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Webinar Summary

IRMAA: What Financial Advisors Should Know About Medicare Surcharge Premiums

Speaker: Larry Pon, CPA, EA, USTCP, CFP®, PFS, AEP®
Original Air Date: August 11, 2026
Run Time: Approximately 1 hour, 52 minutes
Topic Area: Medicare Planning • IRMAA • Retirement Income Planning • Tax Planning

Key Takeaways

• Medicare’s Income-Related Monthly Adjustment Amount (IRMAA) can materially increase Medicare Part B and Part D costs for higher-income beneficiaries.
• IRMAA generally uses tax information from two years earlier. For example, 2026 income generally affects 2028 Medicare premiums.
• IRMAA MAGI is generally adjusted gross income plus tax-exempt interest, so items such as Roth conversions, RMDs, capital gains, deferred compensation, and even municipal bond interest can affect premiums.
• IRMAA thresholds function like cliffs: crossing into the next income tier can trigger a higher monthly adjustment for the entire year.
• Form SSA-44 may allow a client to request a redetermination following certain qualifying life-changing events that reduce income.
• QCDs, HSA planning, tax-loss harvesting, retirement-plan contributions, and thoughtful timing of income can help manage IRMAA when they fit the client’s broader plan.
• Advisors should not allow a short-term Medicare surcharge to override a strategy that produces greater lifetime tax or financial benefits.

How IRMAA Works

IRMAA applies to Medicare Part B and Part D premiums. A beneficiary enrolled in Medicare Advantage generally still pays the Part B premium and can therefore still be subject to Part B IRMAA.

For 2026, the standard Part B premium is $202.90 per month. Higher-income beneficiaries pay that amount plus an additional IRMAA charge. Part D plans have their own premiums, and higher-income beneficiaries may also owe a separate Part D IRMAA adjustment.

The key planning concept is the two-year lookback:

• 2024 income generally determines 2026 IRMAA.
• 2025 income generally determines 2027 IRMAA.
• 2026 income generally determines 2028 IRMAA.

This means an income event occurring today may not affect Medicare premiums until two years later. For clients approaching age 65, Roth conversions, capital gains, business sales, stock compensation, and large retirement-account distributions beginning around age 63 deserve particular attention.

Advisor Takeaway

Build IRMAA into retirement-income planning before Medicare begins rather than waiting until a client receives an unexpectedly high premium notice.

Understanding IRMAA MAGI and Thresholds

For IRMAA purposes, modified adjusted gross income is generally:

Adjusted Gross Income + Tax-Exempt Interest

Pon described this as Form 1040 adjusted gross income plus tax-exempt interest.

Potential IRMAA triggers include:

• RMDs and other traditional IRA withdrawals
• Roth conversions
• Capital gains
• W-2 income and bonuses
• Business and rental income
• Deferred compensation
• Stock options and RSUs
• Taxable investment income
• Tax-exempt municipal bond interest

An important planning nuance is that municipal bond interest may be exempt from federal income tax but is still included in IRMAA MAGI.

IRMAA uses income tiers rather than ordinary marginal tax brackets. Once MAGI exceeds a threshold, the corresponding monthly adjustment generally applies. Pon emphasized that this makes year-end planning especially important for clients who are close to a cutoff.

Filing status also matters. Married taxpayers filing separately who lived together during the tax year face especially unfavorable IRMAA thresholds.

Advisor Takeaway

Before realizing discretionary income, determine where the client sits relative to the current IRMAA tiers and whether the transaction would move the client into the next band.

Form SSA-44 and IRMAA Redeterminations

Form SSA-44, Medicare Income-Related Monthly Adjustment Amount — Life-Changing Event, allows certain beneficiaries to ask Social Security to use more recent income after a qualifying event causes MAGI to decline.

