IRMAA and Medicare Planning for Dentists: The Practice Sale Surcharge Nobody Warns You About

A dentist in her early 60s sells her practice for $1.4 million after 28 years. It's the biggest financial event of her life — well-executed, well-advised. She retires to Medicare and expects to pay the standard premium. Two years later, Social Security notifies her that her Medicare Part B premium will be $689.90 per month instead of $202.90. Her husband, also on Medicare, gets the same letter.

The practice sale income, realized in 2024, is triggering 2026 IRMAA surcharges. For two years, this couple will pay an extra $11,688 per year just for Medicare Part B — before factoring in Part D drug coverage surcharges. And there's nothing to do about it retroactively.

IRMAA — the Income-Related Monthly Adjustment Amount — is the Medicare premium surtax that applies when your income exceeds certain thresholds. It is calculated based on income from two years prior. For dentists, this creates a specific and largely avoidable problem: the income spike from a practice sale, DSO buyout, or high-earning peak year can lock you into top-tier Medicare surcharges for the next two years. Most dentists don't learn this until the bill arrives.

How IRMAA works: the two-year lookback

Every year, the Social Security Administration reviews your Modified Adjusted Gross Income (MAGI) from your federal tax return filed two years earlier.¹ That income determines what you pay for Medicare Parts B and D for the current year.

• Your 2026 Medicare premiums are based on your 2024 MAGI (the tax return filed in spring 2025)
• Your 2027 Medicare premiums are based on your 2025 MAGI
• If you sell your practice in 2024, both 2026 and 2027 are potentially affected — but 2027 only if your 2025 income also lands in a high bracket

There is no blending, no proration, and no credit for the fact that the income was a one-time event. A dollar over the threshold is a dollar over — the surcharge applies to the entire year's premium.

2026 IRMAA brackets: what each tier costs

The 2026 IRMAA surcharges are applied on top of the standard $202.90/month Part B base premium.² The thresholds below are based on 2024 MAGI reported to the IRS.

Sources: CMS 2026 Medicare Part B premium ($202.90 base per CMS newsroom); IRMAA income thresholds per SSA POMS HI 01101.020 (updated December 2025); mid-tier premium amounts computed from CMS Part B cost-sharing percentages (35/50/65/80/85% of program cost). Verified May 2026.

Part D IRMAA: the hidden add-on

If you have Medicare prescription drug coverage (Part D), IRMAA applies there too — as an additional monthly surcharge on top of whatever your plan's own premium is.³

At the top bracket, a couple both on Medicare pays an extra $182/month in Part D surcharges alone — on top of their actual Part D plan premiums and the Part B surcharges above.

Why dentists face outsized IRMAA risk

Most high-income professionals have relatively stable earnings — a surgeon earning $600K/year stays in the same IRMAA bracket year after year. Dentists who own practices face a different pattern:

Practice sale creates a one-time income spike. A dentist netting $300K/year from practice income might sell their practice for $1.2M in goodwill and assets. That's $1.2M of additional taxable income in a single year — on top of any salary or distributions from the practice during the transition period. Even with installment sale structures (discussed below), large one-time cash events push MAGI into IRMAA territory.

DSO cash-out transactions concentrate income. When a dentist sells to a dental service organization and receives a significant cash portion of the deal upfront, the same MAGI spike occurs. Rollover equity defers some of the income (IRC §721 exchange in an LLC structure), but the cash component is immediately taxable.

Peak earning years in your 50s land near Medicare eligibility. A dentist who starts Medicare at 65 and was earning $450K/year in practice income at 63 may find themselves in IRMAA territory right from the start — even before any sale event.

What it actually costs: real dentist scenarios

Scenario 1: Married couple, practice sale in 2024

A general dentist (age 63) sells their practice in 2024. The practice had a tax basis of $150K; it sells for $1.3M. After allocations, most of the goodwill qualifies for long-term capital gains rates, but total taxable income for 2024 (including practice income during the transition and sale proceeds) is approximately $1.4M MAGI.

Both spouses are 66 and enrolled in Medicare when 2026 IRMAA applies.

This is $27,744 of additional Medicare cost that wouldn't exist if the same sale had been structured to keep 2024 MAGI below $750,000 MFJ. An installment sale spreading proceeds over three years, for example, could hold each year's income below the top bracket — potentially saving $15,000–$20,000 in total IRMAA premiums.

Scenario 2: Single dentist, peak earning year

A single dentist age 65 is still running a high-volume implant practice, collecting $850K/year with $420K in net personal income. Their 2024 MAGI lands at $440K — well into the fourth IRMAA tier ($206K-$500K).

• Part B premium: $649.30/month vs. $202.90 base → extra $5,357/year
• Part D surcharge: $83.90/month → extra $1,006.80/year
• Total extra: ~$6,364/year — every year until income drops below $206K

For this dentist, the planning question is whether reducing practice income by adjusting compensation — timing retirement contributions, maximizing a cash balance plan contribution — could hold MAGI below a lower bracket. Each bracket drop saves thousands annually, compounding as long as the bracket holds.

