Medicare for Physicians: IRMAA Planning for High-Income Doctors

Physicians and doctors face a Medicare problem that almost no one mentions during training: the income that sustained your career is the same income that drives IRMAA surcharges up to $6,936 per person per year in Part B and D premiums — even after you retire. The two-year look-back means your final working years follow you into Medicare. And most generalist advisors don't know enough about physician compensation structures to model the problem correctly.

How physician compensation types count for IRMAA

IRMAA MAGI equals your Adjusted Gross Income (Form 1040 Line 11) plus tax-exempt interest (Line 2a). Physician compensation flows into MAGI through several channels, each with different planning implications.¹

The peak-earnings look-back trap

The Medicare IRMAA two-year look-back is particularly damaging for physicians because physician earnings typically peak in the five to ten years before retirement. A physician earning $500,000 in 2024 who retires in January 2025 faces:

• 2026 premiums based on 2024 income — the $500,000 year puts a single filer solidly in Tier 5 (≥$500K): $6,936/year in extra surcharges
• 2027 premiums based on 2025 income — if 2025 included partial-year salary through January plus consulting fees, 2025 MAGI might still be $150,000–$200,000, putting them in Tier 2 ($2,885/year extra)
• 2028 premiums based on 2026 income — by now, income has normalized to retirement levels; surcharges drop to base or Tier 1

The window between ages 63 and 66 is when this trap is most costly. Physicians who don't know about the two-year look-back are often blindsided when their Medicare premium notice arrives with a $6,936 surcharge bill — for income they earned two years ago and can no longer change.

What you can do before age 65: If you are 62 or 63, your 2024 income sets your 2026 Medicare premiums (if you enroll at 65 in 2026). This is the last year you can change what that look-back year looks like. Maximizing pre-tax retirement plan contributions — particularly a cash balance plan — in the 2–3 years before Medicare enrollment is the highest-leverage IRMAA planning action available to self-employed and partnership physicians.

Working past 65 with hospital group coverage

Many physicians continue working past age 65 under their hospital or group practice's employer health plan. Medicare rules allow you to delay Part B enrollment without penalty as long as:

• Your employer (or your spouse's employer) has 20 or more employees, and
• You have active, employer-sponsored group health coverage — not COBRA

Once employment ends or group coverage ends (whichever comes first), you have an 8-month Special Enrollment Period to enroll in Part B. Enroll within this window and no late enrollment penalty applies. Miss it and the 10%/year permanent penalty accumulates from the month your SEP expired.

The Part A retroactive HSA trap. If you have been contributing to an HSA while working past 65, do not enroll in Medicare Part A. Medicare Part A enrollment (even if only Part A) triggers a 6-month retroactive coverage start date, which in turn creates retroactive HSA ineligibility for up to 6 months. Excess contributions for that period are taxable and subject to a 6% penalty. Many physicians who delayed Medicare and maxed HSAs trigger this inadvertently when they do enroll. See Medicare and HSA rules for the full mechanics.

2026 IRMAA brackets for physician income levels

Your 2026 Medicare premiums are based on your 2024 MAGI. IRMAA is cliff-based — one dollar over a threshold moves your entire income into the next tier.¹

Per person. A physician couple both in Tier 4 pays $12,710 combined annually in IRMAA surcharges. Source: SSA POMS HI 01101.020 and CMS, verified June 2026.

Estimate your physician IRMAA

Enter your compensation and planned retirement plan contributions to see your estimated MAGI and IRMAA tier. Uses 2026 brackets based on 2024 MAGI.

Cash balance plan + solo 401(k): the most powerful IRMAA levers for physicians

For self-employed physicians, partnership physicians, and solo practitioners, the combination of a cash balance defined-benefit plan and a solo 401(k) is the single most effective tool for reducing IRMAA MAGI before retirement.

Solo 401(k) in 2026:

• Employee deferral: $24,500
• Catch-up contribution at 50+ (except ages 60–63): $8,000 → total $32,500
• Super catch-up at ages 60–63 (SECURE 2.0): $11,250 → total $35,750⁴
• Employer profit-sharing: up to 25% of net self-employment compensation
• Combined max (employer + employee, excluding catch-up): $72,000
• New 2026 rule: if your prior-year FICA wages exceeded $150,000, catch-up contributions must be designated as Roth (applies to most physicians with hospital W-2 income)

Cash balance plan in 2026:

• A cash balance plan is a defined-benefit plan that targets a specific account balance at retirement. Contributions are actuarially determined to fund that target.
• The maximum annual benefit under a defined-benefit plan is $290,000 in 2026⁵ — this translates to annual contributions of $100,000–$280,000 depending on physician age, years to retirement, and assumed interest crediting rate.
• A 60-year-old physician partner earning $600,000 can often contribute $200,000–$250,000/year to a cash balance plan, stacked on top of the $72,000 solo 401(k) limit, for a combined $270,000+ pre-tax annual contribution.

