For many retirees, Medicare premiums are treated as a fixed expense. But an ill-timed tax planning decision — like a Roth conversion — can quickly change that. The income-related monthly adjustment amount, or IRMAA, operates with sharp cliffs: Cross a threshold by even a single dollar, and premiums can jump by thousands annually.
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For advisors, that makes income management just as important as portfolio management. And as surcharges rise in 2026, the cost of getting it wrong is becoming more visible to clients.
Consider a single retiree who’s in the 80th percentile of Medicare beneficiaries. They make just over $91,000 annually and have just under $530,000 in savings. In a bid to lower future taxes in retirement, they do a Roth conversion for about a fifth of their savings, roughly $115,000, spiking their annual income to just over $206,000.
That conversion could offer major tax advantages in the later years of their retirement, but it also pushes them into a higher IRMAA tier, where surcharges total $446 per month for Part B and $83 for Part D. Combined, that’s $530 a month, or $6,355 a year in additional Medicare premiums.
The kind of situation is what makes the planning challenge so stark: A retiree with just under $92,000 in income can trigger more than $500 a month in Medicare costs through a single, well-intentioned tax strategy.
IRMAA is particularly unforgiving because it’s based on income from two years prior and structured as a cliff rather than a phase-in. That means temporary income spikes — whether from Roth conversions, asset sales or business income — can have delayed but significant consequences.
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What advisors can still do before filing
By the time tax season arrives, most of the major planning opportunities have passed, but not all of them. Advisors say there are still ways to reduce prior-year income before filing deadlines, particularly for clients with earned income.
Traditional IRA contributions, health savings account funding and SEP-IRA contributions can reduce taxable income if completed before their respective deadlines.
“For a client sitting just $7,000 to $8,000 above an IRMAA cliff, a maxed-out IRA contribution could be the difference between clearing that threshold and triggering hundreds — or thousands — of dollars in annual Medicare surcharges,” said Shaun Williams, a partner and financial advisor at Paragon Capital Management in Denver, Colorado.
For business owners, the options to lower taxable income are even broader.
“For small business owners, profit-sharing contributions can reduce the company’s net income,” said Gabriel Shahin, founder of Falcon Wealth Planning in Ontario, California. “In addition, decisions like electing Section 179 deductions versus depreciating certain expenses can also help bring taxable income down.”
Even relatively small adjustments can matter if a client is close to an IRMAA threshold, where a single dollar of income can determine whether a surcharge applies.
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How and when to appeal IRMAA
If a client’s income drops after the lookback year, advisors can turn to the appeals process. The Social Security Administration allows retirees to request a reduction in IRMAA using Form SSA-44, but only under specific circumstances.
“It allows individuals to report a life-changing event such as retirement, divorce or the death of a spouse,” Shahin said. “This is a very normal process, and we help clients navigate it regularly.”
Retirement is the most common trigger, but other qualifying events include reductions in work hours or the loss of income-producing property. When successful, the appeal can adjust premiums to reflect a client’s current, lower income.
However, advisors caution that not all income changes qualify.
“If the income is due to a house sale or other one-time events, the client is generally stuck with the IRMAA surcharge for a year,” said Sally Boyle, founder of SJ Boyle Wealth Planning in Hanover, New Hampshire.
That limitation makes proactive planning especially important.
When amending a return makes sense
If an error or missed deduction pushed a client over an IRMAA threshold, filing an amended return can also be a viable solution to avoid an IRMAA surcharge.
“If a legitimate error was made and correcting it would move the client below an IRMAA threshold, then, yes, amending the return absolutely makes sense,” Shahin said. “It can directly reduce the Medicare surcharge the client is being assessed.”
If the savings outweigh the cost of filing an amended return, taking that path could make sense, Boyle said.
Advisors should also be aware of a key procedural step: Updating a return with the IRS does not automatically adjust Medicare premiums. The corrected information must also be provided to the Social Security Administration.
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Planning around one-time income spikes
When clients are considering a large financial move, such as a Roth conversion or asset sale, the best opportunity to manage IRMAA is before the income is realized.
If timing is flexible, spreading income across multiple years can help avoid crossing thresholds. In other cases, advisors like Williams will intentionally pair a large taxable event with retirement, creating a path to appeal the resulting surcharge.
“The most powerful strategy I use with clients approaching retirement is to intentionally pair a big taxable event … with the year they retire or the year before,” Williams said. “Because retirement qualifies as a ‘work stoppage’ under SSA-44, we can appeal the resulting IRMAA surcharge and have it waived. You’re essentially getting a one-time window to do something large and taxable while neutralizing the Medicare cost that would normally follow.
“One extension of that strategy: I’ve coached some clients to maintain part-time or gig work into early retirement rather than stopping cold,” he added. “As long as their income is genuinely declining year over year, they can qualify for ‘work reduction’ under SSA-44, which is a separate category from work stoppage. That can open up multiple years of appeals rather than just one, giving more runway for Roth conversions or other income-generating strategies while still managing the IRMAA exposure.”
Once the income is locked in, however, options become limited. At that point, advisors say the focus often shifts to helping clients understand the cost rather than avoid it. That’s particularly important given IRMAA’s two-year delay, which can make the surcharge feel disconnected from the decision that caused it.
