You may have $800,000 in your IRA, a paid-off house, and a financial advisor who told you that you have enough to cover long-term care on your own. The money may be there. The plan may still be broken.
The missing piece is IRMAA: Medicare's income-related surcharge on Part B and Part D premiums. When you pay for care with a large traditional IRA withdrawal, Medicare may treat that withdrawal as high income and charge you more for coverage for years afterward.
The core problem
Large IRA or 401(k) withdrawals count as taxable income. That income can push you into a higher IRMAA bracket, which means higher Medicare premiums on top of the actual care bill.
70%
of people over 65 who will need some form of long-term care
$108k
average annual cost of a private nursing home room
3 yrs
average length of a long-term care stay
$324k+
average out-of-pocket cost for a 3-year stay
Long-term care costs keep climbing
Annual cost of a private room vs. assisted living, selected years
What is IRMAA, and why should you care?
In 2026, the standard Medicare Part B premium is $202.90 per month. But Medicare looks back two years at your income. If that income is above certain thresholds, you owe extra on top of the base premium.
That is the trap for self-funders. Pull $95,000 from a traditional IRA to pay for one year of care, and the next year Medicare may treat you like a high-income retiree even if your normal retirement income is modest.
2026 IRMAA brackets: single vs. couple
All dollar amounts are per person, per month unless marked as a yearly total. IRMAA is the extra surcharge. It is not a late-enrollment penalty.
Total IRMAA extra
Part B IRMAA + Part D IRMAA
The monthly surcharge Medicare adds
Extra / year
Total IRMAA extra × 12
What the surcharge costs for the year
Total you pay / month
Standard Part B + total IRMAA
Does not include your Part D plan premium
| 2024 MAGI | Standard Part B | Part B IRMAA | Part D IRMAA | Total IRMAA extra / mo | Total you pay / mo | Extra / year |
|---|---|---|---|---|---|---|
| $109,000 or less | $202.90 | $0.00 | $0.00 | $0.00 | $202.90 | $0.00 |
| $109,001 - $137,000 | $202.90 | $81.20 | $14.50 | $95.70 | $298.60 | $1,148.40 |
| $137,001 - $171,000 | $202.90 | $202.90 | $37.50 | $240.40 | $443.30 | $2,884.80 |
| $171,001 - $205,000 | $202.90 | $324.60 | $60.40 | $385.00 | $587.90 | $4,620.00 |
| $205,001 - $499,999 | $202.90 | $446.30 | $83.30 | $529.60 | $732.50 | $6,355.20 |
| $500,000 or more | $202.90 | $487.00 | $91.00 | $578.00 | $780.90 | $6,936.00 |
How to read the table: Start with your 2024 MAGI, then read across. Total IRMAA extra is the surcharge. Extra / year is that surcharge for 12 months. Total you pay / month is the standard Part B premium plus IRMAA.
Couples: the income brackets use your joint MAGI, but each spouse on Medicare pays the IRMAA separately. If both of you are on Medicare, use the last column for the household extra.
Real-world example
If your regular retirement income is $75,000 and you withdraw $95,000 from a traditional IRA to cover care, your income jumps to roughly $170,000. That can land a single filer in the third IRMAA bracket and add about $4,620.00 extra for the year.
How a large IRA withdrawal triggers IRMAA
Annual Medicare Part B cost by IRMAA tier
The numbers add up fast — and that is just for one person
Scenario A: Single person, 3-year stay, funded from a traditional IRA
- $324,000 in direct care costs over 3 years
- Income spike to roughly $170,000+ during care years
- Third IRMAA bracket at about $4,620.00 extra per year
- About $18,480.00 in IRMAA extra over 4 years
- Potentially $58,000+ in lost investment growth on funds withdrawn early
True total cost can exceed $400,000.
It gets worse if you are married
Most couples have not planned for the two-household problem: one spouse in care and one spouse still paying for life at home. The care bill hits the same tax return as Social Security, pension income, and normal living expenses.
That can push joint income into a bracket where both spouses pay higher Medicare premiums, even though only one of them needs care.
2026 IRMAA brackets: single vs. couple
All dollar amounts are per person, per month unless marked as a yearly total. IRMAA is the extra surcharge. It is not a late-enrollment penalty.
