One Income Event Could Raise Your Medicare Premiums — Here's What Triggers It

Subject: A Note on Medicare Premiums and a Rule Worth Knowing

There's a Medicare rule that catches a lot of retirees and pre-retirees off guard. It's called IRMAA — the Income-Related Monthly Adjustment Amount — and if you've had an unusually high-income year recently, it may already be affecting what you pay.

I want to make sure you're aware of it before it shows up as a surprise.

How Medicare Actually Prices Your Premiums

Most people pay the standard Part B premium: $185 per month in 2025. But Medicare doesn't base your premium on this year's income. It looks back two years.

Your 2025 Medicare premium is calculated from your 2023 MAGI — your modified adjusted gross income from the return you filed in 2024.

If your 2023 income exceeded $106,000 (single filer) or $212,000 (married filing jointly), you're currently paying more than the standard rate. How much more depends on where your income fell:

That surcharge applies to Part D prescription drug coverage as well.

The Income Events That Trigger It

IRMAA isn't just a high-earner problem. It frequently catches people who had a single, one-time income spike — often from a financial decision that made sense in isolation but whose Medicare impact wasn't modeled.

**Roth conversions.** Converting from a traditional IRA to a Roth IRA increases your MAGI dollar for dollar in that year. A $100,000 conversion can push a retired couple from below the IRMAA threshold to well above it — and that increase shows up in Medicare premiums two years later.

**Selling appreciated property.** The year you sell a rental property, a business, or a large position in appreciated securities, your income can spike significantly — even if it's a one-time event that will never repeat.

**RMD onset.** When required minimum distributions begin, that income stacks on top of everything else. For some retirees, the combination of Social Security, investment income, and a new RMD crosses an IRMAA threshold they hadn't anticipated.

You Can Appeal an IRMAA Surcharge

Here's something most people don't know: if your income dropped significantly after the year Medicare is basing your premium on, you may be able to appeal.

Life-changing events — retirement, divorce, death of a spouse, loss of income-producing property — can qualify you for a reduction. You file SSA Form SSA-44 with supporting documentation. Medicare has the ability to use a more recent year's income when the change was significant enough to warrant it.

If any of these situations apply to you and your premiums seem unexpectedly high, it's worth asking about the appeals process.

The Planning Opportunity

The two-year lookback creates a real planning lever. If you're considering a Roth conversion, selling a large asset, or making any decision that would significantly increase your MAGI this year, it's worth modeling the IRMAA impact two years out — not just the current-year tax bill.

Income smoothing across years doesn't just reduce tax bracket exposure. It can also protect you from Medicare premium spikes that arrive quietly on a two-year delay.

This isn't a reason to avoid Roth conversions or asset sales. It's a reason to size and time them carefully — and to make those decisions with the full picture in front of you.

If you'd like to understand your current IRMAA status or think through an upcoming income decision, reply to this email or book a call. Happy to walk through it with you.

Talk soon,

[Advisor Name], CFP®

This content is for informational and educational purposes only and does not constitute investment, tax, or legal advice. Medicare premium amounts and income thresholds are subject to annual adjustment. Past performance is not indicative of future results. All investing involves risk, including the possible loss of principal. Please consult with a qualified financial, tax, or legal professional before making any financial decisions.