When I speak with affluent pre-retirees and retirees considering Boerne, Fredericksburg, Wimberley, Dripping Springs, or New Braunfels, Medicare premiums are rarely the first issue they raise.
They ask about homes, healthcare access, wineries, golf, acreage, restaurants, and whether a slower-paced lifestyle will fit their family. But eventually, another question appears:
“Why did my Medicare premiums increase so much? My income is lower now.”
The answer is often IRMAA: the Income-Related Monthly Adjustment Amount. It is a Medicare surcharge that can affect both Part B and Part D premiums, even when the income event occurred years earlier.
For anyone working through retirement income planning in Texas, this timing matters. A Roth conversion, required minimum distribution, business transaction, or capital gain from selling a home or ranch may affect Medicare costs two years later.
Because Medicare’s annual open enrollment period begins October 15, 2026, this is a useful time to review both your coverage and the income decisions that may affect future premiums.
What IRMAA actually does
IRMAA is an income-based adjustment to Medicare premiums. It applies to:
- Medicare Part B, which covers physician and outpatient services
- Medicare Part D, which covers prescription drug plans
For Part B, IRMAA increases the total monthly premium. For Part D, it adds a surcharge to the premium charged by your specific prescription drug plan.
The Centers for Medicare & Medicaid Services states that approximately 8% of Medicare beneficiaries pay these income-related adjustments. The Social Security Administration describes the structure plainly: “The higher the beneficiary’s range of modified adjusted gross income (MAGI), the higher the IRMAA.”
The income measure is generally your modified adjusted gross income, which includes adjusted gross income plus tax-exempt interest. Social Security typically receives this information from the IRS rather than asking you to estimate it when the initial determination is made.
The two-year lookback is the part many retirees miss
For 2026 Medicare premiums, Social Security generally uses your 2024 tax return.
That two-year lookback can create an uncomfortable mismatch:
- Your income was unusually high in 2024.
- Your 2025 or 2026 income is much lower.
- Social Security uses the earlier high-income year to calculate your current Medicare premiums.
This is why a financial decision made before retirement can have consequences after retirement.
For example, imagine a couple preparing to move from the Austin area to a ranch-style home near Fredericksburg. In 2024, they sell their longtime residence and realize a sizable capital gain. They also complete a Roth conversion to reposition part of their retirement savings.
Their income is ordinary again in 2025. They have stopped working by 2026 and are relying primarily on portfolio withdrawals, Social Security, and retirement accounts. Yet the income reported for 2024 may still determine their 2026 IRMAA bracket.
The sale price of a property is not automatically the taxable income amount. The relevant figure depends on the transaction, basis, exclusions, and other circumstances. However, a taxable gain can increase MAGI in the year it is recognized.
That is an important distinction for anyone selling a second home, ranch, investment property, or business interest while preparing for a Texas Hill Country retirement.
2026 IRMAA thresholds and premiums
For 2026, IRMAA begins when 2024 MAGI exceeds $109,000 for an individual tax filer or $218,000 for a married couple filing jointly.
The following amounts are the official 2026 figures published by CMS and the Social Security Administration’s IRMAA tables.
| 2024 MAGI: Individual | 2024 MAGI: Married Filing Jointly | 2026 Part B Monthly Premium | 2026 Part D IRMAA |
|---|---|---|---|
| $109,000 or less | $218,000 or less | $202.90 | $0 |
| More than $109,000 to $137,000 | More than $218,000 to $274,000 | $284.10 | $14.50 plus plan premium |
| More than $137,000 to $171,000 | More than $274,000 to $342,000 | $405.80 | $37.50 plus plan premium |
| More than $171,000 to $205,000 | More than $342,000 to $410,000 | $527.50 | $60.40 plus plan premium |
| More than $205,000 to less than $500,000 | More than $410,000 to less than $750,000 | $649.20 | $83.30 plus plan premium |
| $500,000 or more | $750,000 or more | $689.90 | $91.00 plus plan premium |
These figures are per person. For a married couple, both spouses may pay the applicable Part B and Part D amounts.
Married individuals who file separately can face a different and more severe structure when they lived with their spouse during the year. For 2026, the higher IRMAA tiers generally begin above $109,000 and reach the top tier at $391,000 or more. Anyone in this situation should review the official tables carefully.
IRMAA has cliffs, not smooth steps
One of the most surprising features of IRMAA is its cliff structure.
If your income is exactly at the top of a bracket, you remain in that bracket. But if your MAGI goes one dollar above the threshold, you move into the next full tier.
The surcharge is not prorated based on how far you cross the line.
For example, an individual with 2024 MAGI of $109,000 or less pays the standard 2026 Part B premium of $202.90. An individual with MAGI of $109,001 falls into the next tier and pays $284.10 per month for Part B, plus the Part D surcharge if enrolled in Part D.
That is a $81.20 monthly difference for Part B alone. The Part D surcharge is separate.
This does not mean a retiree should make an investment or charitable decision solely to remain below a particular threshold. It does mean that thresholds deserve attention when discussing retirement income planning in Texas.
Income events that can create an IRMAA surprise
Several common retirement decisions can increase MAGI for a single year:
A Roth conversion
A Roth conversion generally moves money from a traditional retirement account into a Roth account. The converted amount may be included in taxable income for that year.
A single large conversion can therefore affect Medicare premiums two years later. This is one reason conversion timing is often discussed before retirement, while income and account balances can still be modeled across multiple years.
Required minimum distributions
Required minimum distributions, or RMDs, can increase taxable income after they begin. If an RMD is added to Social Security, pension income, investment income, or other distributions, it may push MAGI into a higher IRMAA tier.
The distribution may be required even if you do not need the cash for living expenses. That makes it especially important to consider how retirement income sources interact rather than viewing each account separately.
