The Bill That Showed Up Two Years Late

I opened a letter from Social Security on a Monday morning. It said my Medicare Part B premium was going up. Not by a little. From $203 a month to $284.

I called. The woman on the phone was polite. She explained it in about 30 seconds.

My 2024 income was too high. The profit from a rental property I sold that year pushed me over a line I didn’t know existed. And in 2026, two years later, Medicare sent the bill.

The surcharge has a name. IRMAA. Most guys have never heard it. Until it shows up.

IRMAA stands for Income-Related Monthly Adjustment Amount. It’s a surcharge Medicare adds to your Part B and Part D premiums if your income goes above a set number.

For 2026, that number is $109,000 for a single filer and $218,000 for a married couple. Go over it by a single dollar, and your premium jumps. It’s not a gradual increase. It’s a cliff.

The standard Part B premium in 2026 is $202.90 a month. Cross the first IRMAA line and it jumps to $284.10. Cross the next and it goes to $405.80. At the top, you’re paying $689.90 a month. Per person.

One dollar over the line and you pay the full surcharge for that bracket. Not a penny more in income. Hundreds more in premiums.

▸ Selling a property. The capital gain counts as income. Sell a rental for $100,000 in profit and your income for that year could push you into a higher bracket. Two years later, the surcharge lands.
▸ A large IRA withdrawal. Pull $80,000 from a traditional IRA to pay for a kitchen or help a kid with a down payment. That’s income. IRMAA sees it.
▸ A Roth conversion. Converting a chunk of your IRA to a Roth is smart long-term. But the converted amount counts as income in that year. Plan the timing.
▸ A good investment year. Large capital gains from selling stocks or mutual funds count too. Even if you reinvest every dollar.

▸ Know the number. For 2026, it’s $218,000 for a couple filing jointly. If you’re anywhere near it, plan every large sale, conversion, or withdrawal with the line in mind.
▸ Spread the income. Instead of one big Roth conversion, do smaller ones over three or four years. Stay under the line each year. Same result. No surcharge.
▸ Time your property sales. If you can control when you sell a rental or a second home, look at what your income will be in that year and what it’ll mean for Medicare two years later.
▸ Talk to your CPA before you act. Not after. The two-year look-back means the consequences show up long after the decision. Your CPA can model the IRMAA impact before you sign anything.

I would’ve talked to my CPA before I sold the rental. Not about the sale. About the timing. If I’d split the sale across two tax years or used an installment sale, my income wouldn’t have spiked. The surcharge wouldn’t have hit.

Instead, I sold it all in one year. Made a clean profit. Felt great about it. Then two years later, the letter showed up.

For me and my wife, the surcharge cost us about $1,950 for the year. Not a fortune. But money I didn’t need to spend. Money that went to a bill I could’ve avoided with one phone call to my accountant.

That letter from Social Security is still in my desk drawer. I keep it there as a reminder. Every big financial move has a second act. And the second act doesn’t show up for two years.

— Walter