IRMAA and Medicare Planning for Physicians: Reducing Your Premium Surcharges

Medicare Part B and Part D aren't flat-rate programs. Once your Modified Adjusted Gross Income (MAGI) crosses $109,000 (single) or $218,000 (married filing jointly), you pay Income-Related Monthly Adjustment Amounts — IRMAA surcharges on top of the standard $202.90 base premium. For physicians, who routinely earn $300,000–$700,000+ as attendings, IRMAA isn't an edge case. It's the default. A dual-physician household in the upper tiers can pay $12,000–$14,000/year in Medicare surcharges alone — $240,000–$280,000 over a 20-year retirement before accounting for investment opportunity cost. The planning question isn't whether you'll pay IRMAA; it's whether you're managing it deliberately or leaving money on the table.

The 2026 IRMAA Brackets

IRMAA surcharges are based on your MAGI from two years prior. Your 2026 Medicare premiums are determined by your 2024 tax return.¹ The two-year lookback means income decisions you make today affect Medicare costs starting two years from now — which makes early, coordinated planning essential.

Source: CMS 2026 Medicare Premiums Fact Sheet and Kiplinger, verified May 2026.² The top bracket ($500K+) is frozen and not indexed for inflation until 2028. IRMAA applies separately to each Medicare enrollee.

Why Physicians Hit IRMAA Harder Than Almost Anyone

Most high earners reduce income at retirement and drop back to the base IRMAA bracket. Physicians often don't follow that pattern — because of how their wealth is structured:

Practice Sale Proceeds

Selling a medical practice can generate $500,000–$3M+ in a single tax year. Even with capital gain treatment on goodwill and personal goodwill doctrine (23.8% rate), total MAGI spikes dramatically in the sale year. Because IRMAA looks back two years, a physician who sells their practice at age 63 and enrolls in Medicare at 65 pays top-bracket IRMAA in their first year on Medicare. See Physician Practice Sale and Exit Planning for how to structure proceeds to mitigate this.

457(b) Distribution Timing

Non-governmental 457(b) plans at hospital systems must be distributed within two years of separation. A physician with $800K in deferred compensation who separates at age 62 and receives two $400K distributions may land in Tier 4 or Tier 5 both in age 63 and 64 — exactly the two years before Medicare enrollment that feed the IRMAA lookback at ages 65 and 66. See Physician 457(b) Deferred Compensation Guide for distribution strategies.

Required Minimum Distributions

RMDs begin at age 73 (born 1951–1959) or age 75 (born 1960+) under SECURE 2.0. Physicians often carry $1M–$4M+ in pre-tax 403(b)/401(k)/457(b) accounts. A $3M pre-tax balance at age 73 generates approximately $115,000/year in mandatory taxable RMDs (using Uniform Lifetime Table divisor of 26.5). Even without other income, that alone approaches Tier 2. Add Social Security, dividends, and rental income and a physician with a modest retirement portfolio can land in Tier 3 or Tier 4 for decades.

Social Security Benefits

Up to 85% of SS benefits are taxable at ordinary income rates and included in MAGI for IRMAA.³ A physician claiming SS at age 70 — the maximum benefit — receives up to $5,181/month ($62,172/year) of which up to $52,846 is included in MAGI. On top of RMDs and investment income, this easily pushes total MAGI into Tier 3 or Tier 4 for the duration of retirement.

Investment Income and Municipal Bond Trap

Dividends and capital gains from after-tax taxable accounts add to MAGI. More counterintuitively, tax-exempt municipal bond interest counts toward IRMAA MAGI even though it's excluded from AGI on line 11. SSA adds it back in their calculation. A physician holding $600,000 in munis generating $18,000/year in "tax-free" interest is paying IRMAA surcharges on that income — often unknowingly.

The Cliff Effect: Why $1 of Extra Income Can Cost Thousands

IRMAA uses a cliff structure, not a gradual phase-in. Earning $137,001 — just $1 above the Tier 2 threshold — puts your entire Part B premium at $405.80/month immediately. Earning $274,001 as a married couple adds over $2,800/year in combined surcharges in a single dollar step.

The most consequential cliff for physicians is usually the Tier 4 boundary at $205,000 (single) / $410,000 (MFJ). Staying under this threshold saves $1,735/year per person in surcharges versus being just over it — permanently, for every Medicare year at that income level.

Physician IRMAA Reduction Strategies

1. Roth Conversions Before Age 63

This is the highest-leverage strategy for most physicians. Every dollar converted from a traditional 401(k), 403(b), or IRA to Roth before age 63 (two years before Medicare enrollment at 65) eliminates that dollar from future MAGI after age 65. Converting $100,000/year from ages 58–63 at a 24% federal rate costs $24,000/year in current taxes. But it permanently removes $100,000/year from retirement MAGI, potentially saving $6,355+/year per person in Tier 4 IRMAA surcharges for 20+ years.

The math is especially strong for physicians who retire before 65 with a low-income gap period. With no W-2 wages, PSLF complete, and Social Security not yet claimed, conversions may be taxed at 22–24% — far below the 37% they would have faced during peak earning years. This gap between conversion tax cost and avoided future IRMAA surcharge is where physician wealth is made or lost in retirement planning.

