Do wealthy people pay more for Medicare? Learn how IRMAA surcharges raise premiums for high earners — and why a Roth IRA can mean lower Medicare costs, even with millions saved. Oak Road Wealth Management, Lee's Summit, MO.
Executive Summary: Whether you pay more for Medicare depends on your reportable income, not your total wealth. The IRS uses a two-year-old tax return to set your Medicare premium. High-income retirees are charged an IRMAA surcharge that can more than triple the standard Part B premium. However, a retiree with millions saved in a Roth IRA can have very low reportable income — and pay the same Medicare premium as someone with modest savings. Smart retirement income planning is the key to controlling your Medicare costs.
Do wealthy people pay more for Medicare? The short answer is: it depends — and "wealthy" may not mean what you think. Medicare premiums are not based on your net worth. They are based on your reportable income. That distinction matters enormously for retirement planning, and understanding it could save you thousands of dollars every year.
At Oak Road Wealth Management in Lee's Summit, Missouri, we help clients navigate exactly this kind of planning — because the decisions you make before retirement can quietly determine your Medicare bill decades later.
Medicare Part B (medical insurance) and Part D (prescription drug coverage) both have standard premiums that most enrollees pay. In 2026, the standard Part B premium is $202.90 per month. But Medicare does not charge everyone the same amount.
If your income exceeds certain thresholds, Medicare applies an additional charge called the Income-Related Monthly Adjustment Amount (IRMAA). This surcharge is added on top of your standard premium, and it can be substantial.
Medicare uses your Modified Adjusted Gross Income (MAGI) from two years prior to determine your current premium tier. For example, your 2026 Medicare premium is based on your 2024 tax return.
IRMAA — the Income-Related Monthly Adjustment Amount — is a Medicare surcharge applied to higher-income enrollees. The Social Security Administration (SSA) calculates your IRMAA tier using your MAGI, which includes wages, taxable Social Security benefits, required minimum distributions (RMDs), capital gains, rental income, and most other taxable income.
IRMAA thresholds adjust each year. For 2026, individual filers face surcharges at the following MAGI levels:
Married couples filing jointly face thresholds that are roughly double the individual amounts. Each spouse pays the surcharge separately, so a high-income couple could pay well over $1,000 per month combined — just for Part B, before Part D surcharges are added.
At the highest income tier, a single enrollee pays $689.90 per month for Part B alone — more than three times the standard $202.90 premium. Add the Part D IRMAA surcharge (up to $91.00/month in 2026) and a couple at the top bracket could easily pay an extra $10,000 or more per year in Medicare surcharges alone.
This is a real and significant cost that income-aware retirement planning can help you reduce — or avoid entirely.
No — not automatically. This is one of the most important and misunderstood points in retirement planning. Medicare does not look at your investment portfolio balance, the value of your home, or your total net worth. It looks exclusively at your reportable income — the number that appears on Line 11 of your federal tax return.
You could retire with $3 million in the bank and pay the exact same Medicare premium as someone who retired with $100,000 — if your reportable income falls in the same bracket.
A Roth IRA is funded with after-tax dollars. Qualified withdrawals in retirement are completely tax-free, and — critically — they do not count as income on your federal tax return. They do not raise your MAGI.
Consider this example:
Same wealth. Very different Medicare bills. The difference is where the money is, not how much there is.
The following income sources do raise your MAGI and can trigger or increase IRMAA surcharges:
The following income sources do not raise your MAGI for IRMAA purposes:
Reducing Medicare premiums is really about managing reportable income — and that planning starts years, sometimes decades, before you enroll in Medicare. Here are the strategies we most commonly help clients think through at Oak Road Wealth Management.
Converting traditional IRA or 401(k) funds to a Roth IRA while you are still working — or during the lower-income years between retirement and Medicare enrollment — can reduce your future RMDs and lower your MAGI in retirement. Yes, you pay taxes on the conversion now. But doing so can lower your Medicare premiums for decades, in addition to reducing your overall tax burden.
If you have been consistently contributing to a Roth 401(k) or Roth IRA, you have already been building tax-free retirement income. The more of your retirement assets that sit in Roth accounts, the more flexibility you have to draw income without triggering IRMAA surcharges.
Large one-time income events — selling a business, selling a rental property, taking a large capital gain — can push you into a higher IRMAA tier for the following two years. Strategic timing or installment sales can help manage this exposure.
If your income drops significantly due to retirement, divorce, the death of a spouse, or loss of income-producing property, you can request that Medicare use a more recent tax year to calculate your premium. This appeal is filed using SSA Form SSA-44. If approved, your premium can be adjusted based on your current income rather than the two-year-old figure.
Many of our clients in the Lee's Summit and Kansas City area have worked hard, saved diligently, and built real wealth — but they have held most of it in traditional 401(k)s or IRAs because that was the default savings vehicle available to them throughout their careers. That is a strong position to be in. But it also means that, without proactive planning, RMDs alone could push them into IRMAA territory — paying thousands more for Medicare than they would with a different account structure.
Wealth is not the problem. How that wealth is structured can be. A financial plan that accounts for Medicare premium exposure is not just a tax strategy — it is a healthcare cost strategy, a cash flow strategy, and a legacy strategy all at once.
If you are within 10 to 15 years of retirement, now is the time to model your projected MAGI in retirement and evaluate whether Roth conversions, asset reallocation, or other strategies make sense for your situation.
Not necessarily. Medicare premiums are based on your reportable income — your Modified Adjusted Gross Income (MAGI) — not your net worth or total assets. A retiree with millions in a Roth IRA may have very low reportable income and pay the standard Medicare premium. A retiree with less total wealth but high taxable income may pay significantly more.
IRMAA stands for Income-Related Monthly Adjustment Amount. It is a surcharge added to standard Medicare Part B and Part D premiums for enrollees whose MAGI exceeds annual thresholds set by Medicare. In 2026, individual filers with MAGI above $109,000 begin paying IRMAA surcharges. The surcharge increases at five income tiers above that threshold.
Medicare uses your federal tax return from two years prior to set your current-year premium. The income figure used is your Modified Adjusted Gross Income (MAGI), which includes most taxable income sources but excludes tax-free income such as qualified Roth IRA distributions.
No. Qualified Roth IRA distributions are not included in your MAGI and do not count toward IRMAA calculations. This is one of the key reasons Roth accounts can be a powerful tool for managing Medicare costs in retirement.
Yes. If a retiree's wealth is primarily held in Roth accounts and their other income sources (such as Social Security) are low or moderate, their MAGI could fall below the IRMAA threshold — and they would pay the same standard premium as anyone else.
Required Minimum Distributions (RMDs) from traditional IRAs and 401(k)s are fully taxable and increase your MAGI. Large RMDs can push retirees into higher IRMAA tiers, increasing their Medicare premiums. This is one reason Roth conversions before age 73 can be valuable: they reduce future RMD amounts and help control Medicare costs.
Yes. If you experienced a significant income-reducing life event — such as retirement, divorce, or loss of a spouse — you can request that Medicare use a more recent tax year to calculate your premium. This is done through the Social Security Administration using Form SSA-44.
Written by Andrew Matz, Financial Planner at Oak Road Wealth Management.
