68-Year-Old Software Architect With $2.6M Discovers His Severance Triggered Huge Medicare Premium

Medicare premiums for higher earners can include IRMAA surcharges on top of standard Part B and Part D costs. Social Security determines these surcharges using tax return information from two years prior to enrollment. A retiree who delayed Medicare enrollment until age 68 received a premium quote that did not match expectations because a large severance payment in 2024 increased MAGI. The severance lump sum, combined with wages and investment income, pushed MAGI above the single-filer threshold that triggers the highest IRMAA tier. The surcharge resulted in substantially higher monthly Part B and Part D premiums for 2026, with a similar impact potentially continuing into 2027 if later MAGI remains elevated.

"IRMAA, the Income-Related Monthly Adjustment Amount, is the Medicare surcharge layered on top of standard Part B and Part D premiums for higher earners. Social Security uses your tax return from two years prior to set today's premium. 2026 premiums are calculated from 2024 MAGI."

"For this retiree, 2024 looked like a normal high-earning year on paper: $280,000 in W-2 wages, $620,000 in severance, and $42,000 of investment income. Added together, MAGI cleared $942,000, well above the $500,000 single-filer threshold that triggers the top IRMAA tier. The resulting load: roughly $443 per month over standard Part B and $84 per month on Part D, adding up to $6,324 for 2026 alone."

"What no one flagged during the planning conversation: the $620,000 severance lump sum paid in 2024 would resurface two years later as a Medicare surcharge. This scenario shows up regularly on the r/Medicare subreddit, usually phrased as some version of "Why is my Part B premium $600 a month?" The answer is almost always the same: a one-time income event two years before enrollment."

"The trigger: 2024 MAGI of roughly $942,000, inflated by a severance lump sum. The damage: Top-tier IRMAA surcharges on both Part B and Part D for 2026. What is at stake: Roughly $12,500 to $13,000 across two years."

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