The plan must be established before December 31 of the tax year for which you want to make contributions. Cash balance plans require an actuary and a third-party administrator — setup typically costs $2,000–$5,000, with ongoing TPA fees of $3,000–$6,000/year. For physicians in their final 5–10 years before retirement, the IRMAA reduction alone — roughly $4,000–$8,000/year in Medicare savings — often justifies the cost, separate from the substantial tax deduction.

Locum tenens income: a hidden solo 401(k) opportunity

Physicians who moonlight as locum tenens while employed by a hospital often don't realize that locum income — reported on Form 1099-NEC — is self-employment income for which a separate employer profit-sharing contribution to a solo 401(k) may be available.

If your hospital employer already provides a 401(k) plan, you cannot double your employee deferral ($24,500 total per person across all plans). But the employer profit-sharing component of a solo 401(k) for your locum entity is a separate calculation: up to 25% of net self-employment income from locum activities, subject to the overall $72,000 415(c) limit after accounting for your hospital plan contributions.

Example: Dr. Kim has a $350,000 hospital W-2 (with $24,500 already deferred in the hospital 401(k)) and $80,000 in locum tenens 1099 income. Net self-employment income after SE tax deduction ≈ $76,000. The solo 401(k) employer profit-sharing for the locum income = 25% × $76,000 = $19,000. Her combined contributions across both plans: $24,500 (hospital) + $19,000 (locum solo 401(k)) = $43,500 — reducing her MAGI by an additional $19,000 compared to no locum plan.

Pre-retirement Roth conversion window for physicians

Physicians who retire before Social Security starts (most physicians delay SS to 70 for maximum benefit) have a window of 2–7 years where income drops significantly relative to peak working years. That window — before SS begins, before RMDs begin at 73, and before large inherited-IRA distributions start — is the most efficient time to convert traditional IRA and 401(k) assets to Roth.

If you retire at 65 with a pension or practice distribution providing $80,000/year, and you delay SS to 70:

• Ages 65–69: MAGI = approximately $80,000 (below $109,000 IRMAA Tier 1 threshold for a single filer)
• Converting $25,000/year to Roth during this period adds $105,000 bracket income each year — still well below Tier 1 for a single filer
• At age 70, SS adds $40,000/year (85% taxable = $34,000) — now MAGI climbs toward $114,000 → Tier 1
• At age 73, RMDs on a $2M IRA begin at approximately $74,000/year → MAGI jumps to $188,000 → Tier 3

Converting proactively at ages 65–69 reduces the IRA balance that generates future RMDs — and permanently removes that money from IRMAA MAGI. Each $100,000 converted reduces future RMDs by roughly $3,700/year (at age 73 with approximately 26.5 ULT divisor), which in turn reduces long-term IRMAA exposure. See Roth conversions and IRMAA for the full two-year look-back mechanics.

5 strategies for physician IRMAA reduction

1. Maximize cash balance + solo 401(k) in the 3–5 years before Medicare enrollment. For partnership physicians and self-employed physicians, this is the highest-leverage action available. A physician age 61 with $500K net practice income who contributes $200K to a cash balance plan and $72K to a solo 401(k) has reduced MAGI from $500K to $228K — crossing from Tier 5 to Tier 2 and saving $4,051/year in IRMAA. The contributions also reduce current-year income taxes, making the effective cost of the planning negative.

2. File SSA-44 in your first Medicare year. If you retired from active practice in the year you enrolled in Medicare, retirement is a qualifying life-changing event under SSA Form SSA-44. SSA will use your current-year income estimate (the post-retirement figure) rather than the two-years-ago peak salary year. For physicians dropping from $450,000 to $60,000, this can eliminate Tier 4 or Tier 5 surcharges entirely in year 1. See IRMAA appeal guide for the full process.

