Are You on Pace for an Unexpected Medicare IRMAA Surcharge?
By Scott Searles | May 29th, 2026
Many affluent retirees are surprised to learn that Medicare premiums are not the same for everyone. If your income crosses certain thresholds, you may pay an additional surcharge called IRMAA, or the Income-Related Monthly Adjustment Amount.
IRMAA applies to Medicare Part B and Part D premiums. For 2026, Medicare uses your 2024 modified adjusted gross income (MAGI) to determine whether a surcharge applies. That two-year lookback can create an unpleasant surprise when a Roth conversion, capital gain, business sale, large IRA withdrawal, or investment income pushes income above a threshold.
For higher-income retirees, IRMAA is not just a Medicare issue. It is a tax-planning issue hiding in a health-care costume.
What Is IRMAA?
IRMAA stands for Income-Related Monthly Adjustment Amount. It is an extra monthly charge that higher-income Medicare beneficiaries may pay in addition to their regular Medicare Part B and Part D premiums.
The Social Security Administration determines IRMAA using income data from the IRS. In general, Medicare looks at your tax return from two years prior. For example, your 2026 IRMAA is generally based on your 2024 tax return.
Your IRMAA income figure is based on modified adjusted gross income, which generally includes adjusted gross income plus certain tax-exempt interest.
That means IRMAA can be affected by many financial decisions, including:
- Roth conversions
- Capital gains
- IRA or 401(k) withdrawals
- Required Minimum Distributions
- Business sale proceeds
- Taxable investment income
- Municipal bond interest
- Rental income
- Deferred compensation payouts
In other words, IRMAA may show up after the party is over, wearing a name tag that says, “Remember that income from two years ago?”
Why Do Retirees Get Surprised by IRMAA?
Retirees are often surprised by IRMAA because Medicare does not only look at recurring income. It can also be affected by one-time income events.
A retiree may normally live well below an IRMAA threshold, then suddenly cross into a higher premium tier because of a single planning decision or financial event.
Common examples include:
- Selling appreciated stock
- Completing a large Roth conversion
- Selling real estate
- Taking a large IRA distribution
- Receiving a final bonus or deferred compensation payout
- Selling a business
- Exercising stock options
- Realizing capital gains after portfolio rebalancing
This is why tax planning and Medicare planning should not live in separate rooms. Ideally, they should be at the same table, preferably before the check is written to the IRS.
How Much Could IRMAA Cost in 2026?
For 2026, the standard Medicare Part B premium is $202.90 per month. Higher-income beneficiaries may pay more depending on their income tier.
For 2026, IRMAA thresholds are based on 2024 income. The first IRMAA tier begins above $109,000 for single filers and above $218,000 for married couples filing jointly.
That does not mean every retiree above those numbers has made a mistake. It simply means income decisions should be modeled carefully.
A Roth conversion may still make long-term sense even if it triggers IRMAA. A business sale may be worth the tax cost. A capital gain may be strategically necessary. The key is knowing the tradeoff before it happens.
Can Roth Conversions Trigger IRMAA?
Yes. A Roth conversion increases taxable income in the year of conversion, which can increase MAGI and potentially trigger IRMAA two years later.
That does not mean Roth conversions should be avoided. For many retirees, Roth conversions may help reduce future required minimum distributions, improve tax flexibility, and create more tax-diversified retirement income.
However, the conversion amount should often be coordinated with:
- Federal tax brackets
- State taxes
- Medicare IRMAA thresholds
- Social Security taxation
- Capital gains exposure
- Charitable giving plans
- Future RMD projections
A Roth conversion is not just a tax-bracket decision. For Medicare-age retirees, it can also be a premium-planning decision.
Can Capital Gains Affect Medicare Premiums?
Yes. Realized capital gains can increase MAGI and may push a retiree into an IRMAA surcharge tier.
This is especially important for retirees with taxable brokerage accounts, concentrated stock positions, inherited assets, or highly appreciated real estate.
