The Medicare Premium Surcharge Most Washington Residents Don't Know About Until It's Too Late
Most people who get a letter from Social Security saying their Medicare premiums are higher than expected have the same reaction. Confusion first. Then frustration. Then, sometimes, the realization that this was avoidable.
The surcharge is called IRMAA. It stands for Income-Related Monthly Adjustment Amount. And if you're approaching Medicare or already enrolled, it's worth understanding before the letter arrives.
As a licensed Medicare advisor serving Pierce County and Washington State, this comes up in almost every consultation with higher-income retirees. It surprises people who thought they had their retirement finances sorted out.
Here's the straightforward version.
What Is IRMAA?
IRMAA is a surcharge added to your Medicare Part B and Part D premiums if your income exceeds certain thresholds. It applies to everyone — Original Medicare and Medicare Advantage enrollees alike, because all Medicare beneficiaries pay Part B.
The standard Medicare Part B premium in 2026 is $202.90 per month. If IRMAA applies to you, that premium increases — significantly.
The 2026 surcharge tiers, based on 2024 income:
| Individual Income (2024) | Joint Income (2024) | Part B Monthly Premium |
|---|---|---|
| $109,000 or below | $218,000 or below | $202.90 (no surcharge) |
| $109,001 – $137,000 | $218,001 – $274,000 | $284.10 |
| $137,001 – $171,000 | $274,001 – $342,000 | $405.80 |
| $171,001 – $205,000 | $342,001 – $410,000 | $527.50 |
| $205,001 – $499,999 | $410,001 – $749,999 | $649.20 |
| $500,000 and above | $750,000 and above | $689.90 |
Part D premiums carry an additional surcharge ranging from $14.50 to $91.00 per month on top of plan costs.
The Detail That Catches Most People Off Guard
Your 2026 Medicare premiums are based on your 2024 income — not your current income.
Social Security uses a two-year lookback. They pull your 2024 tax return filed in 2025 and use that to set your 2026 premium. By the time you receive a notice, the income that triggered the surcharge is already in the past.
This catches people who had a high-income year in 2024 for any number of reasons:
- The last full year of working before retiring in 2025
- A large IRA distribution
- A home sale
- A pension lump sum
- A Roth conversion
- Social Security starting simultaneously with other income
- RMDs kicking in
Each of these is a common Washington retirement story. Any one of them can push you into an IRMAA tier without anyone flagging it until the letter shows up.
The Cliff Effect
IRMAA doesn't phase in gradually. It operates like a cliff. One dollar over a threshold and you pay the full surcharge for that tier — not a prorated amount, not a partial increase. The full jump.
Going from no IRMAA to the first tier costs a couple $2,297 more per year in Part B premiums alone. Moving from Tier 1 to Tier 2 adds another $3,475 annually.
For a couple where both spouses are on Medicare, every surcharge doubles. A one-time income event in 2024 can create two years of elevated premiums that most people didn't budget for.
What Counts as Income for IRMAA
This is where Washington retirees sometimes get surprised.
Washington has no state income tax. That's a real advantage. But IRMAA is federal. Washington's state tax advantage doesn't protect you from it.
IRMAA is calculated using your Modified Adjusted Gross Income, which is your adjusted gross income plus any tax-exempt interest. That second piece catches people. Municipal bond interest is tax-free for income tax purposes — but it counts toward your IRMAA calculation. If you hold municipal bonds for the tax break on interest, those returns still add to your MAGI.
Washington Department of Retirement Systems (DRS) pension holders — teachers, county employees, city workers, state government employees — often have a combination of DRS pension income, Social Security, and IRA distributions that can push joint income above $218,000 more easily than expected. It's worth running the numbers before Medicare begins.
The Appeal Option Nobody Tells You About
If IRMAA has hit you based on income you're no longer earning, there's a path worth knowing.
Form SSA-44 — the Medicare Income-Related Monthly Adjustment Amount Life-Changing Event form — allows you to request that Social Security use more recent income data instead of the two-year lookback. The approval rate for legitimate qualifying events is high, and it's one of the most underused tools available to Medicare beneficiaries.
Qualifying life-changing events include:
- Retirement
- Death of a spouse
- Divorce
- Loss of income-producing property
- Loss of pension income
- Reduction in work hours
If you retired from a job in 2024 or 2025, your final year's income was likely much higher than your retirement income. You don't have to wait two years for that to work through the system. File the SSA-44 with your current income documentation and request a new determination.
One important caveat: investment decisions — a large Roth conversion, capital gains, IRA distributions — are not qualifying events. If the income spike came from a financial planning move rather than a life event, the appeal won't be approved.
If You're on Medicare Advantage, IRMAA Still Applies
This one surprises people regularly. Medicare Advantage plans often advertise $0 premiums. What that means is the plan's additional premium is zero. You still pay Part B — and if IRMAA applies to you, you still pay the Part B surcharge. The $0 plan premium doesn't exempt you from it.
Part D IRMAA surcharges for Medicare Advantage plans with drug coverage are billed separately by Medicare — not collected through the insurance plan. Many people on Medicare Advantage don't realize they're receiving a separate bill from Medicare for this.
Frequently Asked Questions
Does IRMAA apply to Medicare Advantage plans?
What income does Medicare use to calculate IRMAA?
Can I appeal IRMAA if I recently retired?
Washington has no state income tax. Does that help with IRMAA?
How do I find out if IRMAA applies to me?
Medicare costs are complicated enough without a surprise surcharge showing up after the fact. IRMAA is the piece most people miss — and by the time the letter arrives, the window to plan around it has already closed.
If you'd like to walk through your income and Medicare cost picture before you enroll, or if you're already on Medicare and received an IRMAA notice you want to understand, that's exactly the kind of conversation worth having.
Have questions about your specific situation?
Join Michael's free Facebook group — "Turning 65 in Washington State" — where Washington residents get clear Medicare answers without the sales pitch.
Join the group →Michael Gurr is a licensed Medicare and retirement advisor serving Pierce County and Washington State. This article is for educational purposes and does not constitute financial or legal advice.