3. Use the pre-Medicare Roth conversion window. If you retire before 65 — increasingly common among physicians — the gap between retirement and Medicare enrollment (plus the SS delay period) is optimal for Roth conversions. MAGI is at its lowest; tax brackets are more favorable than peak-earning years; and each dollar converted permanently reduces future IRMAA-driving RMDs. See Roth conversion and IRMAA for the two-year look-back calendar.

4. QCDs if you are age 70½+ with an IRA and charitably inclined. Physicians who accumulated large 401(k) and IRA balances during their careers face substantial RMDs at 73. If you are charitably inclined, Qualified Charitable Distributions exclude up to $111,000/year per person from MAGI entirely — not as a deduction, but as a full bypass of AGI. For a physician with $300,000 in RMDs and $100,000 in charitable intent, a QCD reduces MAGI by $100,000, potentially moving from Tier 4 to Tier 2 and saving $3,470/year per person in Medicare surcharges. See IRMAA reduction strategies.

5. Structure the practice sale carefully if the timing overlaps with Medicare enrollment. Selling a medical practice or retiring from a group partnership creates a one-year MAGI spike — sometimes $500,000–$1,000,000 — that hits two years later as IRMAA. An installment sale under IRC §453 spreads the income over 5–10 years, smoothing the look-back impact. For C-corp physician practices, the QSBS §1202 exclusion can eliminate capital gain entirely on up to $15M in proceeds under OBBBA (July 2025). SSA-44 does not apply to practice sale income (it's not a qualifying life-changing event). See business sale and IRMAA for the full analysis.

What a specialist advisor models that generalist advisors miss

Most generalist financial advisors work with employees and retirees with W-2 income and portfolio distributions. Physician compensation structures — partnership K-1s, group practice buyouts, tail coverage obligations, medical group defined benefit plans, and locum tenens side income — sit outside their typical workflow.

A physician-focused advisor models the cash balance plan contribution schedule for the 5 years before Medicare enrollment, coordinates the Roth conversion window with the IRMAA look-back calendar, and ensures the practice transition doesn't trigger an avoidable multi-year IRMAA spike. That's a different skill set than annual financial planning — and for most physicians, a single year of avoided Tier 4 or Tier 5 surcharges more than covers the planning cost.

Sources

1. SSA POMS HI 01101.020 — IRMAA Sliding Scale Tables: 2026 IRMAA bracket thresholds and Part B/D surcharge amounts. MAGI for IRMAA = AGI + tax-exempt interest per IRC §36B(d)(2). Base Part B premium $202.90/month per CMS Nov 2025 fact sheet. Verified June 2026.
2. IRS — Roth IRAs and Designated Roth Accounts: qualified distributions from Roth IRAs and Roth 401(k)/403(b) accounts (age 59½+, 5-year holding period) are excluded from gross income under IRC §402A(d) / §408A(d). Not counted in AGI; not counted in IRMAA MAGI. SECURE 2.0 §325 eliminated lifetime RMDs from Roth 401(k) accounts effective 2024.
3. IRS — Qualified Charitable Distributions: IRC §408(d)(8) permits QCDs from traditional IRAs only (not 401(k) or 403(b) directly); those accounts may be rolled to IRA first. 2026 QCD annual limit $111,000 per person per IRS Notice 2025-67, inflation-adjusted under SECURE 2.0.
4. IRS — 401(k) Limit Increases to $24,500 for 2026: employee deferral $24,500; age 50–59 and 64+ catch-up $8,000; SECURE 2.0 super catch-up ages 60–63: $11,250 per IRS Rev. Proc. 2025-67; combined employer + employee max $72,000 (415(c) limit 2026). New 2026: catch-up contributions for plan participants with prior-year FICA wages exceeding $150,000 must be designated Roth.
5. IRS — Defined Benefit Plan Benefit Limits 2026: maximum annual benefit $290,000 for 2026 per IRC §415(b)(1)(A); compensation limit $360,000. Cash balance plan contributions are actuarially determined to fund the target benefit and vary by participant age and years to retirement — no fixed annual contribution dollar cap, but the benefit cap limits the cumulative funding.

Values verified as of June 2026. IRMAA brackets per SSA POMS HI 01101.020. QCD limit per IRS Notice 2025-67. Solo 401(k) and catch-up limits per IRS Rev. Proc. 2025-67. Defined benefit limit per IRC §415(b)(1)(A). Consult a licensed advisor for guidance specific to your situation.