2. The Roth Conversion Window: Ages 60–72

Even physicians who work through 65 often have a conversion window before RMDs begin at 73/75. Systematic conversions in this window:

• Reduce future RMD size — Roth accounts have no lifetime RMDs for the original owner under SECURE 2.0⁴
• Build a Roth balance that provides MAGI-neutral income in high-IRMAA years
• Allow flexibility: skip conversions in high-income years (457(b) distributions, practice sale), convert aggressively in low-income years

3. Qualified Charitable Distributions (Age 70.5+)

Once you reach age 70½, you can transfer up to $111,000/year (2026 limit, indexed for inflation) directly from an IRA to a qualified charity as a Qualified Charitable Distribution. The QCD satisfies your RMD requirement but is excluded from MAGI entirely — it never appears as income on your Form 1040.⁵

For a physician with significant charitable intent, a $111,000 QCD reduces MAGI by $111,000. At Tier 4 IRMAA exposure, that can save the full $6,355/year per person in surcharges plus state income tax and NIIT effects on the charitable income. Unlike itemized charitable deductions, the QCD works even if you take the standard deduction.

4. 457(b) Distribution Timing

If you're leaving a health system with a non-governmental 457(b) balance, you often have flexibility within the 2-year distribution window. Splitting distributions between calendar years — even if slightly compressing the window — can keep both years in Tier 3 rather than Tier 4 or Tier 5. A $600,000 balance split $300K/$300K over two years may both land in Tier 2; taken as a lump sum it hits Tier 4. The difference: roughly $7,000–$9,000 in total IRMAA surcharge costs over the two lookback years.

5. Installment Sales for Practice Proceeds

When selling a medical practice, §453 installment sales let you spread gain recognition over multiple years. Structuring payments over 3–5 years can keep annual MAGI below the top IRMAA tiers rather than spiking into Tier 5 in a single year. The tradeoffs are interest income on installments, buyer credit risk, and complexity — but for practice sales generating significant goodwill, the IRMAA mitigation alone can justify the structure on its own. Discuss with a CPA specializing in medical practice transitions.

6. Donor-Advised Fund Bunching

A large DAF contribution in a high-income year (practice sale, large bonus) can shift multiple years of charitable intent into one year when the deduction is most valuable. You then direct DAF distributions to charities in subsequent lower-income years, managing MAGI smoothly without changing your total charitable giving. This is different from a QCD — DAF contributions don't reduce MAGI in the contribution year, but they do prevent future charitable deductions from requiring you to itemize in low-income years. See Physician Charitable Giving: DAF, QCD, and Appreciated Stock for the full framework.

7. Life-Change Event (LCE) Appeal

IRMAA for 2026 is based on your 2024 return. If your income has dropped significantly — you retired, reduced hours, sold the practice and income is now lower — you can appeal to Social Security using SSA Form SSA-44. This lets you use a more recent year's income (or an estimate of current-year income) instead of the 2024 lookback. Qualifying events include: retirement, reduction in work hours, separation or divorce, death of a spouse, or loss of income-producing property.⁶

This is commonly overlooked at Medicare enrollment. A physician who retires at 65 with much lower income than their peak earning year two years prior can apply for an immediate IRMAA reduction — they don't have to wait two years for the IRS lookback to catch up.

What Counts as MAGI for IRMAA: A Physician Checklist

IRMAA MAGI is AGI (Form 1040, line 11) plus tax-exempt interest income.¹

Planning Timeline by Career Stage

Residency and Early Career

Contribute to Roth accounts directly while income is below the phase-out threshold ($236,000 MFJ for Roth IRA direct contribution in 2026). Every Roth dollar built now is a future MAGI-neutral income source in retirement that won't touch your IRMAA tier. If your program offers a Roth 403(b) option, use it.

Mid-Career Attendings (40s–50s)

Model your projected Medicare MAGI using conservative assumptions: your expected RMD stream (calculate based on current pre-tax balances grown at 6–7% to age 73), projected SS benefit, and typical retirement investment income. Most attendings who consistently max retirement accounts will face Tier 2–Tier 4 IRMAA without intervention. Identify this now — there are 20+ years of conversion runway ahead.

Pre-Retirement (55–63): The Prime Conversion Window

If you retire before 65 with a low-income gap period, convert aggressively — this may be the only window where your marginal rate is 22–24% rather than 37%. Know your 457(b) balance, distribution schedule, and hospital pension obligations. Coordinate conversions with your 457(b) distribution plan to avoid doubling up in high-income years. The goal is entering Medicare with the smallest possible pre-tax balance and the largest possible Roth balance.

At Medicare Enrollment (65)

Enroll on time to avoid permanent Part B late-enrollment penalties (10% per 12-month period you delay after your enrollment window). If your income has dropped from its 2024 level, file SSA-44 immediately with documentation. Don't pay Tier 4 IRMAA when you're living on retirement distributions at Tier 2 income — the appeal process exists for exactly this situation.

Age 70½ and Beyond

Implement the QCD strategy for any charitable giving. Once RMDs begin, model each year's MAGI to find the Roth conversion amount (if any) that keeps you in the optimal IRMAA tier without cliff-jumping. Use Roth assets to fund one-time large expenses (new car, home repair, travel) rather than pulling from pre-tax accounts that inflate MAGI.