Recognized events generally include:

• Marriage
• Divorce or annulment
• Death of a spouse
• Work stoppage
• Work reduction
• Qualifying loss of income-producing property
• Loss or reduction of pension income
• Certain employer settlement payments

The form requires the client to identify the qualifying event, provide the date, report more recent or expected MAGI, and submit documentation.

Documentation Matters

Pon encouraged advisors to provide more than an unsupported income estimate. Helpful documentation can include:

• Employer retirement or work-reduction letters
• Final pay statements
• Death or marriage certificates
• Pension correspondence
• Tax returns or transcripts
• Documentation of qualifying property loss
• A worksheet showing how projected MAGI was calculated

He recommended beginning with the previous tax return and explaining line by line what is expected to change.

Important Limitation

A one-time income spike does not automatically qualify for SSA-44 treatment. A voluntary home sale, ordinary capital gain, Roth conversion, or large IRA distribution by itself is generally not one of Social Security’s specified life-changing events.

If Social Security relied on incorrect tax information or the client later files an amended return showing lower income, other reconsideration procedures may be available.

Advisor Takeaway

Before filing SSA-44, confirm that:

1. A recognized life-changing event occurred.
2. It actually reduced income.
3. The client can document it.
4. The new MAGI would move the client into a lower IRMAA tier.

Roth Conversions and IRMAA

Roth conversions were one of the most important planning topics in the session.

A conversion increases taxable income and can therefore increase Medicare premiums two years later. Pon urged advisors to include IRMAA in every conversion analysis for clients approaching or already enrolled in Medicare.

That does not mean conversions should be avoided.

A conversion may still make sense when it:

• Reduces future RMDs
• Lowers lifetime income taxes
• Improves survivor tax outcomes
• Builds tax-free retirement assets
• Creates greater flexibility later in retirement

The correct analysis compares the current tax and Medicare cost with potential future tax, estate, and survivor benefits.

As Pon agreed during the Q&A, advisors should not “let the tax tail wag the dog.”

Advisor Takeaway

IRMAA is a cost to model, not necessarily a reason to reject an otherwise sound Roth conversion strategy.

Qualified Charitable Distributions

For charitably inclined clients age 70½ or older, Pon strongly favored qualified charitable distributions (QCDs) when appropriate.

A QCD can count toward an RMD without increasing AGI in the same way as taking a taxable IRA distribution and then writing a check to charity.

That matters because ordinary charitable deductions generally occur below AGI, while IRMAA is based on MAGI.

Pon illustrated how redirecting an RMD to charity through a QCD could reduce MAGI enough to lower Medicare surcharges.

Practical Uses

• Coordinate QCDs before taking remaining RMDs.
• Consider eligible inherited IRAs.
• Begin year-end processing early.
• Confirm the charity qualifies.
• Retain appropriate documentation.

Advisor Takeaway

For an eligible client who already intends to give to charity, compare a taxable IRA withdrawal plus charitable gift with a direct QCD. The charitable result may be the same, but the IRMAA result can be very different.

HSA Planning

Health savings accounts can provide another useful source of retirement cash flow because qualified HSA distributions generally do not increase taxable income or IRMAA MAGI.

Pon encouraged eligible clients to consider:

• Maximizing HSA contributions while working
• Paying current medical expenses from other funds when practical
• Preserving receipts
• Investing the HSA for future healthcare needs
• Using HSA assets for qualifying Medicare costs after age 65

The main caution is that once an individual enrolls in Medicare, the individual generally can no longer contribute to an HSA.

Advisor Takeaway

Coordinate HSA contributions with Medicare enrollment, Social Security claiming, and retirement dates rather than treating these as separate decisions.

Other Ways to Manage IRMAA

Several additional planning techniques may help manage MAGI when appropriate.

Tax-Loss Harvesting

Realized capital losses can offset capital gains and may help keep MAGI below an IRMAA threshold.

This is especially relevant after portfolio rebalancing, concentrated-stock sales, or other transactions that have already generated gains.

