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, a surcharge that quietly carves hundreds of dollars off every Social Security check you receive once your income crosses certain thresholds in retirement. About 5.1 million Medicare beneficiaries paid Part B IRMAA surcharges in 2025, roughly 7% of the program’s 69 million total enrollees, yet the charge still blindsides most people who face it for the first time.
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 reaches your bank account. It is not a tax you settle 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, total Part B premiums range from $284.10 to $689.90 per month depending on 2024 income. The gap between the standard rate and what a high earner pays is the IRMAA surcharge, scaling 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. The Part D surcharge is billed separately from whatever your drug plan itself charges. Medicare collects it directly, often deducting it from the same Social Security payment, and it represents a second bite that most news coverage of IRMAA fails to mention.
The mechanic that makes IRMAA so dangerous is the two-year lookback. The SSA determines who pays a surcharge based on income reported two years prior, meaning your 2024 tax return determines 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 $260,000 in capital gains on top of their normal $120,000 retirement income. Their modified adjusted gross income jumps to $380,000 for that single year. For joint filers in 2026, the third IRMAA tier covers MAGI from $342,001 to $410,000. At $380,000, both spouses land squarely in that tier. The Part B surcharge alone adds $324.60 per person per month, and the Part D surcharge layers on another $60.40, for a combined IRMAA hit of $385 per spouse monthly. According to retirement planning data published for 2026, annual IRMAA costs across all tiers run from $1,148 to $6,936 per person.
At $385 per person per month, the couple together pays $770 in combined surcharges each month, or roughly $9,240 over the full year. They recognized the gain in 2024, paid capital gains taxes by April 2025, and then in 2026 watched nearly $10,000 more come out of their Social Security checks for a property they no longer own. That is the IRMAA cliff effect at work. The surcharge does not phase in gradually like a marginal tax bracket. Once MAGI exceeds a threshold by even $1, the full surcharge for that tier applies to the entire premium for all twelve months.
The same trap closes 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 that 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 accordingly from day one. If the high-income year came from a property sale, an inheritance, 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, and the SSA will reject appeals that cite events outside it.
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 correct basis for a SSA-44 appeal, and documenting it carefully is essential.
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 identify where your projected modified adjusted gross income lands two years out. For 2026, joint filer surcharge tiers start at $218,000 and step up at $274,000, $342,000, $410,000, and $750,000. Because IRMAA works as a cliff system, crossing any of those lines by even $1 triggers the full surcharge for the next tier, meaning a small difference in income can produce thousands of dollars in additional annual costs for both you and your spouse.
- If you have a one-time income event coming, consider whether you can spread it across two tax years to keep each year under the next IRMAA threshold. 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 figure alone.
- If a qualifying 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. Approved appeals typically adjust future premiums within one to two billing cycles, and overpaid months may be refunded.
Suze’s comment about KT’s check is the clearest warning a high-earning retiree will hear: 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 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 illustrative scenario to use $260,000 in capital gains on top of $120,000 in retirement income (total MAGI $380,000), which accurately places a married couple in the 2026 IRMAA tier 3 bracket ($342,001 to $410,000) and produces a combined annual surcharge of roughly $9,240 for both spouses; the prior version used $200,000 in gains and $320,000 total MAGI, a figure that actually falls in tier 2 and generates a substantially lower combined surcharge. The specific tier 3 monthly amounts ($324.60 Part B surcharge plus $60.40 Part D surcharge per person) were also added.
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