The $109,000 Threshold That Triggers Medicare Surcharges Most Retirees Miss

Most Medicare enrollees pay the same $202.90 per month for Part B coverage. But cross one of five critical income lines and that number jumps, sometimes by hundreds of dollars, for the entire year. The surcharge is called IRMAA (Income-Related Monthly Adjustment Amount), and the thresholds that trigger it aren’t adjusted for inflation the way most tax brackets are.

The Five Income Thresholds

IRMAA is based on your Modified Adjusted Gross Income (MAGI) from two years prior. For 2026, that means your 2024 tax return determines which tier applies. The five thresholds work like cliff edges: one dollar over the line moves you into the next bracket for the full year.

1. Tier 1 (single: $109,001–$137,000 / joint: $218,001–$274,000): Part B rises to $284.10/month, plus a $14.50/month Part D surcharge. Annual extra cost: roughly $1,114 more per year.
2. Tier 2 (single: $137,001–$171,000 / joint: $274,001–$342,000): Part B jumps to $405.80/month, with a $37.40/month Part D add-on. Annual extra: $2,956.
3. Tier 3 (single: $171,001–$205,000 / joint: $342,001–$410,000): Part B reaches $527.50/month and Part D adds $60.20/month. Annual extra: $4,738.
4. Tier 4 (single: $205,001–$500,000 / joint: $410,001–$750,000): Part B hits $649.20/month. Annual extra: $6,520.
5. Tier 5 (single: above $500,000 / joint: above $750,000): Part B reaches $689.90/month, with a $91.00/month Part D surcharge. Annual extra: $6,927.

Why Retirees Get Caught Off Guard

The entry threshold has sat at or near $109,000 for single filers while incomes have risen steadily. Per capita disposable personal income reached $67,648 in late 2025. With Social Security’s 2.5% COLA for 2026, more retirees with IRA withdrawals, dividends, or capital gains are landing in Tier 1 unexpectedly. A married couple where both spouses cross into Tier 2 can face over $370 per month in added premiums compared to a couple just below the line.

Interest income is to blame. With the federal funds rate at 3.75%, retirees holding CDs and savings accounts are earning more than before. That interest counts toward MAGI and can push someone over a threshold.

Five Ways to Stay Below the Next Cliff

1. Size Roth conversions carefully. Converting just enough to stay below the next tier captures tax-free growth without triggering a surcharge jump.
2. Spread capital gains across years. Selling appreciated assets over two or three years instead of one keeps any single year’s MAGI lower.
3. Harvest capital losses. Losses in taxable accounts offset gains dollar for dollar, reducing MAGI before year-end.
4. Use Qualified Charitable Distributions. Retirees 70.5 and older can send up to $105,000 annually directly from an IRA to charity. The amount never hits MAGI.
5. File SSA-44 after a life-changing event. If income dropped significantly due to retirement, divorce, or a spouse’s death, the SSA-44 form lets you appeal to use a more recent year’s income instead of the two-year lookback.

The toughest mistake to undo is discovering the surcharge after the year closes. Income planning works best in the fall, when you still have time to control distributions before December 31st. A tax professional can help model the scenarios before it’s too late.