Total IRMAA extra
Part B IRMAA + Part D IRMAA
The monthly surcharge Medicare adds
Extra / year
Total IRMAA extra × 12
What the surcharge costs for the year
Total you pay / month
Standard Part B + total IRMAA
Does not include your Part D plan premium
| 2024 MAGI | Standard Part B | Part B IRMAA | Part D IRMAA | Total IRMAA extra / mo | Total you pay / mo | Extra / year | Both on Medicare, extra / year |
|---|---|---|---|---|---|---|---|
| $218,000 or less | $202.90 | $0.00 | $0.00 | $0.00 | $202.90 | $0.00 | $0.00 |
| $218,001 - $274,000 | $202.90 | $81.20 | $14.50 | $95.70 | $298.60 | $1,148.40 | $2,296.80 |
| $274,001 - $342,000 | $202.90 | $202.90 | $37.50 | $240.40 | $443.30 | $2,884.80 | $5,769.60 |
| $342,001 - $410,000 | $202.90 | $324.60 | $60.40 | $385.00 | $587.90 | $4,620.00 | $9,240.00 |
| $410,001 - $749,999 | $202.90 | $446.30 | $83.30 | $529.60 | $732.50 | $6,355.20 | $12,710.40 |
| $750,000 or more | $202.90 | $487.00 | $91.00 | $578.00 | $780.90 | $6,936.00 | $13,872.00 |
How to read the table: Start with your 2024 MAGI, then read across. Total IRMAA extra is the surcharge. Extra / year is that surcharge for 12 months. Total you pay / month is the standard Part B premium plus IRMAA.
Couples: the income brackets use your joint MAGI, but each spouse on Medicare pays the IRMAA separately. If both of you are on Medicare, use the last column for the household extra.
The part no one plans for
When one spouse needs care, the healthy spouse at home may also get hit with IRMAA. The facility bill and at-home living expenses land on the same return, and both Medicare premiums can rise together.
"Self-funding looks like a simple math problem. In reality, it is four problems at once: the care bill, the tax hit, the IRMAA surcharges that follow you, and the investment growth you gave up. When there are two of you, every one of those problems gets bigger."
How the dominos fall
- You need care after a fall, stroke, or diagnosis.
- You withdraw $95,000 to $110,000 from a traditional IRA to pay for it.
- Your MAGI jumps above the IRMAA threshold.
- Medicare raises Part B and Part D premiums the following year.
- If care continues, the cycle repeats and the penalty can linger after care ends.
What can you do instead?
1. Traditional long-term care insurance
This can protect your IRA from large taxable withdrawals, though premiums and underwriting are the tradeoffs.
2. Hybrid life insurance with a care benefit
These policies can provide either long-term care benefits or a death benefit if care is never needed.
3. Asset-based protection plans
Some plans are designed so distributions for care are not treated like ordinary taxable IRA income, which can help keep MAGI below IRMAA thresholds.
4. Strategic self-funding
If you insist on self-funding, coordinate withdrawals across after-tax accounts, taxable brokerage assets, and IRA balances well before a crisis.
True cost comparison
Estimated total out-of-pocket for a 3-year care event
Why this matters for IRMAA specifically
If your normal retirement income is about $80,000, a $100,000 IRA withdrawal can push you into IRMAA Tier 3 or 4. A properly structured alternative may pay for care without creating that same taxable income spike.
Find out what self-funding would actually cost you
A quick planning conversation can show which IRMAA bracket your current retirement setup could trigger and whether a different strategy would protect more of your money.
Frequently asked questions
What is IRMAA and how does it affect long-term care planning?
IRMAA is an income-related surcharge on Medicare Part B and Part D. A large traditional IRA withdrawal used to pay for care can increase your future Medicare premiums.
Why is this even worse for married couples?
Joint household income can push both spouses into a higher IRMAA bracket, so the spouse living at home may also see higher Medicare costs.
Is self-funding always a bad idea?
Not always, but it needs to be modeled carefully. The issue is not just whether the assets exist; it is how using those assets changes taxes, Medicare premiums, and long-term retirement cash flow.
Tyler Dalton — Licensed Medicare Broker
Tyler helps clients across Alabama evaluate Medicare, IRMAA exposure, and long-term care funding strategies with a focus on practical planning rather than generic retirement projections.