IRMAA in Your First Year of Medicare

The Two-Year Lookback and Your First Medicare Premium

IRMAA is always calculated using the MAGI from the federal tax return filed two years prior. For Medicare, that rule applies to every enrollee every year, including the very first year of enrollment. There is no ramp-up and no exception for new enrollees.

If you enroll in Medicare in 2026, your first IRMAA is based on your 2024 tax return. If you enroll in 2027, it will be based on your 2025 return. The fact that your income may already be significantly lower by the time the first premium bill arrives does not change the math. SSA uses what is on file with the IRS from two years back.

Why Your First IRMAA Bill Reflects Age-63 Income

For a person enrolling in Medicare in the year they turn 65, the two-year-old return covers the year they were 63, often still a peak earning year for professionals, executives, and business owners. That is why the first IRMAA surcharge many new enrollees see is based on income levels that may no longer reflect their situation.

IRMAA doesn't warn you, it bills you. The first bill lands in the mailbox with a surcharge amount based on a return the enrollee filed over a year earlier, at a life stage that has already shifted.

The Initial Determination Notice: What to Expect and When

The Initial Determination Notice is the document SSA sends to confirm a new enrollee's Medicare premium, including any IRMAA. It typically arrives shortly before Medicare Part B coverage begins, often a few weeks before the month the enrollee turns 65 and becomes Medicare-eligible. The notice explains:

• The standard Part B premium for the year
• The IRMAA tier assigned, if any, and the MAGI amount used to assign it
• The Part D IRMAA surcharge, if applicable, which is collected by SSA separately from the Part D plan premium
• The right to appeal within 60 days if a qualifying life-changing event applies
• Instructions on how to request a reconsideration or file a new SSA-44

The notice is easy to misread. It is not a bill, it is a determination. The premium amount shown becomes the basis for monthly deductions from Social Security benefits or direct billing if the enrollee is not yet collecting Social Security.

When Current Income Is Much Lower Than Lookback Income

Three common first-year scenarios:

Scenario A: Still Working, High Income

A new enrollee who is still working at 65 in a high-income role generally sees the first IRMAA aligned with what they would expect. The 2024 return shows high earnings, the 2026 premium reflects that, and the actual current income is similar. There is no appeal basis because there is no qualifying life-changing event.

Scenario B: Recently Retired, Much Lower Income

A new enrollee who retired at 63 or 64 may see a large first-year IRMAA surcharge based on peak-earning income, even though current income is now a fraction of that. Retirement is a listed qualifying life-changing event, which means an SSA-44 appeal is available. If approved, SSA may reset the IRMAA determination using the enrollee's estimated current-year MAGI.

Scenario C: Consistently Lower Income

A new enrollee whose MAGI has consistently stayed below the $109,000 single or $218,000 joint thresholds generally sees no IRMAA on the first Initial Determination Notice. The premium shown reflects only the standard Part B amount of $202.90 per month for 2026.

Retirement as a Qualifying Life-Changing Event

SSA recognizes several life-changing events that justify an IRMAA recalculation. For new enrollees, the most relevant events are:

• Work stoppage or reduction: Full retirement or a move to part-time work that reduces income
• Loss of income-producing property: For example, a rental property lost to disaster or fraud
• Employer pension settlement ending: A prior lump-sum or structured settlement that has now concluded
• Death of a spouse: When the surviving spouse's filing status or income changes

Retirement is by far the most common first-year appeal reason. The SSA-44 form asks for the date of the event, the estimated new MAGI, and supporting documentation. A signed letter from a former employer confirming the retirement date, combined with projected current-year income, is often sufficient.

How to Read the SSA Notice

New enrollees should look for four things on the Initial Determination Notice:

• The tax year used: For a 2026 enrollment, this should be 2024. If the notice references an older year, additional review may be warranted
• The MAGI amount: SSA lists the exact figure pulled from the IRS. Compare this to the 2024 return to confirm accuracy
• The tier assignment: Compare the MAGI against the 2026 IRMAA bracket thresholds to verify the tier is correct
• The appeal rights section: The 60-day clock starts from the notice date, not the date of receipt

Errors do happen. If the MAGI figure on the notice does not match the filed return, a reconsideration request (a different process from SSA-44) is the right tool. Consult a licensed financial advisor or tax professional for personalized planning guidance.

Mid-Year Enrollment Special Cases

Most new enrollees start Medicare on the first of the month they turn 65, though the exact Initial Enrollment Period spans seven months around that birthday. A few special situations affect first-year IRMAA:

• Delayed Part B enrollment due to employer coverage: IRMAA only applies for months in Part B, so a delayed Part B start reduces the total IRMAA paid in the first year
• Mid-year retirement: The SSA-44 can be filed as soon as the retirement event occurs, using projected current-year MAGI
• Part D enrollment separate from Part B: The Part D IRMAA is collected by SSA separately and appears on the same notice structure
• Spouse already on Medicare: IRMAA is assessed individually, so each spouse's Medicare premium is tied to their own status, but the underlying MAGI typically comes from the joint return

Steps to Take in Your First Year

• Locate the Initial Determination Notice. Confirm the date, the tax year used, and the MAGI figure
• Compare MAGI to the 2026 bracket thresholds. Verify the tier assignment is correct
• Evaluate the current income picture. If retirement or another qualifying event has reduced MAGI meaningfully, an SSA-44 appeal may be appropriate
• Gather documentation. For a retirement appeal: the retirement date, pension or 401(k) rollover statements, and a projection of current-year MAGI
• File SSA-44 within 60 days. Requests outside that window may still be accepted for good cause, but the clean path is to file on time
• Plan for year two and beyond. The two-year lookback means the IRMAA picture changes yearly. The 2025 return will drive 2027 IRMAA. Understanding that cadence helps with ongoing planning
• Consult a qualified professional. Especially in the first year, a CPA or advisor familiar with IRMAA can identify appeal eligibility and model long-term exposure. Consult a licensed financial advisor or tax professional for personalized planning guidance

The strategies that work must be in place two years before you enroll, but the first year of Medicare is still a decision point. A clean read of the Initial Determination Notice, combined with a timely SSA-44 when the circumstances warrant it, is clarity before the penalty.

Sources

• Centers for Medicare & Medicaid Services, "2026 Medicare Parts A & B Premiums and Deductibles," cms.gov
• Social Security Administration, "Medicare Premiums: Rules for Higher-Income Beneficiaries," ssa.gov
• Social Security Administration, "Form SSA-44, Medicare Income-Related Monthly Adjustment Amount, Life-Changing Event," ssa.gov
• Medicare.gov, "Part B costs," medicare.gov
• Social Security Administration, "Initial Enrollment Period for Medicare," ssa.gov