Commentary on a Real-World IRMAA Story from the Kern Valley Sun
A Kern Valley Sun column told the story of a retiree whose one-time pension lump sum doubled her Medicare premium. Here's what happened and the planning lessons behind it.
Every so often a small-town newspaper explains a complicated federal program better than any government pamphlet. That's exactly what happened in January 2022, when the Kern Valley Sun — a community paper serving the Kern River Valley in California — published a commentary titled "Irma A Is Not Your Friend" by Harry P. Thal, a Medicare insurance specialist based in Kernville.
We highlighted this piece when it ran because it showed, through one real retiree's story, the exact mechanism that catches thousands of Medicare beneficiaries off guard every year: the Income-Related Monthly Adjustment Amount, or IRMAA. The surcharge doesn't arrive when you earn the money. It arrives two years later, deducted straight out of your Social Security check, often after the money is long gone.
Below is a walk-through of the story Thal told, the numbers behind it, and the planning lessons it still teaches — because while the dollar figures were 2022's, the mechanism is unchanged today.
The column opens with a phone call. "Roberta called in tears," Thal wrote. She knew her Medicare Part B premium for 2022 was going up to $170.10 from the prior year's $148.50 — the standard increase everyone faced. What she was not prepared for was the notice telling her that $372.30 would be deducted from her Social Security every month for the year. More than double the standard premium — and Social Security was her only source of income.
How could this happen? Two years earlier, in 2020, Roberta's pension matured. She had a choice: take payments over time or a single lump-sum distribution. Since she could get by on her Social Security, she took the lump sum. She did everything a careful person would do — she calculated and paid the taxes due, paid off her modest credit card balances, made her final car payment, and gifted the rest to her children who needed help.
What she didn't know is that Medicare reviews your income each year based on your tax return from two years prior. For 2022 premiums, the Social Security Administration looked at her 2020 return — the year of the lump sum. On paper, Roberta looked like a high-income retiree. In reality, the money was gone and she was living on Social Security alone.
Key Takeaway:
IRMAA is assessed on income from two years ago, not your income today. A one-time event — a pension cash-out, a home sale, a large IRA withdrawal — can double your Medicare premiums for a full year, even if you're now living on Social Security alone.
Thal's column did something most IRMAA coverage skips: it explained where the numbers actually come from. The true calculated cost of Medicare Part B in 2022 was about $680.40 per month. The average beneficiary pays roughly 25% of that cost — which for 2022 worked out to the standard $170.10 premium — while taxpayers absorb the other 75% from general revenue.
IRMAA is the mechanism that shifts more of that true cost onto higher-income beneficiaries. Depending on your income, you pay 35%, 50%, 65%, 80%, or 85% of the program's cost instead of the typical 25%. The income measure is your Adjusted Gross Income plus any tax-exempt municipal bond interest — a figure known as Modified Adjusted Gross Income (MAGI). You can see exactly how the calculation works on our page covering how IRMAA is calculated, and the current income thresholds on our IRMAA brackets page.
Roberta's 2020 lump sum landed her in the 50% bracket — meaning she paid double the standard premium for all of 2022. The premise behind the surcharge is that higher-income people can afford to pay a greater share of their Medicare costs. The problem, as her story shows, is that "higher income" is judged from a snapshot two years old, with no regard for whether the income was recurring or a one-time event.
While Part B is the larger piece of IRMAA, the column pointed out that the surcharge also applies to Medicare Part D, the prescription drug benefit. This affects anyone who has purchased a stand-alone Part D plan or has drug coverage built into a Medicare Advantage plan. The Part D income adjustment uses the same brackets as Part B, and it is charged in addition to the plan's own premium.
In Roberta's case, her stand-alone prescription drug plan cost $29.50 per month, paid to the insurance company. Because her 2020 income placed her in an IRMAA bracket, an additional $32.10 per month Part D surcharge was deducted from her Social Security on top of that premium. The surcharge on her drug coverage was larger than the drug plan itself.
Add it up and the two-year-old lump sum cost her hundreds of dollars a month across Part B and Part D — all deducted automatically from the Social Security income she depended on.
Thal did what a good advisor does: he looked at the appeal routes. He provided Roberta with Form SSA-561-U2, the "Request for Reconsideration." But there is nothing on that form recognizing a pension cash-out as a valid reason to reduce IRMAA. The determination was, by the government's rules, correct — her 2020 income really was that high.
The other route is Form SSA-44, which can reduce or eliminate IRMAA when you've had a qualifying life-changing event. The recognized events are:
Notice what's missing: cashing in your pension, paying off your bills, and giving money to your kids do not qualify. Ironically, losing pension income is on the list — but voluntarily taking your pension as a lump sum is not. For a full walk-through of when appeals do work, see our guide to appealing an IRMAA determination.
IRMAA appeals are for life-changing events, not spending decisions. If the income was real — even a one-time lump sum — the surcharge generally stands for that year.
Thal closed his column with the point that matters most. It's estimated that only about 7% of the Medicare population pays an IRMAA surcharge, and for the most part those people can afford it. But "proper planning and knowledge of the surprise two years from now might shed some light on decisions," he wrote. Selling your home, cashing out pensions, and other large-dollar transactions "should be red flags to IRMAA down the road."
That's the whole game. Roberta's surcharge wasn't inevitable — a pension taken as payments over time, or a lump sum split across tax years, might have kept her under the threshold entirely. But nobody ran the numbers before the decision was made, because nobody knew there were numbers to run.
This is precisely why we built IRMAA projection into RetirementAdvisorPro. When an advisor models a pension election, Roth conversion, home sale, or large IRA withdrawal, the software shows the Medicare premium impact two years downstream — before the client signs anything. The thresholds move every year (you can review the current 2025 IRMAA brackets and projected future ones), so a plan that clears the line one year can cross it the next.
Stories like Roberta's are why local columnists, national outlets, and advisors keep writing about IRMAA. It is a well-documented, fully avoidable surprise — for anyone who looks two years ahead. Credit to Harry P. Thal and the Kern Valley Sun for telling it plainly.
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