A surprising spike in Medicare premiums—sometimes doubling or tripling the expected amount—can throw off carefully designed retirement plans. Many people don’t realize that Medicare Part B premiums are based on income, and a single year of higher earnings can trigger substantial Income-Related Monthly Adjustment Amount (IRMAA) surcharges. These adjustments can come with little warning, often long after the income event has occurred.
For producers, understanding IRMAA is a critical part of delivering real value—a chance to help clients develop a proactive strategy that manages their income, minimizes unnecessary costs, and avoids both financial and emotional stress. In particular, it provides a catalyst for important conversations about the possible impact of taxable deferred annuity withdrawals, along with the advantages of nontaxable cash value withdrawals or policy loans from a permanent life insurance policy.
What Is IRMAA?
Most people don’t pay a premium for Medicare Part A (hospital insurance) because Medicare taxes were taken out of their paychecks while they were working. Medicare Part B (medical insurance), however, requires the payment of a monthly premium. A standard premium amount applies up to a stated modified adjusted gross income (MAGI) threshold. Above that threshold, the IRMAA surcharge can increase premium costs dramatically.
In 2025, the standard Medicare Part B premium (for individual filers with MAGI of $106,000 or less) is $185.00 per month. Above that income threshold, though, IRMAA starts making a noticeable difference. For single filers with MAGI in the $167,000 – $200,000 range, for example, the monthly premium is $480.90. For single filers with MAGI of $500,000 or higher, the monthly premium is $628.90. (MAGI thresholds differ for joint filers and married filing separately.)
The Social Security Administration (SSA) determines these surcharges using the individual’s tax return from two years prior. For example, 2025 Medicare Part B premiums are based on the individual’s 2023 MAGI.
For many retirees, crossing the IRMAA threshold isn’t something they consider in their financial planning. Yet, higher premiums can be triggered by one-time income events, such as large distributions from retirement accounts, proceeds from the sale of property or a business interest, or taxable death benefits.
How Can Producers Proactively Assist Clients?
Even a slight increase in income can push clients into a higher bracket for Part B premiums, which can have a cascading effect on their future healthcare costs. Producers should consider some practical strategies to guide clients through potential IRMAA-related challenges:
1. Understand what counts toward MAGI and what doesn’t.
To help clients avoid unexpected Medicare surcharges, producers need to know which income sources affect MAGI. Taxable distributions from traditional IRAs, annuities, and capital gains all count, but policy loans and withdrawals up to basis from life insurance generally do not. This knowledge allows producers to help clients manage income levels more strategically.
2. Time income events thoughtfully.
Encourage clients (and their advisors) to consider the timing and size of income events like Roth conversions, annuity withdrawals, or large asset sales. Staggering these over multiple years—or coordinating them with lower-income years—can help keep MAGI below IRMAA thresholds.
3. Use permanent life insurance as a flexible income source.
Cash value life insurance can provide tax-free income through loans or basis withdrawals. This can supplement income in years when a Roth conversion or other taxable event is planned, helping clients meet their cash flow needs without triggering additional Medicare premiums.
4. Coordinate with other professionals.
You aren’t the one designing Roth conversion strategies or preparing tax returns, but by being aware of how life insurance and annuities impact MAGI—and by collaborating with CPAs and financial advisors—you become an essential part of the client’s planning team.
5. Educate clients before the IRMAA letter arrives.
IRMAA surcharges often catch clients off guard—usually because they don’t realize an increase in income can affect Medicare premiums two years later. Bringing this up proactively strengthens your credibility and shows that you’re looking out for their full financial picture.
6. Suggest an appeal when appropriate.
Some clients may be unaware of their rights to an appeal. Clients can request a review of IRMAA surcharges after life-changing events like marriage, divorce, or loss of income. If the SSA used outdated or incorrect income data, clients can also request a recalculation without filing a formal appeal.
The Bottom Line
IRMAA surcharges may not show up on a client’s balance sheet, but they can create real financial strain and frustration in retirement. As a life insurance producer, you have tools that go beyond protection and accumulation. You can help clients manage income, avoid unnecessary Medicare costs, and make more informed decisions about Roth conversions, annuity distributions, and retirement income strategies. By raising the IRMAA conversation early, you not only strengthen your role as a trusted advisor, you protect your client’s peace of mind.
