What Triggers IRMAA Besides Income?

Why your Medicare premium might go up even if you’re “retired”

A lot of people are caught off guard when their Medicare premium goes up.

They’ll say something like,“I’m retired now. My income is actually lower than it used to be. Why am I paying more for Medicare?”

It’s a fair question. And in most cases, the answer comes down to something called IRMAA.

IRMAA stands for Income-Related Monthly Adjustment Amount. It’s an additional charge added to your Medicare Part B and Part D premiums if your income is above certain thresholds.

On the surface, that sounds straightforward. Higher income, higher premiums.

But where this gets confusing is what actually counts as “income” in Medicare’s eyes. It’s not just your paycheck or what you’re living on month to month. It’s a much broader picture, and that’s where people get surprised.

Medicare doesn’t look at your current income. It looks at your Modified Adjusted Gross Income, or MAGI, from two years ago. So your 2026 Medicare premiums are based on your 2024 tax return.

That alone can cause confusion. But the bigger issue is what’s included in that MAGI number.

A lot of the things that trigger IRMAA aren’t part of your everyday income. They’re often one-time events or strategic financial decisions that temporarily increase your taxable income. And even though those events may have made sense at the time, they can still lead to higher Medicare premiums later.

Let’s walk through the most common triggers we see.

One of the biggest ones is capital gains. If you sell investments like stocks or mutual funds and realize a gain, that gain is counted as income. It doesn’t matter if you reinvested the money or if it was a one-time decision. From Medicare’s perspective, it still increases your income for that year. We see this a lot when people rebalance their portfolios or clean up old positions. It makes sense financially, but two years later it can push them into a higher IRMAA bracket.

Another common trigger is selling property. This could be a second home, a rental property, or even a primary residence in some cases. While there are exclusions available when you sell your primary home, any taxable portion of that gain still counts toward your income. And if you’re selling a rental or investment property, the gain can be significant. That one transaction can be enough to increase your Medicare premiums for an entire year.

Roth conversions are another big one, and this one tends to catch people off guard because it’s often part of a smart long-term strategy. Converting money from a traditional IRA to a Roth IRA can reduce taxes later in life, especially for heirs. But the amount you convert is treated as taxable income in the year you do it. So if you convert a large amount in one year, it can push your income well above the IRMAA thresholds. We see this happen frequently. Someone makes a thoughtful decision to improve their tax situation long term, and then two years later they’re surprised by a spike in their Medicare premiums.

Required Minimum Distributions also come into play. Once you reach the age where RMDs are required, those withdrawals are counted as income whether you need the money or not. For some people, especially those who have built up large retirement accounts, RMDs alone can be enough to push them into a higher IRMAA bracket. And unlike a one-time event, this can become an ongoing issue if not planned for.

There are also smaller sources of income that can add up more than people expect. Interest from savings accounts, dividends from investments, rental income, and even certain one-time payments can all contribute to your total income calculation. Individually they may not seem like a big deal, but combined they can push you over a threshold.

And that’s really what IRMAA comes down to. It’s not just about how much you make. It’s about whether your total income crosses certain lines. Once you cross into the next bracket, your Medicare premiums increase. And depending on how far over you go, that increase can be meaningful.

For some people, IRMAA adds a small bump to their monthly premium. For others, it can add hundreds of dollars per month when you combine Part B and Part D adjustments. And what makes it more frustrating is that it’s based on something that already happened. You’re not making that income anymore, but you’re still paying for it now.

The good news is that this is something you can plan around.

If you’re working with a financial advisor or tax professional, it’s worth having a conversation about how certain decisions might impact your Medicare premiums down the road. That doesn’t mean you should avoid things like Roth conversions or selling assets. It just means being intentional about timing and amounts.

It’s also important to know that if your income has gone down due to a major life event, you may be able to appeal your IRMAA determination. Situations like retirement, divorce, or the death of a spouse can qualify. If your current income is significantly lower than what Medicare is using, there is a process to request a reduction. It takes a little paperwork, but it can make a meaningful difference.

At the end of the day, IRMAA is one of those things that feels frustrating when it catches you off guard. But once you understand how it works, it becomes something you can plan for.