Selling an Investment? How the Gain Could Raise Your Medicare Premiums

Before You Sell That Investment: The Medicare Premium Surprise to Know About

You reviewed the investment. You checked the gain. You considered the taxes. But did you ask what the sale could do to your Medicare premiums?  This is one of those retirement-planning details that can sneak up on you. Selling appreciated stock, real estate or another asset may increase your taxable income. That higher income can result in larger Medicare Part B and Part D premiums two years later. Let’s walk through it without making your eyes glaze over.

Medicare looks back two years

Higher-income Medicare beneficiaries may pay an Income-Related Monthly Adjustment Amount, commonly called IRMAA. IRMAA is an additional charge added to Medicare Part B and Part D prescription-drug costs. Social Security generally determines it using income from your federal tax return two years earlier.

That means your 2026 Medicare premiums are generally based on your 2024 income. A taxable transaction completed in 2026 would generally affect your 2028 Medicare premiums, using thresholds that have not yet been announced.

For Medicare purposes, Social Security defines modified adjusted gross income, or MAGI, as your adjusted gross income plus tax-exempt interest.

In 2026, higher premiums begin when MAGI exceeds:

• $109,000 for most individual filers
• $218,000 for married couples filing jointly

You can find the current figures on the Social Security Administration’s Medicare premium page.

It is the taxable gain—not the entire sale price

Medicare does not raise your premium simply because you sold an asset. The concern is whether the transaction creates taxable income that increases your MAGI.

Suppose you sell investments for $150,000. If your cost basis is $110,000, the potential gain is $40,000—not the full $150,000. Taxes, basis adjustments and exclusions can affect the final amount, so the transaction should be reviewed with your tax professional.

That gain is then added to your other income. It could push you across an IRMAA threshold.

Meet Denise

Denise is single and enrolled in Medicare. Her 2024 MAGI was expected to be $100,000—below the $109,000 threshold used to determine 2026 premiums.

Then she sold appreciated investments and recognized a $50,000 taxable gain. Her MAGI increased to approximately $150,000.

Here is what happened:

The sale increased Denise’s Medicare costs by approximately $240.40 per month, or $2,884.80 for 2026. That does not include her regular prescription-drug plan premium.

Does that mean Denise should not have sold? Not necessarily.

The investment may have become too large a portion of her portfolio. She may have needed cash, wanted less risk or found a better opportunity. Paying higher Medicare premiums for one year may be reasonable if the sale supports a stronger long-term plan.

The problem is not paying IRMAA. The problem is being surprised by it. Before making a significant sale, consider whether you could:

• Spread sales over multiple tax years
• Sell higher-cost-basis shares
• Use investment losses to offset gains
• Donate appreciated securities to charity
• Coordinate the sale with Roth conversions
• Avoid stacking a large gain, retirement withdrawal and Roth conversion in the same year
• Leave room for year-end dividends and capital-gain distributions

Remember that IRMAA uses brackets. Going slightly over a threshold can move you into the next premium tier. Good planning may help you decide whether to stay below a threshold—or cross it intentionally because the larger strategy is worth the cost.

Can an IRMAA charge be appealed?

Social Security may reconsider IRMAA after certain life-changing events, including marriage, divorce, the death of a spouse, work stoppage or reduction and loss of pension income.

A voluntary asset sale or capital gain generally is not a qualifying event by itself. That makes planning before the transaction especially important.

Your next step

Before selling an appreciated asset, ask for an estimate of three numbers:

1. The taxable gain
2. Your projected Medicare MAGI
3. Your potential Medicare premiums two years later

Taxes and Medicare premiums are neighbors. When income goes up, both may come knocking.

Before you press “sell,” let’s calculate the ripple. Schedule a retirement tax and Medicare planning conversation with Harris & Harris Wealth Management.

This article is for educational purposes only and does not constitute individualized investment, tax, legal or Medicare advice. Medicare thresholds and premiums may change annually.