Retirement-Plan Contributions

Deductible contributions to traditional retirement plans may lower AGI for eligible working or self-employed clients.

Deferred Compensation

Clients approaching retirement should review nonqualified deferred compensation elections carefully. A default lump-sum payout may create a large one-year income spike, while some plans allow payments to be spread over several years.

Stock Compensation

Review expected income from stock options and RSUs before retirement. Vesting and exercise schedules can materially affect MAGI.

Investment Income

Pon emphasized that municipal bond interest is still included in IRMAA MAGI. Switching from taxable bonds to municipal bonds therefore does not automatically solve an IRMAA problem.

Advisor Takeaway

IRMAA planning works best when incorporated into the client’s full tax projection rather than addressed one income source at a time.

Home and Business Sales

Large capital gains from selling a home, business, securities, or investment property can produce an unexpected IRMAA increase.

A principal-residence sale is particularly common because clients may assume the home-sale exclusion eliminates the entire gain.

Pon emphasized the importance of tracking a home’s tax basis. Capital improvements such as remodeling, additions, roofing, and major landscaping may increase basis and reduce the taxable gain.

Advanced strategies discussed briefly included combining principal-residence planning with a later 1031 exchange or using estate-planning techniques to manage basis. These strategies require specialized tax and legal analysis and should not be implemented simply to reduce Medicare premiums.

Advisor Takeaway

Before a major property or business sale, prepare an income projection that includes both the tax consequences and the Medicare impact two years later.

Medicare Enrollment Reminders

The session also highlighted several Medicare issues that intersect with IRMAA planning.

• Medicare Advantage participants generally still pay Part B premiums and therefore may still owe Part B IRMAA.
• Clients who delay Part B without qualifying current employer coverage may face a lifetime late-enrollment penalty.
• COBRA generally does not provide the same protection as active employer coverage for delaying Part B.
• Medicare enrollment generally ends eligibility to make HSA contributions.
• Clients receiving Social Security commonly have Medicare premiums withheld from their benefit; others may be billed directly.

Practical Advisor Takeaways

• Start IRMAA planning by age 63 whenever possible.
• Keep the two-year Medicare lookback in tax and retirement projections.
• Calculate MAGI as AGI plus tax-exempt interest.
• Review Roth conversions for both tax and Medicare consequences.
• Check IRMAA thresholds before realizing discretionary gains.
• Use QCDs strategically for eligible charitable clients.
• Maximize and preserve HSA assets when appropriate before Medicare enrollment.
• Review deferred compensation and stock-compensation schedules before retirement.
• Encourage clients to maintain records of major home improvements.
• Use SSA-44 only when the facts fit Social Security’s qualifying-event rules.
• Document IRMAA redetermination requests carefully.
• Do not change a strong long-term strategy solely to avoid one year of higher Medicare premiums.

Sources & References

Social Security Administration — Request to Lower an IRMAA
https://www.ssa.gov/medicare/lower-irmaa

Social Security Administration — Form SSA-44
https://www.ssa.gov/forms/ssa-44.pdf

Social Security Administration — Medicare Premiums and IRMAA
https://www.ssa.gov/benefits/medicare/medicare-premiums.html

Medicare — Medicare Costs
https://www.medicare.gov/basics/costs/medicare-costs

Medicare — Avoid Late Enrollment Penalties
https://www.medicare.gov/basics/costs/medicare-costs/avoid-penalties

IRS — Health Savings Accounts, Form 8889 Instructions
https://www.irs.gov/instructions/i8889

Compliance Note: This summary is provided for educational purposes only and does not constitute individualized tax, Medicare, Social Security, investment, insurance, estate-planning, or legal advice. IRMAA thresholds, Medicare premiums, tax limits, and administrative procedures change over time. Advisors should verify current requirements directly with Social Security, Medicare, the IRS, and qualified tax or legal professionals before implementing a planning strategy.