How to Reduce Your IRMAA: 8 Strategies to Lower Medicare Premiums

IRMAA surcharges can add $2,000 to nearly $15,000 per year to a couple's Medicare costs. But unlike most taxes, IRMAA has sharp cliff effects — meaning small reductions in income can produce outsized savings. Here are eight strategies to lower your Modified Adjusted Gross Income (MAGI) and reduce or eliminate your IRMAA surcharges.

Understanding What You're Fighting

IRMAA brackets work as cliffs, not gradual scales. If your joint MAGI is $222,000 (projected 2027 threshold), you pay the standard premium. At $222,001, you jump to the next tier and pay roughly $2,500 more per year as a couple. This cliff structure makes income management near thresholds extremely valuable.

Your MAGI includes virtually all income: wages, IRA/401(k) withdrawals, RMDs, pensions, Social Security, rental income, capital gains, dividends, interest, and even tax-exempt municipal bond interest. However, several types of income are excluded — and that's where the strategies come in.

Strategy 1: Roth Conversions Before Medicare Age

This is the single most powerful long-term IRMAA strategy. Converting traditional IRA money to Roth IRA before age 65 means:

• During conversion years (before 65): You pay income taxes on the conversion, but IRMAA doesn't apply yet
• After 65: Roth withdrawals don't count toward MAGI and don't trigger IRMAA
• Reduced RMDs: Smaller traditional IRA balance means smaller Required Minimum Distributions, which also reduces future MAGI

Example: A couple converts $400,000 from traditional IRA to Roth between ages 60-64 ($80K/year). At 73, their RMDs are significantly smaller, keeping MAGI below the IRMAA threshold. Over 20 years of retirement, this saves $40,000+ in IRMAA surcharges alone — on top of regular income tax savings.

Strategy 2: Qualified Charitable Distributions (QCDs)

After age 70½, you can donate up to $105,000 per year directly from your IRA to qualified charities. QCDs are uniquely powerful because they:

• Satisfy your RMD requirement — the donation counts toward your Required Minimum Distribution
• Don't count as income — the distribution goes directly to charity and never appears on your tax return as income
• Reduce MAGI — since the distribution isn't counted as income, it doesn't push you into higher IRMAA brackets

Example: Your RMD is $50,000 and you normally donate $15,000/year to charity. Instead of taking the full $50,000 RMD (which increases MAGI) and separately writing a check to charity, donate $15,000 via QCD. Your MAGI drops by $15,000, potentially saving $2,500+ in IRMAA surcharges.

Strategy 3: Manage Capital Gains Timing

Capital gains from selling stocks, mutual funds, or real estate count toward MAGI. Strategies to manage them:

• Spread large sales across years: Instead of selling $300,000 of stock in one year, sell $100,000 over three years
• Harvest losses to offset gains: Sell losing positions to generate capital losses that offset gains, reducing net MAGI
• Use specific identification: When selling partial positions, choose the highest-cost-basis shares to minimize gains
• Consider timing relative to IRMAA years: If you must realize large gains, do it in a year where you're already in a high IRMAA bracket rather than a year where it pushes you over a new threshold

Strategy 4: Size Roth Conversions to Stay Below Cliffs

If you're already on Medicare and doing Roth conversions, precision matters:

1. Calculate your base MAGI (Social Security + RMDs + pension + investment income)
2. Identify the next IRMAA threshold above your base MAGI
3. Convert only the amount that keeps you below that threshold

Example: Your base MAGI is $190,000 (joint). The next IRMAA threshold is $222,000. You can convert up to $32,000 to Roth without triggering IRMAA. Converting $33,000 would push you over the cliff and cost an extra $2,500 in premiums two years later.

Strategy 5: Maximize Pre-Tax Deductions

If you or your spouse are still working, maximize deductions that reduce AGI:

• 401(k)/403(b) contributions: Up to $23,500 in 2025 ($31,000 if 50+, $34,750 if 60-63) directly reduces AGI
• HSA contributions: If you have a high-deductible health plan (before Medicare), HSA contributions reduce AGI
• Self-employment deductions: If you have consulting or freelance income, deduct business expenses, home office, and self-employment tax

Strategy 6: Use the Life-Changing Event Appeal

If your income has dropped significantly since the lookback year, you can ask Social Security to recalculate IRMAA based on current income. Qualifying events include:

• Retirement or work reduction
• Marriage or divorce
• Death of spouse
• Loss of pension
• Loss of income-producing property

File Form SSA-44 with your local Social Security office. This is commonly used in the first year of retirement when your lookback year reflected full employment income but your current income is much lower.

Strategy 7: Shift Income to Roth and Tax-Free Sources

The long-term strategy is to build income sources that don't count toward MAGI:

• Roth IRA withdrawals: Tax-free and excluded from MAGI
• Roth 401(k) withdrawals: Same tax treatment as Roth IRA
• Return of cost basis: Withdrawing your original contributions from brokerage accounts (not gains) isn't taxable income
• Loan proceeds: HELOC draws, reverse mortgage payments, and other loans aren't income
• Life insurance cash value: Loans against cash value aren't taxable income

The more of your retirement income that comes from these sources, the lower your MAGI and the less you pay in IRMAA.

Strategy 8: Bunch Income Into Fewer Years

Sometimes the best strategy is the opposite of spreading income out — if you can't avoid high income, concentrate it:

• If you'll be in a high IRMAA bracket anyway: Do a large Roth conversion in that year since the IRMAA cost is already triggered
• Sell multiple assets in one year: If one large capital gain already pushes you into Tier 5, additional gains in that year cost nothing extra in IRMAA (until the next cliff)
• Alternate high and low years: Have a "conversion year" (high income, high IRMAA) followed by a "quiet year" (low income, no IRMAA) rather than moderate income every year that triggers IRMAA consistently

Putting It All Together: A Real-World Example

The situation: Bob and Carol, both 68, have $1.5M in traditional IRAs, $200K in Roth, and $400K in brokerage accounts. Annual expenses: $100,000. Social Security: $50,000 combined.

Without IRMAA planning:

• Withdraw $50,000 from traditional IRA for expenses
• Social Security: $50,000
• Investment income: $20,000 (dividends/interest)
• Roth conversion: $100,000
• Total MAGI: ~$220,000 — just under the $222,000 threshold
• IRMAA: $0

The problem: If investment income comes in at $23,000 instead of $20,000, MAGI hits $223,000 — triggering $2,500 in IRMAA surcharges.

IRMAA-smart approach:

• Reduce Roth conversion to $85,000 (provides margin below threshold)
• Use $15,000 from Roth IRA for expenses (doesn't count toward MAGI)
• Donate $10,000 via QCD instead of regular charitable donation
• Total MAGI: ~$195,000 — safely below the threshold with a cushion
• IRMAA: $0
• Savings: $2,500/year, every year they stay below the cliff

Using Bullseye to Plan Your IRMAA Strategy

Bullseye automatically models IRMAA in your retirement projections:

• See IRMAA costs year-by-year: Bullseye calculates your projected MAGI each year and shows the resulting IRMAA surcharges as part of your Medicare costs
• Identify danger years: Spot years where RMDs or other income sources push you over an IRMAA cliff
• Test conversion strategies: Use Scenarios to model different Roth conversion amounts and see the IRMAA impact two years later
• Compare approaches: Model the total lifetime cost of IRMAA under different withdrawal strategies to find the optimal approach