshold, you pay the standard premium and nothing extra.

Which Parts of Medicare Does IRMAA Affect?

IRMAA applies to two parts of Medicare:

• Part B (outpatient care, doctor visits, lab work)
• Part D (prescription drug coverage)

If you are subject to IRMAA, you pay your plan’s base premium plus an income-based surcharge on top. The Social Security Administration calculates the amount and deducts it automatically from your benefit, or bills it directly if you are not yet collecting Social Security.

How Medicare Calculates Your IRMAA

Medicare uses your modified adjusted gross income (MAGI), which starts with your federal adjusted gross income (AGI) and adds back certain items, most notably tax-exempt interest from municipal bonds.

Two important details for Maryland retirees:

1. Medicare uses your federal MAGI, not your Maryland taxable income. That means Maryland’s pension exclusion, which reduces state taxable income, has no effect on IRMAA. Your federal AGI is the starting point either way.
2. There is a two-year lookback. Your 2026 IRMAA is based on your 2024 tax return. By the time you receive the surcharge notice, the income that triggered it is already in the past, which is why proactive planning matters so much.

The Cliff Effect: Why a Single Dollar Can Cost Thousands

IRMAA is structured as a series of income brackets, and crossing into the next bracket triggers the entire surcharge for that tier. It is not prorated.

A single dollar over a threshold pushes you into the higher tier. Stay one dollar below, and you avoid the increase entirely.

For Maryland retirees, this matters because routine planning moves like a Roth conversion, a property sale, or the timing of an IRA withdrawal can easily push MAGI a few thousand dollars over a threshold. Understanding the brackets is the first step in avoiding accidental jumps.

2026 IRMAA Brackets at a Glance

The 2026 standard Part B premium is $202.90 per month, up from $185.00 in 2025. Brackets are based on your 2024 modified adjusted gross income.

The following figures should be verified against the most recent CMS guidance before applying to your situation.

2026 IRMAA brackets based on 2024 MAGI. Surcharges are per person, per month, added to standard premiums.

For Married Filing Separately in 2026

A single Maryland retiree in the highest tier could pay over $6,900 in annual surcharges. For a married couple in the top bracket, that figure can roughly double because IRMAA applies to each spouse individually.

These are real dollars that could otherwise go toward travel, family, or simply keeping more of your retirement savings intact.

How Maryland’s Tax Benefits Interact With IRMAA

Maryland retirees face a distinct planning landscape that is worth understanding alongside the broader IRMAA picture.

Maryland Pension Exclusion Reduces State Tax, Not IRMAA

The Maryland pension exclusion lets eligible retirees subtract up to $41,200 (2025) of qualifying pension and employer retirement plan income from their state taxable income. That is a meaningful state tax benefit.

It does nothing for IRMAA.

The pension exclusion is applied on your Maryland return after federal AGI is calculated. IRMAA uses your federal MAGI, which sits upstream. So pension and 401(k) distributions still count fully toward your IRMAA calculation, even when they are partially or fully excluded for Maryland purposes.

Social Security Is Exempt in Maryland, But Counts for IRMAA

Maryland fully exempts Social Security from state income tax. However, the taxable portion of your Social Security benefits at the federal level (up to 85%) is included in your federal AGI, and therefore in MAGI for IRMAA purposes.

A retiree with substantial Social Security income may show low Maryland taxable income but a federal MAGI high enough to trigger IRMAA.

Maryland Roth Distributions and IRMAA

Qualified Roth distributions are excluded from federal AGI and therefore do not count toward MAGI for IRMAA. This is one reason Roth assets are particularly valuable for IRMAA planning, regardless of state of residence.

Strategies to Reduce or Avoid IRMAA Surcharges

You cannot opt out of IRMAA, but you can often influence the income that triggers it. The strategies below are general approaches. Each works for some retirees and not for others. Individual results depend on your specific income mix, account types, age, and broader financial plan.

Manage Taxable Income Across Account Types

Blending withdrawals from traditional IRAs, Roth accounts, and taxable accounts can keep any single source from pushing you into the next IRMAA bracket. The specific mix depends on your overall plan, but the principle is the same: spread the income generation so no single year shows a spike that crosses a threshold. Learn more about our retirement income approach.