IRMAA mitigation strategies for dental practice owners

1. Installment sales

An installment sale (IRC §453) lets you report gain in the year payments are received, not all in the year of sale. A $1.2M goodwill sale can be spread over 3–5 years, turning a single $1.2M income spike into $240K-$400K/year tranches. Depending on your total income and where those tranches land in the IRMAA brackets, the premium savings over two years can rival the interest cost on the deferred payments.

Important: not all practice sale income can be installment-reported. Ordinary income components (equipment recapture under IRC §1245, certain covenant payments) may be front-loaded. Goodwill and personal goodwill are the installment-eligible portions. Work with both a tax advisor and a financial advisor to model the IRMAA impact of each payment structure before signing.

2. Pre-sale Roth conversions (the window before the income spike)

In the years before a planned practice sale, a dentist's income may be at a predictable level — high but not stratospheric. This is often the best window for Roth conversions: filling up lower brackets before the sale-year income spike pushes everything to the top. After the sale closes and income normalizes in retirement, the IRMAA lookback from the sale year has already burned through; future Roth distributions create no MAGI and no IRMAA exposure.

See the Roth conversion guide for dentists for bracket-filling mechanics and timing considerations.

3. Timing the sale to a low-income year

If a dentist is planning to retire in 2026, choosing to close the practice sale in early 2025 rather than late 2024 shifts the income to 2025 MAGI — which affects 2027 Medicare premiums rather than 2026. The total IRMAA exposure is the same, but it lands in different years. This can matter if a spouse's Medicare eligibility starts later, or if other deductions are more advantageous in 2025.

4. Cash balance plan contributions in the final years

An age-70 dentist can contribute $250,000–$290,000 per year to a cash balance plan, directly reducing MAGI. In the 2–3 years before a practice sale, maximizing retirement contributions reduces the income base — which in turn affects IRMAA for those years. This won't eliminate the sale-year spike, but it reduces the pre-sale bracket level.

See the cash balance plan guide for contribution limits and eligibility requirements.

5. QBI deduction and entity structure

The IRC §199A QBI deduction (permanently extended by OBBBA 2025) allows qualified business income to be deducted at 23% for dentists operating as pass-through entities. This deduction reduces taxable income but does NOT reduce MAGI — MAGI is calculated before the QBI deduction. So QBI deduction planning does not help with IRMAA directly, though it does help with income tax.

The IRMAA appeal: life-changing events (SSA-44)

Social Security allows IRMAA to be reduced prospectively when a "life-changing event" has caused a significant income drop since the two-year-prior return was filed.⁴ Qualifying events include:

• Retirement or reduced work hours
• Death of a spouse
• Divorce or annulment
• Loss of income-producing property (involuntary)
• Loss of pension income
• Employer settlement payment

The catch: "Retirement" as a qualifying event means the beneficiary has stopped working — not merely that they had a high-income year due to a practice sale. The SSA will typically look at whether your current income (the year you're filing the appeal, not the lookback year) is materially lower than the MAGI that triggered the surcharge.

This matters for dentists in a specific way: if you sold your practice in 2024 and retired in 2024 (or 2025), you can file SSA-44 to request IRMAA be recalculated using your current (lower) income. If the SSA agrees that your income is now substantially reduced — which it will be, since you're no longer drawing practice income — they can recalculate using estimated current-year income instead of the 2024 lookback.

The appeal doesn't automatically succeed, and the income provided must be documented (often via an amended return or income estimate). But for dentists who retired cleanly in the same year as the practice sale, SSA-44 can eliminate much or all of the IRMAA surcharge within months of filing.

IRMAA and Medicare Advantage plans

IRMAA applies to Part B and Part D separately. If you enroll in a Medicare Advantage (Part C) plan instead of Original Medicare, you still owe the IRMAA Part B surcharge — it's collected regardless of what plan type you choose. If your Advantage plan includes drug coverage, the Part D IRMAA applies there too. There is no Medicare Advantage structure that avoids IRMAA.

Planning IRMAA alongside practice sale tax planning

The practice sale conversation typically focuses on capital gains rates, installment sale vs. lump sum, asset vs. stock sale structure, and the personal goodwill strategy. IRMAA should be modeled alongside these — because decisions that are tax-optimal under an income tax lens may still trigger significant IRMAA costs that partially offset the savings.

Example: a lump-sum sale that generates $1.4M MAGI may be entirely taxed at the favorable 20% + 3.8% NIIT rate. But the same transaction triggers $27,744 of IRMAA over two years for a married couple. An installment sale generating $600K/year over two years, taxed at the same 23.8% rate, avoids the top IRMAA bracket — potentially saving $15,000+ in Medicare premiums. The IRMAA impact belongs in the net-proceeds model alongside the income tax calculation.

See the practice sale tax guide for asset sale vs. stock sale mechanics and goodwill allocation strategy.