High Earning Retirees Are Being Warned About This $9,600 Medicare Surcharge That Hits Two Years After a Big Income Event
On the September 15, 2022 episode of Ask Suze & KT Anything, Suze Orman pulled back the curtain on something most retirees never see coming until it hits their own bank account. She was talking about her wife KT’s Social…
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On the September 15, 2022 episode of Ask Suze & KT Anything, Suze Orman pulled back the curtain on something most retirees never see coming until it hits their own bank account. She was describing her wife KT’s Social Security deposit, and what she revealed should make every high earner approaching 65 pay close attention.
Here is what Suze said: “That’s why I was just showing KT the other day that she got a Social Security check, right, put into her account and they had to subtract 560, I think almost $600 for her Medicare B part of it. So the more money you make, the more you have to pay.”
That number is real. It reflects IRMAA, the Income-Related Monthly Adjustment Amount, and if your income crosses certain thresholds in retirement, it can quietly carve hundreds of dollars off every Social Security check you receive. Roughly 5.1 million Medicare beneficiaries paid Part B IRMAA surcharges in 2025, about 7% to 8% of all enrollees, yet the surcharge still blindsides most retirees.
What IRMAA Actually Does to Your Check
IRMAA is a premium add-on the government withholds directly from your Social Security deposit before the money ever lands in your account. It is not a tax you file at year-end. Most people pay the standard Part B monthly premium of $202.90 in 2026, up from $185.00 in 2025. High earners pay considerably more. For 2026, higher earners pay anywhere from $284.10 to $689.90 per month depending on their 2024 income. The gap between the standard rate and what a high earner pays is the IRMAA surcharge, and it scales upward across five tiers as income rises.
When Suze mentioned in 2022 that she and KT were paying roughly $526 a month out of their Social Security checks for Medicare Part B, that figure reflected their own income-related surcharge at the time. In 2026, IRMAA adds $81.20 to $487.00 per month to Part B, with an additional $14.50 to $91.00 per month layered on top for Medicare Part D drug coverage. Critically, the Part D surcharge is billed separately from whatever your drug plan itself charges. It is collected by Medicare directly, often deducted from the same Social Security check, and represents a second bite that the original news coverage of IRMAA frequently omits.
The mechanic that makes IRMAA so dangerous is the lookback. The SSA determines who pays an IRMAA based on income reported two years prior, meaning your 2024 tax return sets what you owe in 2026. A one-time event in 2024, whether that is selling a rental property, exercising stock options, or completing a large Roth conversion, can spike your premium two years later, long after the cash has been spent or reinvested.
The Math on a Realistic Scenario
Consider a married couple who sells a rental property in 2024 and recognizes $200,000 in capital gains on top of their normal $120,000 retirement income. Their modified adjusted gross income jumps to $320,000 for that single year. For 2026, IRMAA income brackets and surcharges increased by approximately 3% and 9%, respectively, relative to 2025. At $320,000 joint MAGI, both spouses land in a higher IRMAA tier, each facing a total Part B premium well above the standard rate. According to one retirement planning analysis, IRMAA surcharges in 2026 run from $1,148 to $6,936 per person annually at the various tiers.
If each spouse’s monthly Part B premium rises by roughly $400 due to the surcharge, that is $800 a month for the couple combined, or about $9,600 over the full year. They earned the gain in 2024, paid capital gains taxes on it by April 2025, and then in 2026 watched another five-figure bill come out of their Social Security checks for a property they no longer own. That is the IRMAA cliff effect. IRMAA does not work like a traditional tax bracket. Once your MAGI exceeds a threshold, the full surcharge for that tier applies to your entire premium, not just the amount over the line.
The same trap snaps shut on retirees who do aggressive Roth conversions in their 60s, take a large required minimum distribution, or sell a business. The income event is finite. The IRMAA bill arrives two years later as though the income were permanent, and it applies to both spouses on the same joint income figure.
The Variable That Decides Whether IRMAA Is Permanent
Whether your high-income year was a one-time event or your steady state is what changes everything. A retiree consistently drawing $400,000 a year from a portfolio should treat IRMAA as a permanent line item in their Medicare budget and plan around it from day one. But if the high-income year came from a property sale, an inheritance event, or a Roth conversion, there is potentially a path back to lower premiums.
Suze pointed to the fix on the same podcast episode: Form SSA-44. The form lets Medicare beneficiaries challenge their IRMAA premium when a qualifying life-changing event has reduced their income since the tax year SSA used. Under federal regulations, eight specific events qualify: marriage, divorce or annulment, death of a spouse, work stoppage, work reduction, loss of income-producing property, loss of pension income, and an employer settlement payment related to bankruptcy or reorganization. The list is closed.
One caveat deserves emphasis: the “loss of income-producing property” category applies to involuntary losses, such as damage from a natural disaster or theft, not to a voluntary sale. A retiree who sold a rental property at a profit generally cannot use that category to appeal. What often does qualify is the work stoppage or retirement that accompanied, or followed, the sale. If you retired during or shortly after the high-income year, that retirement event is typically the right hook for a SSA-44 appeal, and you should document it carefully.
What to Do Before Your Next High-Income Year
Run the numbers before pulling the trigger on any large income event in your 60s or later:
- Pull the current IRMAA bracket chart from Medicare.gov and find where your projected modified adjusted gross income lands two years out. IRMAA works as a cliff system, meaning exceeding an income threshold by even $1 can trigger the full surcharge for the next tier. The difference between the top of one bracket and the bottom of the next can be a few thousand dollars of income that triggers thousands in annual surcharges for both you and your spouse.
- If you have a one-time income event coming, consider whether you can split it across two tax years to keep each year under the next IRMAA threshold. Remember that Part D carries its own IRMAA layer on top of Part B, billed separately by Medicare, so the true cost of crossing a bracket is higher than the Part B surcharge alone.
- If a life-changing event has already happened and your income has dropped meaningfully since the tax year SSA used, download Form SSA-44 from the Social Security website and file it promptly. You can submit the form by mail or at a local SSA office. Do not wait for Medicare to recalculate on its own. If an appeal is approved, the adjustment typically applies to future premiums within one to two billing cycles, and any overpaid months may be refunded.
Suze’s comment about KT’s check is the clearest warning a high-earning retiree will get: the bigger your income in the rearview mirror, the smaller your Social Security deposit right now. The two-year lag between the income event and the premium bill is what makes it feel like it came out of nowhere. It came from a tax return you filed two years ago, and the only way to fight it is to know the rules before the bill arrives.
Editor’s note: This pass corrected the article’s treatment of the SSA-44 “loss of income-producing property” qualifying event, clarifying that the category covers involuntary losses such as disaster or theft and does not extend to voluntary real estate sales. It also added that the Part D IRMAA surcharge is billed separately by Medicare on top of any drug-plan premium, included the annual per-person IRMAA cost range of $1,148 to $6,936 for 2026, and noted that approved SSA-44 appeals typically take effect within one to two billing cycles with overpaid months potentially refunded.
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