The cliff problem
IRMAA is not a phase-in. One dollar of MAGI above any tier breakpoint applies the full higher Part B and Part D surcharge for the entire year — for both spouses on a joint return. Crossing the first MFJ tier costs about $1,776/year. Crossing the second costs about $4,440/year. The math makes the cliff worse than the federal bracket above it for most pre-retirees.
2025 breakpoints
| Tier | MFJ MAGI | Single MAGI | Couple annual surcharge vs. base |
|---|---|---|---|
| Base | ≤ $206,000 | ≤ $103,000 | $0 |
| 1 | $206,001–$258,000 | $103,001–$129,000 | +$1,776 |
| 2 | $258,001–$322,000 | $129,001–$161,000 | +$4,440 |
| 3 | $322,001–$386,000 | $161,001–$193,000 | +$7,099 |
| 4 | $386,001–$749,999 | $193,001–$499,999 | +$9,768 |
| 5 | ≥ $750,000 | ≥ $500,000 | +$10,656 |
Modeling against the breakpoint
Two years before Medicare eligibility, every income decision needs an IRMAA test:
- Project current-year MAGI by mid-November.
- Identify the tier you will land in for two years out.
- If within $10,000 of a breakpoint, run the cost of crossing vs. the cost of stopping short.
- Re-true at year-end before any discretionary income event.
Tactics that move the needle
- Stop the conversion short of the breakpoint — the cleanest tactic.
- Bunch capital gains into pre-Medicare years (typically ages 62–63 if Medicare starts at 65).
- Use QCDs after 70½ — they reduce both AGI and MAGI, unlike itemized charitable deductions.
- Realize losses to offset gains in a year where the breakpoint is at risk.
- Use Roth withdrawals instead of IRA withdrawals when MAGI is the binding constraint.
- Defer pension lump sums by 1–2 years if the lump-sum year would cross multiple tiers.
When SSA-44 helps
SSA-44 only works for the eight qualifying life-changing events: marriage, divorce, death of a spouse, work stoppage, work reduction, loss of income-producing property, loss of pension income, and an employer settlement payment. A Roth conversion, capital gain, or inheritance does not qualify. File at Medicare enrollment if retirement just occurred — do not wait for the surcharge notice.
Stephen Arnold
Founder & CEO of Wealth Protection Advisory. Pension and retirement planner with 20+ years advising small business owners. Creator of the Designer DB Plus® strategy and author of Designer DB Plus® Game-Changing Tax Reduction & Retirement Strategy.