IRMAA: The Medicare Surcharge That Can Surprise Retirees
Healthcare costs are a major part of retirement for University of Rochester professionals, and Medicare often provides meaningful relief. Many retirees assume that once they enroll, their premiums will remain predictable.
That assumption can be costly.
There is a lesser-known rule called IRMAA that increases Medicare premiums for retirees with higher incomes. The impact often feels unexpected, especially for individuals who have spent decades saving diligently in a TIAA 403(b) or other retirement accounts.
What IRMAA Is and Why It Matters
Medicare Part B and Part D have standard monthly premiums. Higher-income retirees pay an additional surcharge known as IRMAA, which is based on your modified adjusted gross income from two years prior.
This two-year lookback is what creates confusion.
Income decisions made before retirement can affect Medicare premiums long after you have left the University.
This is often the first moment retirees realize that retirement taxes are not just about income. They are about timing.
Why IRMAA Often Comes as a Surprise
Most people first encounter IRMAA after making decisions that felt reasonable at the time:
• Larger-than-usual withdrawals from a 403(b) or IRA
• Required Minimum Distributions that push income above a threshold
• Roth conversions that unintentionally raise MAGI
These choices can raise Medicare costs by hundreds of dollars per month for an entire year.
The surcharge feels sudden, even though it is tied to income activity that happened years earlier. That disconnect is what catches people off guard.
Why Strategy Matters
IRMAA is not unpredictable. The thresholds are public, and with thoughtful planning, it is often possible to stay below them or control when you exceed them.
A well-designed retirement tax strategy helps you:
• Time Roth conversions before Medicare enrollment
• Spread withdrawals across years instead of creating sharp income spikes
• Coordinate withdrawals with Social Security and other income sources
• Avoid one-time events that trigger unnecessary surcharges
Without a strategy, healthcare costs can feel like an unwelcome surprise. With a strategy, Medicare premiums become far more manageable and predictable.
How Professional Guidance Fits In
Many University of Rochester professionals retire with significant tax-deferred savings. Those balances can create higher taxable income in retirement than expected, especially once Required Minimum Distributions begin.
A fiduciary advisor can help you:
• Understand how your today’s income decisions affect future premiums
• Coordinate Roth conversions and withdrawals with IRMAA in mind
• Align tax strategy with your retirement income plan
• Smooth income over time to avoid steep premium increases
The goal is not to eliminate every surcharge. It is to avoid the ones that did not need to happen.
Final Thought
Healthcare costs in retirement are unavoidable. Unnecessary Medicare surcharges often are not.
With the right plan, IRMAA becomes something you anticipate rather than react to. That difference alone can bring a great deal of peace of mind.
If you are a University of Rochester professional preparing for retirement, now is the time to incorporate healthcare and tax planning into your overall strategy.
Ready to Build a Retirement Plan That Anticipates IRMAA?
We will review your tax picture, income plan, and Medicare timing so you can move forward with clarity and control.
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The Pitti Group Wealth Management, LLC ("The Pitti Group") is a registered investment advisor. Advisory services are only offered to clients or prospective clients where The Pitti Group and its representatives are properly licensed or exempt from licensure. Tax information is general and not tax advice. Consult your tax professional for guidance.