Earn $1 Over $109,000 and Medicare Charges You $95.70 More a Month. These 3 ETFs Cover the Surcharge

You cross the $109,000 modified adjusted gross income line by just one dollar as a single filer, and Medicare hands you a bill your neighbor at $108,999 never sees. The IRMAA surcharge is the tax nobody warned you about, and at this first cliff it works out to roughly $1,148 a year in extra Part B and Part D premiums for a single retiree. Three ETFs can help you generate enough cash flow to offset that extra bill: the Amplify CWP Enhanced Dividend Income ETF (NYSEARCA:DIVO), the iShares Preferred and Income Securities ETF (NASDAQ:PFF), and the Vanguard Tax-Exempt Bond ETF (NYSEARCA:VTEB).

The Cliff You Are Standing On

Medicare’s IRMAA brackets work as step functions rather than phase-ins. In 2026, a single filer with MAGI at or under $109,000 pays the standard Part B premium of $202.90. Push one dollar over, and your total Part B premium jumps to $284.10, an $81.20 monthly hit, with a matching Part D adjustment on top. The goal is generating enough spendable income to offset the surcharge without taking unnecessary risk or creating a bigger tax bill elsewhere. That is where these three funds come in.

DIVO: Monthly Dividend Checks With a Covered-Call Kicker

DIVO is an actively managed portfolio of large-cap dividend payers wrapped in a covered-call overlay that boosts the monthly payout. The fund holds about $7.89 billion in assets and carries an expense ratio of 0.56%, meaning $994 of every $1,000 you invest stays working for you. Distributions land every month; the July 2026 payment was $0.1882 per share, and the trailing 12-month total came to $2.985 per share. At $48.45 a share, DIVO is up 11.97% year to date and 19.42% over the past year, giving investors both income and capital appreciation over the period.

The covered-call structure smooths income, which is exactly what someone paying a fixed monthly Medicare bill wants.

PFF: A Yield-Heavy Preferred Stock Sleeve

Preferred stocks sit between bonds and common equity, and PFF is the biggest way to own them in one ticker. The fund tracks the ICE Exchange-Listed Preferred & Hybrid Securities Index and charges 0.45% in expenses. Distributions come monthly. The August 2026 payment was $0.142313 per share, with an annualized forward rate near $1.71 on a share price of $30.84.

That yield exists because preferreds are rate sensitive and heavy in financials. With the 10-year Treasury at 4.63% and the fed funds rate steady at 3.75% since December 2025, the backdrop for preferreds has stabilized. PFF is up 2.58% year to date, which is what you want here. The coupon is the point.

VTEB: Tax-Free Income, But Not IRMAA-Free

VTEB brings a different tax advantage to the portfolio. Interest from municipal bonds is generally exempt from federal income tax, giving retirees a way to generate monthly income without adding to their federal income-tax bill. VTEB tracks the S&P National AMT-Free Municipal Bond Index and pays monthly. The August 2026 distribution was $0.1415 per share, and the trailing 12-month total was $1.6981. Shares trade at $49.76, up 5.30% over the past year.

There is an important Medicare catch. Tax-exempt municipal-bond interest is still added back when calculating MAGI for IRMAA, so VTEB will not help someone stay below the $109,000 threshold simply because its income is federally tax-exempt. Its advantage is instead what you keep after taxes. At a hypothetical 28% combined marginal tax rate, a 3.5% tax-exempt yield is equivalent to roughly 4.9% from a fully taxable investment. VTEB can therefore make the portfolio more tax efficient even if Medicare still counts the income when determining your surcharge.

The Trade-Offs

None of this is without risk. DIVO’s covered-call overlay caps some upside in strong bull markets, so you can lag the S&P 500 when stocks surge. PFF’s preferreds are rate-sensitive and heavily tilted toward financials, meaning a credit shock or sharp yield spike could dent the share price faster than the income compensates. VTEB carries interest-rate and credit risk of its own, and its tax-exempt distributions still count toward MAGI for IRMAA purposes.

Blended thoughtfully, though, the three ETFs can turn the $1,148 annual surcharge into a manageable portfolio expense. DIVO and PFF emphasize monthly cash flow, while VTEB adds federally tax-exempt municipal income that can reduce the tax bite elsewhere. None of the three makes IRMAA disappear, but together they can generate enough income to make the extra Medicare bill easier to absorb.

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