IRMAA and Medicare Planning for Orthopedic Surgeons

What IRMAA is and why orthopedic surgeons face it immediately

IRMAA — the Income-Related Monthly Adjustment Amount — is a Medicare surcharge added to standard Part B and Part D premiums for beneficiaries whose income exceeds certain thresholds. It is not a penalty or an enrollment error: it is a statutory pricing mechanism that makes high earners pay a larger share of Medicare's program costs. For orthopedic surgeons, it is essentially unavoidable.

The standard Medicare Part B premium in 2026 is $202.90/month.¹ A single orthopedic surgeon with $700K in annual income who retires at 65 will pay $689.90/month in Part B premiums alone — the maximum IRMAA tier — in their first year on Medicare. That is $5,844/year in Part B surcharges on top of the base premium, plus Part D surcharges of up to $91/month ($1,092/year). For a married surgeon couple with two Medicare beneficiaries, the combined IRMAA exposure at top tier is $13,872/year — before any other Medicare cost sharing.

2026 IRMAA brackets: what you actually pay

IRMAA has five surcharge tiers above the base. Your tier is determined entirely by your Modified Adjusted Gross Income (MAGI) from two years prior. MAGI for IRMAA purposes is your adjusted gross income plus tax-exempt interest income — it includes W-2 wages, 1099 income, practice distributions, ASC distributions, capital gains, Roth conversion income, and most other taxable income.

Part B + D annual estimate combines Part B IRMAA ($81.20–$487.00/month) and Part D IRMAA ($14.50–$91.00/month) at 12 months. Exact Part D surcharge depends on your plan.¹ These are per-person figures; married couples with two Medicare beneficiaries pay double.

The income events that spike IRMAA for orthopedic surgeons

Most physicians see IRMAA as a retirement planning issue — manage income in retirement, manage premiums. For orthopedic surgeons, the more acute problem is practice-exit income events that create multi-year IRMAA surcharges even after the income is gone.

Practice sale or PE acquisition

An orthopedic surgeon selling a private practice or joining a private equity rollup in a taxable transaction can generate $1M–$10M+ in capital gains and ordinary income in a single year. The PE deal structure matters enormously: the typical 70% cash / 30% rollover equity structure generates immediate taxable income on the cash portion plus any asset-sale ordinary income. If that sale closes in 2026, the resulting MAGI spike locks the surgeon into top-tier IRMAA for 2028 and 2029 — two full years after the transaction, when they may have no surgical income at all.

A surgeon who retires at 63 after a practice sale would be 65–67 during those IRMAA spike years. That is their first two to four years on Medicare — at maximum surcharge. The combined IRMAA exposure over two spike years for a couple is up to $27,744 — real money that can be substantially reduced with proper sequencing of the sale year's income recognition (installment sale elections, charitable strategies, retirement plan contributions).

ASC equity buyout

When a surgeon sells their ASC equity stake — whether to a larger ASC management company like USPI or SurgCenter Development, to a co-op buyout, or at retirement — the gain is taxed as capital gains (typically long-term for positions held more than one year). An ASC equity stake worth $1M–$4M at an 8–10× EBITDA multiple produces a MAGI spike in the sale year and, via the two-year lookback, elevated IRMAA for two subsequent Medicare years. The surge in CMS outpatient migration to ASCs has made these buyout values larger than they were a decade ago.

Annual ASC distributions at the income peak

Even without a buyout, a spine or joint replacement surgeon receiving $300K–$800K/year in ASC distributions is already in the top IRMAA tier for any Medicare year following those distribution years. If you are 63 years old with two years of $1M+ income ahead of you before Medicare eligibility, your first two Medicare years are guaranteed top-tier IRMAA. There is limited planning opportunity here unless you restructure the distribution timing, which is often impractical.

Roth conversions in the golden window

The Roth conversion golden window — typically the years between practice exit (income drops) and RMD onset (income rises again) — is the primary mitigation strategy for IRMAA in retirement. But Roth conversion income counts as MAGI for IRMAA purposes. A surgeon who converts $300,000/year from pre-tax retirement accounts during the window must run the IRMAA arithmetic alongside the bracket-filling analysis. Converting enough to fill the 22% or 24% bracket may inadvertently push total MAGI across an IRMAA threshold, triggering a tier-jump surcharge that offsets some of the conversion tax benefit. The detailed interaction is covered in the Roth conversion strategy guide.

IRMAA strategies for orthopedic surgeons

1. Roth conversion sequencing around IRMAA tiers

The most powerful long-term IRMAA management tool is building a large Roth asset base before RMDs begin. Each dollar converted in the golden window is a dollar not subject to RMDs in retirement — which directly reduces lifetime MAGI and IRMAA tier. The optimal conversion amount each year is determined by the intersection of your current marginal bracket and the nearest IRMAA threshold. If your MAGI from Roth conversions plus other income puts you at $408,000 (MFJ), converting $1,999 more crosses the Tier 4 line; you either convert $1,999 less or consider the full tier-jump cost-benefit across your expected retirement horizon. See the Roth conversion strategy guide for the full bracket-filling calculator and three ortho surgeon scenarios.