Selling a home, ranch, or second property
A property sale can create a capital gain in the year it is recognized. This may occur when a retiree sells a longtime home, a vacation property, acreage, or a ranch before relocating to a smaller or more convenient Hill Country residence.
A business owner may also experience an income spike from selling a business or receiving proceeds from a transaction. The sale itself does not automatically qualify someone for an IRMAA appeal later, and the tax treatment depends on the facts.
Investment gains
A portfolio rebalancing decision, concentrated stock sale, or other realization of gains may increase MAGI. This is particularly relevant when someone is building a cash reserve for a home purchase or funding several years of retirement expenses.
The goal is not to avoid every gain or distribution. The goal is to understand how income timing may affect Medicare premiums, cash flow, and the rest of the retirement plan.
What counts as a life-changing event for SSA-44?
When current income is substantially lower than the income used by Social Security, some retirees may request an IRMAA reduction using Form SSA-44.
SSA-44 is designed for specific life-changing events, including:
- Marriage
- Divorce or annulment
- Death of a spouse
- Work stoppage, including retirement
- Work reduction
- Loss of income-producing property due to circumstances such as a disaster
- Loss of pension income
- Receipt of an employer settlement payment related to a closure, bankruptcy, or reorganization
Retirement can qualify as a work stoppage when it results in lower income and can be documented. A business owner who sells a company and genuinely stops working may have a qualifying event based on the work stoppage, not simply because a sale occurred.
The distinction matters.
A Roth conversion is not, by itself, a qualifying life-changing event. A voluntary capital gain from selling a home or ranch is not, by itself, a qualifying event. An RMD is not a qualifying event. A decision to relocate to the Texas Hill Country is not automatically a qualifying event.
When applying, SSA generally requires documentation of the event and an estimate of current or upcoming income. The Social Security IRMAA guidance explains the process and documentation requirements.
If the income information itself is incorrect (for example, because Social Security used the wrong tax return or an amended return has changed the record) you may also need to contact Social Security about reconsideration. An advisor, tax professional, or Medicare specialist can help you understand which process applies.
Planning conversations to have before the income event
I encourage retirees and pre-retirees to discuss IRMAA before making major income decisions, not after receiving an unexpected notice.
Useful topics may include:
- Whether a Roth conversion should occur in one year or be spread across multiple years
- How a planned home, ranch, or business sale could affect MAGI
- Whether charitable giving strategies may fit the household’s broader goals
- How RMDs may interact with other income
- Whether enough liquidity is available without creating an unnecessary income spike
- How portfolio withdrawals can be coordinated with cash reserves
- Whether a change in employment or retirement timing may qualify as a work stoppage
Charitable giving deserves careful professional review. Depending on the circumstances, charitable distributions from retirement accounts may be treated differently from receiving a distribution personally, but eligibility, timing, and documentation matter. This is an area to discuss with a qualified tax professional rather than relying on a general rule.
Likewise, portfolio decisions should be evaluated in the context of the overall retirement plan. A sound process may emphasize transparent, liquid publicly traded investments, appropriate asset allocation, long-term equity ownership, and traditional fixed income rather than making a single Medicare threshold the sole objective.
Open enrollment is approaching, but it is not an IRMAA appeal deadline
Medicare’s 2026 Annual Enrollment Period runs from October 15 through December 7, 2026. During that period, Medicare beneficiaries can review or change eligible health and prescription drug coverage for 2027. Changes generally take effect January 1, 2027.
You can review the dates and available choices on Medicare.gov’s Open Enrollment page.
However, Annual Enrollment and IRMAA appeals are different matters. Open enrollment is primarily about Medicare Advantage and Part D plan coverage. IRMAA is based on income information and is administered through Social Security.
That means reviewing your drug plan is important, but it may not change an IRMAA surcharge. If you believe your income has fallen because of a qualifying life-changing event, SSA-44 or another Social Security reconsideration process may be more relevant.
A Medicare surcharge is part of the retirement income picture
When someone imagines retiring in the Texas Hill Country, the focus is understandably on the lifestyle: a shaded porch, a nearby trail, a Fredericksburg wine weekend, a golf membership, or a ranch where family can gather.
But a sustainable lifestyle also depends on understanding the less visible connections between housing, income, healthcare, and investment decisions. As I discussed in The Bridge Plan: Managing the Gap Between Selling Your Home and Buying Your Ranch, the timing of a property transition can affect more than the purchase price.
IRMAA is one of those connections.
A single high-income year may influence Medicare premiums two years later. The right response is not to make a rushed decision to avoid a threshold. It is to model the possibilities early, understand the cliff structure, document qualifying events, and coordinate decisions with appropriately qualified professionals.
Schedule a private meeting with a fiduciary financial advisor today by calling (512) 593-8380 or by visiting: https://calendly.com/portafoliocapital/15min
Portafolio Capital Management dba Mau Sanchez Capital is a Registered Investment Adviser. This content is for informational purposes only and does not constitute investment advice or a solicitation to buy or sell any security. Advisory services are provided only pursuant to a written advisory agreement.
This article may include stories, scenarios, and perspectives created or assisted by artificial intelligence. Although the individuals and circumstances described may be fictional, the topics are intended to reflect real financial, personal, and lifestyle issues that retirees and individuals commonly face. The content is provided to encourage readers to consider different perspectives that may affect their retirement, regardless of whether they are currently planning, approaching retirement, or already retired. It is intended for general educational and informational purposes only and should not be interpreted as personalized investment, financial, tax, legal, medical, or retirement-planning advice. Individual circumstances vary. Readers should independently verify any information presented and consult appropriately qualified professionals before making financial or personal decisions. No advisory, professional, or client relationship is created through the use of this website.
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