The Medicare Surcharge Suze Orman Says Most Home Sellers Don’t Find Out About Until It’s Too Late

On a recent highlights replay of Ask KT & Suze Anything, Suze Orman pulled Pat’s question back into the spotlight for anyone with a big real estate sale on the horizon. Pat and her husband are selling a rental property and have accepted the capital gains hit, but they want to know one thing: “do I have to wait for the two year look back with Medicare to charge the IRMAA fees?”

If you are within a few years of 65 and sitting on a property, a concentrated stock position, or an inherited IRA you plan to liquidate, this question decides whether your Medicare bill spikes for one year or two. Suze’s answer is short. The math behind it is layered.

What IRMAA actually is, and why Pat is right to worry

IRMAA stands for Income Related Monthly Adjustment Amount. It is the surcharge Medicare tacks onto your Part B (and Part D) premium once your income crosses certain thresholds. For 2026, those thresholds start at $109,000 for single filers and $218,000 for married couples filing jointly. The standard Part B premium this year is $202.90 per month, but once IRMAA kicks in, total Part B costs range from $284.10 all the way to $689.90 per month depending on income tier. Part D carries its own IRMAA layer on top, adding between $14.50 and $91.00 per month. Suze put the high end in plain terms on the show: “I think we pay 526 a month KT out of our Social Security check for Medicare part B.” That figure, while not the maximum, reflects what a high-income household is already paying before a one-time gain ever enters the picture.

The trap is the look-back. As Suze said on the episode, “IRMAA is based on your modified adjusted gross income from two years prior.” Sell a rental in 2024, and Social Security uses that 2024 return to set your 2026 premium. You can be retired, living on a modest pension, and still get hit with a four-figure annual surcharge because of a transaction from two tax years ago. The structure makes the timing feel punishing, and it is.

The verdict: Suze is right, and most sellers miss step two

Suze’s guidance is sound, and it is the part most CPAs gloss over. The look-back is real. A property sale generally lands on your Medicare premium two years later. But Pat does not have to passively absorb a multi-year IRMAA hit when the gain is a one-time event.

Run a realistic scenario. A couple, both 67, normally show MAGI around $180,000. They sell a rental in 2024 and report a $400,000 long-term gain, pushing 2024 MAGI to roughly $580,000. Two years later, Social Security pulls that 2024 return and slots them into a top IRMAA tier. Their Part B premium balloons well above the standard $202.90, potentially reaching Suze’s $526-a-month range or higher, per spouse. Multiply by two people and twelve months and the extra cost runs into thousands of dollars for the year, on top of the capital gains tax already paid. That kind of bracket jump can effectively wipe out a full year of Social Security cost-of-living increases for both spouses.

There is also the cliff problem. IRMAA does not work like a graduated tax rate. Crossing a threshold by even $1 triggers the full surcharge for that entire tier, not just on the overage. The 2026 Tier 1 surcharge alone adds roughly $1,148 per person per year; the top tier can add approximately $6,936 per person per year. This makes precision planning around the sale year’s MAGI especially valuable.

Here is the part Pat asked about. The gain is a one-off. In 2025, their income drops back to $180,000. Under the default process, Social Security still bills them at the inflated 2026 rate because that is what the 2024 return shows. The premium normalizes in 2027, once 2025 income flows through. One bad year, not two, but only if the household takes action.

The form Suze name-checked: SSA-44

Suze’s actual fix is to file Form SSA-44, the life-changing event request. This is where the details matter enormously. The SSA recognizes eight qualifying life-changing events under 20 CFR 418.1205: marriage, divorce or annulment, death of a spouse, work stoppage, work reduction, loss of income-producing property, loss of pension income, and employer settlement payments.

That “loss of income-producing property” category sounds like it might cover a rental sale, but the SSA is explicit: the provision applies only to involuntary losses, including property destroyed in a presidentially declared disaster, loss due to arson or theft, or investment property lost to fraud. A voluntary sale of an appreciated rental at the owner’s direction does not qualify, regardless of how dramatically it inflated MAGI. So Suze’s broader suggestion that “the sale of a property qualifies for that” deserves a firm pushback. If the sale coincides with retiring or reducing work hours, SSA-44 is very much your form for the work stoppage or work reduction event. If it does not, a one-time capital gain from a voluntary sale generally cannot be appealed away. Call the Social Security office, document any income change, and confirm your situation before assuming an appeal is available.

The variable that flips the math: is the income recurring?

The single factor that decides whether you fight IRMAA or budget for it is whether the income repeats. A rental sale is one year of pain. A pension that just started paying, a Roth conversion ladder, or a multi-year installment sale stretches IRMAA across several premium years. Stacking Roth conversions into one tax year can actually cost less overall than spreading them across three, because a single IRMAA hit replaces three consecutive ones. The cliff structure cuts both ways: concentrated income in one year can be cheaper than the same income spread across multiple years of surcharges.

What to do before you sign the closing papers

1. Pull the current IRMAA brackets from Medicare.gov and model where your sale-year MAGI lands, paying particular attention to the cliff thresholds at each tier boundary.
2. Ask your CPA whether installment sale treatment or a 1031 exchange fits your situation.
3. If the sale coincides with retiring or cutting hours, download SSA-44 now and gather proof of the work change, because that event qualifies even when the sale itself does not.
4. Budget the surcharge into your net proceeds as a real cost of the transaction, not a surprise to absorb later.

Suze re-aired Pat’s question because most sellers first learn about IRMAA from the premium notice itself. Run the two-year math before you sign the closing documents, and the surcharge becomes a line item instead of an ambush.

Editor’s note: This update adds the 2026 IRMAA income thresholds ($109,000 single / $218,000 joint), the standard Part B premium ($202.90/month), the full Part B range ($284.10 to $689.90), Part D surcharge figures ($14.50 to $91.00/month), and the annual per-person surcharge range by tier ($1,148 at Tier 1 to $6,936 at Tier 5). The SSA-44 section has been sharpened to clarify that the “loss of income-producing property” qualifying event covers only involuntary losses, explicitly excluding voluntary sales, and the IRMAA cliff structure has been added to the scenario illustration.

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