A little-known Medicare rule increases premiums for retirees who sell homes, impacting financial planning for older Americans.
Retirees face higher Medicare premiums two years after selling their homes due to the income-related monthly adjustment amount (IRMAA). The surcharge affects Part B and Part D premiums, catching many off guard after liquidating home equity for retirement income.
Empty-nest baby boomers own 28% of the nation’s large homes, per Redfin data. Financial planners report more clients are blindsided by IRMAA, which applies to income thresholds starting at $109,000 for individuals and $218,000 for couples.
The rule discourages downsizing, as retirees weigh the financial trade-offs of maintaining property versus higher healthcare costs. Some opt to retain homes indefinitely to avoid premium spikes.