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. Suze put the baseline in plain numbers on the show: “I think we pay 526 a month KT out of our Social Security check for Medicare part B.” That is what a high-income household can already be paying before a one-time gain ever shows up.

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

Suze’s guidance is sound, and it is the part most CPAs skip past. Yes, the look-back is real. Yes, a property sale generally lands on your Medicare premium two years later. But Pat does not have to passively accept a multi-year IRMAA hit if 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. Their 2024 MAGI jumps to roughly $580,000. Two years later, in 2026, Social Security pulls that 2024 return and slots them into a top IRMAA tier. Their Part B premium balloons from the standard amount into Suze’s $526-a-month range, or higher, per spouse. Multiply by two people and twelve months and you are looking at thousands of extra dollars for the year, on top of the capital gains tax they already paid.

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 you do nothing.

The form Suze name-checked: SSA-44

Suze’s actual fix is to file Form SSA-44, the life-changing event request. Selling a rental on its own is not on the SSA’s official list of qualifying events (marriage, divorce, death of a spouse, work stoppage, work reduction, loss of pension, etc.), so Suze’s broader claim that “the sale of a property qualifies for that” is where I would push back gently. If the sale coincides with retirement or a work reduction, SSA-44 is your form. If it does not, you generally cannot appeal away a one-time capital gain. Call the office, document the change, and ask before you assume.

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

The single factor that decides whether you fight IRMAA or write the check 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 be cheaper than spreading them, because you absorb a single IRMAA hit instead of three.

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.
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.
4. Budget the surcharge into your net proceeds as part of the cost of the sale.

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, and the surcharge becomes a line item instead of an ambush.