The AI Bull Market Turns 4 With Stocks Up 117%. Cashing Out Could Raise Her Medicare Premiums Two Years Later

The bull market powered by artificial intelligence (AI) has just passed its fourth anniversary. In an October 9 report, Reuters put the S&P 500’s gain since its October 2022 closing low at 117%.

Take a hypothetical investor who is 64. She bought an AI stock early in a taxable brokerage account and watched it grow until it dominated her portfolio. Now she wants to take money off the table before Medicare starts. Cutting risk feels responsible. It can also raise her Medicare premiums two years later.

This affects a fairly small group. In its fact sheet on 2026 Medicare Part A and B premiums, the Centers for Medicare & Medicaid Services (CMS) says the income-related surcharges reach roughly 8% of people with Part B. If your income remains modest year after year, you’re probably clear. A large realized gain can push an otherwise ordinary household into that group for a year.

Medicare Counts Only the Gains You Realize

Medicare’s income-related monthly adjustment amount (IRMAA) is based on modified adjusted gross income (MAGI) from your federal tax return. That means adjusted gross income plus tax-exempt interest. Account balances play no part. Her AI holding could grow to $1 million without that paper gain adding a dollar to her Medicare premiums.

Selling turns that paper profit into income. What counts is the gain after accounting for her cost basis and any offsetting capital losses, not the full sale price. Long-term gains can get a lower income-tax rate than wages, but they still count toward Medicare’s surcharge.

A Sale at 64 Can Resurface at 66

Medicare generally sets the surcharge using the tax return from two years earlier. A large sale in the year she is 64 can set the premiums she pays at 66, long after she has reinvested or spent the money.

The surcharge applies to both Part B and Part D, and Medicare charges it per person. If she files jointly, the gain raises household income on the shared return, so a spouse on Medicare can pay the surcharge too. Because the sale and the bill fall in different calendar years, it’s easy to miss the connection between them (IRMAA is one of several premium traps we mapped in a free Medicare guide).

Form SSA-44 Covers Life Events, and Voluntary Sales Stay on the Bill

On its page for asking for a lower IRMAA, Social Security explains that beneficiaries can file Form SSA-44 after a life-changing event that reduced household income. Qualifying events include marriage, divorce, the death of a spouse, retirement or a cut in work hours. Lower income alone doesn’t qualify.

A voluntary stock sale falls outside those categories. Her income drops the next year because she chose to sell, and Social Security treats that choice as a voluntary decision outside the qualifying events. A gain that goes away the following year still sets the surcharge for the premium year tied to that return.

Retirement is a different matter. If she also stops working, that work stoppage counts as its own qualifying event and may support a new determination based on her lower income. The request rests on the lost paycheck. The stock sale gives her no grounds of its own, so she should treat the two as separate issues.

Reduce Risk Without Stacking Every Gain Into One Year

Her goal of holding less of one stock before Medicare still makes sense. The fix is timing.

• Compare selling now with splitting the sale across December and January. Spreading the gain over two returns could keep her below a surcharge threshold. But it could also produce two years of surcharges instead of one, so run both scenarios before deciding.
• Harvest available capital losses. Losing positions elsewhere in the portfolio can offset realized gains and reduce the amount that reaches adjusted gross income.
• Watch what else lands on the return. The taxable portion of a Roth conversion or a withdrawal from a traditional IRA also counts. Pair either with a big stock gain, and she could cross a surcharge threshold she would otherwise avoid.

She still has until December 31 to decide how much gain lands on this year’s return. Start with a tax projection comparing the full sale with a sale spread over two years, including tax-exempt interest in the Medicare income calculation. If she plans to retire soon, keep her employer’s letter confirming her last day. It can support a Form SSA-44 request, along with evidence of her lower annual income.

The decision about when to sell comes before the sell order. The bull market made her richer on paper. Selling can put those gains on the tax return that shapes her Medicare premiums two years later. The right schedule could lower the bill, but keeping too much money in one stock carries a price of its own. Compare both before deciding how much to sell.

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