A retired couple sitting on a $1.9 million nest egg opens a letter from Social Security and learns their 2026 Medicare premiums are going up by roughly $5,800 for the year. The trigger happened two years earlier when they sold appreciated tech stock to pay for a kitchen renovation and booked a large long-term capital gain. They were unaware that Medicare looks back two tax years when setting premiums.
In this example, a 65-year-old couple enrolled in Medicare this year. Two years ago, they realized $180,000 in long-term capital gains to fund that remodel. That one-time event pushed their modified adjusted gross income (MAGI) for that tax year to roughly $310,000. Because Medicare uses a two-year MAGI lookback, that single tax return now drives their 2026 Part B and Part D premiums into a higher Income-Related Monthly Adjustment Amount (IRMAA) tier, costing them roughly $5,800 in extra premiums across both spouses for the year.
Higher IRMAA tiers can be triggered by a Roth conversion, a business sale, an inherited IRA distribution, or a one-off brokerage liquidation. The common thread in every case is a household that never modeled the downstream Medicare cost before pulling the trigger.
The surcharge was completely avoidable with planning, and it is completely unavoidable now. IRMAA works as a cliff: cross a tier boundary by one dollar and the full surcharge applies for twelve months, with no partial credit for staying just barely over the line.
The 2026 standard Part B premium is $202.90 per month, up from $185.00 in 2025, with an annual deductible of $283. For joint filers with MAGI between $274,000 and $342,000, each spouse pays an additional $202.90 per month in Part B surcharge on top of the base premium, bringing the total Part B premium to $405.80 monthly per person. Part D adds another $37.50 per month per spouse at the same tier. Multiplying those combined surcharges across both spouses and all twelve months yields roughly $5,800 in added premium cost for the year. The first four IRMAA brackets are inflation-adjusted annually; the top bracket, which begins at $750,000 for joint filers, is frozen by statute until 2028.
Their MAGI in the following year returned to normal, so the IRMAA hit is a single-year event. There is unfortunately no appeal for “I sold stock to remodel my kitchen.”
Three Moves That Could Change the Outcome
For anyone still in the planning window, these are the levers that work. For the couple in the scenario, only one applies retroactively.
- Bunch capital gains into pre-Medicare years. The IRMAA lookback window opens at age 63 for someone enrolling at 65. Large discretionary realizations, home renovation funding, gifting to adult children, and paying off a mortgage are far cheaper if completed before that window opens. Selling appreciated stock at 60 or 61 costs the long-term capital gains tax and nothing else. Selling the same stock at 63 or 64 tacks on a Medicare premium surcharge two years later, turning a single financial decision into a two-year cost event.
- File Form SSA-44 if a Life-Changing Event applies. SSA-44 lets you ask Social Security to use a more recent year’s income instead of the two-year lookback when a qualifying event has lowered your income. Retirement itself qualifies, as do marriage, divorce, death of a spouse, loss of pension, and reduction in work hours. A discretionary stock sale does not qualify. If the lookback year was also the year you retired, file the form with documentation as soon as the IRMAA notice arrives.
- Plan realizations around the lookback calendar, not just the tax year. Before any large taxable event after age 62, run the MAGI math against the joint-filer IRMAA tiers. Sometimes splitting a sale across two tax years keeps both below a cliff. Sometimes accelerating into the current year is better. The right answer depends on where you sit relative to the nearest tier boundary, which CMS publishes each fall. Qualified Charitable Distributions (QCDs), available at age 70 and a half, also reduce MAGI by moving IRA money directly to charity without hitting adjusted gross income.
If you are between 62 and 65 and have appreciated taxable assets, pull your most recent tax return and project MAGI for the current year and next year. Compare both against the 2026 joint-filer tier breaks at $218,000, $274,000, $342,000, $410,000, and $750,000. If a planned sale would push you across a cliff, consider whether the same goal can be funded from cash, a home equity line of credit, or a partial sale sized to stay under the line.
If you are already inside the lookback window and the high-income year coincided with retirement, marriage, divorce, or a spouse’s death, file SSA-44 with documentation. It is the only retroactive lever available.
Capital gains tax is not the full cost of a stock sale. For anyone within two years of Medicare enrollment, the IRMAA shadow is real money, and it arrives on a two-year delay, long after the brokerage statement is forgotten.
Editor’s note: This article corrects the total IRMAA surcharge figure from roughly $4,800 to roughly $5,800, reflecting the confirmed 2026 Tier 2 Part B surcharge of $202.90 and Part D surcharge of $37.50 per spouse per month, and adds context on the 2025-to-2026 Part B premium increase and the statutory freeze on the top IRMAA bracket through 2027.
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