We Sold Our Home. Now We Have To Pay More For Medicare! What is IRMAA?


   By Diane Omdahl, Forbes Contributor

Nov 29, 2022

IRMAA can turn selling your house into a costly surprise.

Many long-retired beneficiaries are stunned when they get a notice from Social Security in November informing them that they will be subject to IRMAA (Income-related Monthly Adjustment Amount). They will have to pay more for Part B, medical insurance, and Part D, prescription drug coverage, in the new year.

They want to know: Why does Social Security think they should pay more? And what can they do to get out of paying this?

Here’s what happened. Social Security reviews tax returns from two years prior to the current year to identify higher-income beneficiaries. (Sometimes, they may have to use three-year-old returns.) When the adjusted gross income plus tax-exempt interest income crosses the threshold, Social Security sends the Annual Determination Notice to inform them that they will pay more. (In 2023, the threshold will be $97,000 for individuals filing a single return and married individuals filing a separate return, and $194,000 for married individuals filing a joint return.)

Two years ago, retired beneficiaries may have converted 401(k) funds to a Roth IRA. Many had to deal with Required Minimum Distributions (RMD). Others sold their homes and moved into senior facilities. Because of these financial transactions, their incomes spiked in 2021. But this year (2022), their incomes dropped back to the usual retirement levels. They don’t believe they should have to pay more for Medicare.

As for their second question, unfortunately, there is little they can do to avoid paying the adjustments.


Life-changing event vs. non-qualifying event

Social Security will consider revaluating the IRMAA determination if a beneficiary’s income drops because of one of these life-changing events:

Death of a spouse


Divorce or annulment

Work reduction

Work stoppage (retirement or termination)

Loss of income-producing property (beyond the individual’s control)

Loss or reduction of pension income (plan failure or termination or scheduled cessation), and

Employer settlement payment (as a result of an employer or former employer’s closure, bankruptcy, or reorganization).

Here’s an example of how this works when there is a life-changing event.

In 2021, Richard was a highly paid executive. But, after retirement in January 2022, his income dropped considerably. Social Security will see a drop in income when reviewing his 2022 tax return. However, he could have made bad investments or experienced gambling losses, so Richard had to take action. He filed the life-changing event form with Social Security, identifying work stoppage as his event. Social Security accepted his documentation and reduced his adjustments.

There is no event recognizing RMDs, Roth conversions, or capital gains. Selling a house may be a life-changing event for the beneficiary but, unfortunately, Social Security considers it a non-qualifying event. These beneficiaries will have to pay IRMAA for one year.