Planning considerations may include:
- Spreading gains over multiple tax years
- Coordinating gains with lower-income years
- Using tax-loss harvesting where appropriate
- Donating appreciated securities to charity
- Reviewing whether gains interact with Roth conversions or IRA withdrawals
The goal is not always to avoid gains. Sometimes gains are necessary and even prudent. The goal is to avoid creating avoidable surprises.
What Planning Moves May Help Manage IRMAA Exposure?
IRMAA planning is most effective before income is realized. Once the tax year is over, options may be limited.
Potential planning strategies may include:
1. Review income before year-end
A mid-year or fall tax projection can help identify whether your income is approaching an IRMAA threshold.
2. Coordinate Roth conversions carefully
Rather than converting an arbitrary amount, retirees may benefit from modeling several conversion scenarios.
3.Manage capital gains intentionally
Portfolio rebalancing, stock sales, and real estate transactions should be reviewed for tax and Medicare premium impact.
4. Consider Qualified Charitable Distributions
For eligible IRA owners age 70½ or older, Qualified Charitable Distributions may help satisfy charitable goals while potentially reducing taxable IRA distributions.
5. Watch one-time income events
Business sales, deferred compensation, stock options, and liquidity events may require multi-year planning.
6. Appeal when appropriate
If your income has dropped due to a qualifying life-changing event, Social Security provides Form SSA-44 to request a new IRMAA determination.
Who Should Pay the Most Attention to IRMAA?
IRMAA planning is especially important for:
- Retirees already enrolled in Medicare
- Pre-retirees within two years of Medicare enrollment
- High-income households
- Business owners approaching a sale
- Retirees considering Roth conversions
- Investors with large unrealized capital gains
- Widows or widowers whose tax filing status may change
- Individuals expecting deferred compensation or equity payouts
For high-net-worth retirees, IRMAA is rarely the largest financial issue. But it is often a useful warning light. If your Medicare premiums are being affected by income, your broader retirement tax plan probably deserves a closer look.
Why This Matters
IRMAA is a reminder that retirement planning is not just about how much you have saved. It is also about how your income is recognized, taxed, and coordinated across multiple systems.
A single financial decision may affect:
- Federal income taxes
- State income taxes
- Medicare premiums
- Social Security taxation
- Required Minimum Distributions
- Long-term estate planning
- Portfolio flexibility
That is why proactive planning matters. The best time to evaluate IRMAA exposure is usually before a Roth conversion, asset sale, business exit, or large retirement distribution occurs.
Skybox Financial Group helps retirees, pre-retirees, business owners, and high-net-worth families think through these decisions with a tax-first, long-term planning mindset.
Ready to Build a More Tax-Efficient Retirement Strategy?
Whether you’re evaluating Roth conversions, planning for Medicare, preparing for retirement, or navigating a major financial transition, having a proactive strategy may help you make more informed decisions.
Schedule a complimentary 15-Minute Strategic Phone Call with Scott Searles to discuss your questions and explore potential planning opportunities.
Schedule Online: www.talkwithscott.net
Call Our Office: 440-238-6983
Sources:
https://www.cms.gov/newsroom/fact-sheets/2026-medicare-parts-b-premiums-deductibles
https://www.ssa.gov/forms/ssa-44.pdf
Disclosure:
The information provided in this article is for general informational and educational purposes only and should not be construed as personalized investment, tax, or legal advice. Reading this material does not create an advisory relationship with Skybox Financial Group, LLC.
Investment advisory services are offered through Skybox Financial Group, LLC, an Ohio-registered investment adviser. Registration does not imply a certain level of skill or training. Advisory services are only offered to clients or prospective clients where Skybox Financial Group and its representatives are properly licensed or exempt from licensure. Insurance service provided by Skybox Risk Management, LLC.
All investments involve risk, including the possible loss of principal. Past performance is not indicative of future results. Any references to market performance, investment strategies, or financial planning concepts are provided for illustrative purposes only and may not be appropriate for your individual situation.
Before implementing any strategy discussed, you should consult with a qualified financial professional to determine its suitability based on your specific financial circumstances and objectives.