2. Qualified charitable distributions starting at 70½

Once you turn 70½, you can make Qualified Charitable Distributions (QCDs) directly from a traditional IRA to a qualified charity — up to $111,000/year in 2026.³ QCDs satisfy RMD obligations but do not count as MAGI for tax purposes, including IRMAA. A retired surgeon taking $250,000/year in RMDs who redirects $111,000 of it to charity via QCD lowers their IRMAA-relevant MAGI by $111,000 — potentially dropping two full IRMAA tiers. For surgeons who are charitably inclined anyway, QCDs are one of the most tax-efficient vehicles available.

3. Charitable deduction strategies in peak income years

In the year of a major MAGI spike — practice sale, ASC buyout — charitable contributions can reduce net MAGI and potentially keep you one tier lower. A Donor Advised Fund (DAF) contribution of $200,000–$500,000 in the same year as a $5M practice sale transaction generates a current-year deduction against the sale income. The DAF can then distribute to charities over many years. For surgeons who intend to give charitably at any point, front-loading contributions into the spike year is more tax-efficient than spreading them over low-income years when the marginal benefit is lower.

4. Timing income recognition across the IRMAA lookback

The two-year lookback creates actionable tax planning around the year you enroll in Medicare. If you plan to retire at 64 and enroll in Medicare at 65, the IRMAA-relevant years are the two years before enrollment. Retiring at 63 (stopping high earned income) means only one prior high-income year bleeds into Medicare. Retiring at 62 means both prior Medicare years could be lower. The math depends on when you can practically step back from surgery, but awareness of the lookback should inform retirement timing discussions with your advisor — particularly for surgeons who can flex their final clinical year.

5. Installment sale elections for practice transactions

When selling a practice or ASC stake to an individual buyer (not a corporate acquirer), an installment sale under IRC § 453 spreads capital gain recognition over multiple years. Each year's payment recognition is included in MAGI in that year rather than all at once. A $2M capital gain recognized over five years at $400K/year may keep each year in Tier 3 or 4 IRMAA rather than Tier 5 — a cumulative difference of thousands in Medicare premiums. Corporate acquisitions (PE groups, hospital systems) typically require cash at close and don't permit installment treatment, but surgeon-to-surgeon or group-to-associate transfers may allow it.

The IRMAA appeal: life-changing event relief

Social Security administers IRMAA determinations and provides an appeal process for beneficiaries who experienced a "life-changing event" (LCE) that caused a significant reduction in income since the lookback year. This is particularly valuable for orthopedic surgeons who retired or reduced their practice after the lookback year and are now paying top-tier IRMAA on income they no longer earn.

Qualifying life-changing events (for IRMAA appeals)

• Retirement or reduction of work hours (most relevant for orthopedic surgeons)
• Death of a spouse
• Divorce
• Loss of pension income
• Loss of income-producing property (e.g., a practice asset that was destroyed or sold at a loss)
• Reduction in or loss of employer income

To appeal, file IRS Form SSA-44 (Medicare Income-Related Monthly Adjustment Amount — Life-Changing Event) with your local Social Security office. You will need documentation of the current year's expected income (estimated tax return, CPA letter, or signed statement) and evidence of the qualifying event. If approved, SSA will use a more recent tax year — or a current-year estimate — to recalculate your IRMAA tier.⁴

What SSA does and does not accept as LCE documentation

A signed statement from you that you retired is not sufficient on its own. SSA wants corroborating evidence: a termination letter, a signed contract showing the employment end date, or for practice owners, documentation of the practice sale or closure. If your income will still be meaningful in the appeal year (from ASC distributions, investments, or part-time work), SSA will set IRMAA based on your estimated current-year income — which may still land in an elevated tier, just lower than the lookback year would produce.

Married filing separately: the IRMAA trap to avoid

Beneficiaries who file taxes as Married Filing Separately (MFS) face a compressed, punishing IRMAA bracket structure. In 2026, any MFS filer with MAGI above $109,000 is automatically placed in Tier 4 — the equivalent of a single filer earning $205,001–$500,000. There is no gradual progression. Filing separately for any financial planning reason (e.g., to isolate student loan income-driven repayment calculations) while on Medicare almost always results in dramatically higher IRMAA costs.

For divorce planning specifically — a scenario explored in the divorce financial planning guide — the transition period where a surgeon goes from MFJ to single or MFS status can trigger an IRMAA tier jump that should be factored into the overall divorce financial analysis, particularly if the surgeon will be on Medicare at the time of the divorce.

Building IRMAA awareness into the retirement income plan

IRMAA should appear as a line item in any retirement income projection for an orthopedic surgeon. At the top tier, two Medicare-enrolled spouses pay $13,872/year in combined Part B + D IRMAA — equivalent to a 37% federal tax rate on a $37,500 marginal income block. From a planning perspective:

• Model Medicare costs at realistic IRMAA tiers. Using the standard $202.90 Part B premium in a retirement projection for a surgeon with $400K in RMDs understates healthcare costs by $5,844/person/year at Tier 4.
• Integrate IRMAA thresholds into the Roth conversion decision. Each annual conversion decision should account for both the marginal income tax bracket and the nearest IRMAA cliff.
• Plan the income "bridge" between practice exit and Medicare. A surgeon who retires at 62 and enrolls at 65 has three years to lower the MAGI that will determine first-year Medicare premiums. Aggressive Roth conversion or income reduction in years 63–64 (the Medicare lookback years) is high-value.
• File SSA-44 promptly after any qualifying life change. The relief is retroactive to the month you filed, not the month you stopped working. A six-month delay in filing costs six months of overpaid premiums you cannot recover.