Spread Roth Conversions Across Multiple Years

Converting a traditional IRA to a Roth IRA creates taxable income in the year of the conversion, which directly affects MAGI two years later. A common approach is to plan conversions in smaller annual amounts that fill up a specific tax bracket without crossing into the next IRMAA tier.

This requires modeling several years out, because the conversion you do today affects IRMAA two years from now.

Worth noting: Roth conversions are not always the right move. They create an immediate tax cost, and the long-term benefit depends on assumptions about future tax rates and your investment horizon. Future tax laws may also change in ways that alter the calculus.

Use HSA Funds Strategically

If you funded a Health Savings Account during your working years and have not yet enrolled in Medicare, HSA distributions for qualified medical expenses remain tax-free and do not count toward MAGI. Once you enroll in Medicare, you can no longer contribute to an HSA, but you can continue to spend the balance tax-free on qualified medical expenses.

Time Large Income Events Carefully

Selling a rental property, exercising options, or rebalancing a concentrated stock position can create one-time spikes in taxable income that cross IRMAA thresholds. Where the timing is flexible, planning these events for a year when other income is lighter can help keep MAGI below a tier.

For property sales, installment-sale treatment can sometimes spread the recognition across multiple tax years, softening the IRMAA impact.

Consider Qualified Charitable Distributions (QCDs)

If you are 70½ or older and charitably inclined, a Qualified Charitable Distribution allows you to send up to $108,000 (2025 limit, indexed annually) directly from your IRA to a qualified charity. The QCD amount does not count toward your taxable income or MAGI.

This is one of the cleaner moves available because it reduces both ordinary income tax and IRMAA exposure simultaneously, while still satisfying your charitable goals and counting toward your Required Minimum Distribution.

Coordinate Social Security Timing

Delaying Social Security can create a lower-income window in your 60s, before benefits begin. That window can be valuable for completing Roth conversions or recognizing gains at a lower MAGI. Once benefits start, the taxable portion adds to MAGI and reduces flexibility.

Life Events That May Allow You to Appeal IRMAA

Because IRMAA uses a two-year lookback, the income on your 2024 tax return may no longer reflect your current circumstances. When a qualifying life event occurs, the Social Security Administration allows you to file Form SSA-44 to have your premium recalculated based on more recent income.

Qualifying life events include:

• Marriage, divorce, or annulment
• Death of a spouse
• Work stoppage or work reduction (including retirement)
• Loss of income-producing property due to a casualty or disaster
• Loss or reduction of a pension
• An employer settlement payment

You’ll need to provide supporting documentation, and you’ll need to estimate your expected MAGI for the current year. If approved, your IRMAA surcharges are reduced to reflect your current situation rather than your two-year-old return.

The form is available at SSA.gov. Many retirees who recently stopped working are good candidates for this appeal in their first year or two of Medicare enrollment.

Common IRMAA Triggers Maryland Retirees Should Watch For

These are the moves that most often produce surprise IRMAA bills. Recognizing them in advance allows you to plan around the timing.

Large IRA or 401(k) Withdrawals

Using a lump sum to renovate the house, pay off a mortgage, or help a child with a down payment can push MAGI well above a threshold. Splitting the withdrawal across two tax years often helps.

Selling Real Estate

Capital gains on a real estate sale can create a one-time MAGI spike. Installment sale treatment, primary residence exclusion timing, or 1031 exchanges (for investment property) may reduce the impact.

Roth Conversions in a Single Year

Converting everything at once creates a short-term MAGI spike that can trigger surcharges for the two years following the conversion. A multi-year conversion ladder typically produces a better balance.

Capital Gains from Portfolio Rebalancing

Trimming a concentrated position or rebalancing a taxable portfolio can generate gains. Pairing gains with available losses (tax-loss harvesting) or timing realizations for lower-income years can help.

Starting a Pension or Annuity Payout

A new income stream adds to MAGI on an ongoing basis, reducing flexibility for Roth conversions or other planning moves.

How MY Wealth Management Approaches IRMAA Planning

IRMAA does not exist in isolation. It interacts with your withdrawal strategy, your Roth conversion plan, your charitable giving, and your Social Security timing. For Maryland retirees, it also interacts with state-level tax planning around the pension exclusion and senior credit.

At MY Wealth Management, we map out income year by year, identify where IRMAA tiers line up with your goals, and look for opportunities to keep MAGI below thresholds where it makes sense, without distorting the broader plan. Learn more about working with a CFP® professional in Maryland.