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The basics
IRMAA is a set of income cliffs. Crossing a tier can increase monthly Medicare costs for each enrolled person, even if only a small amount of income crossed the threshold.
Illustrative numbers
Why the lookback matters
Income eventlarge Roth conversion in 2027
Tax return used2027 MAGI
Potential surcharge year2029 Medicare premiums
The 2027 conversion is taxed in 2027, while the modeled IRMAA effect appears two plan years later for the people enrolled in Medicare then.
Calculation transparency
How it works in MoneyWhatIf
- 01
The model uses the household’s settled MAGI from two years earlier and the filing status that applies to the surcharge year.
- 02
It applies the selected tier’s monthly Part B and Part D surcharge for each person enrolled in Medicare during that year.
- 03
Base Medicare premiums and IRMAA are separate cash-flow rows, and tax analytics shows the affected years and amounts.
- 04
The first two plan years use supplied pre-plan MAGI when available; without it, the engine falls back to the earliest projected MAGI it knows rather than assuming no surcharge.
Keep in mind
Model limits
The model does not predict successful appeals, life-changing-event adjustments, or future legislative redesigns.
It treats annual thresholds and premiums as plan-year figures; real notices, enrollment months, and Part D plan premiums can differ.
IRMAA is a cliff-style surcharge, so nearby inputs can produce discontinuous results. Test values on both sides of a threshold.
This explanation documents the planning model. It is educational, not individualized tax, legal, Medicare, or investment advice.
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The words behind it
Related financial terms
Plain-English definitions, with 2026 figures and worked examples, from the financial terms glossary.