Key Points:
IRMAA Lookback Trap: 2025 capital gain or IRA distribution -> MAGI crosses $112,000 cliff on filed tax return -> 2027 Medicare surcharge erases the entire 3.5% COLA raise before the January check clears.
The $1 Cliff: One dollar over the $112,000 single-filer threshold triggers $1,189 in annual IRMAA surcharges, turning an $876 yearly COLA gain into a net loss of $313 per year
Private Forecaster Risk: If the 2027 Part B premium lands between $216 and $219, as several private forecasters project rather than the Trustees' $209.50 baseline, the Medicare bite roughly doubles and could erase a third of the average retiree's COLA gain
Expanding Exposure: IRMAA surcharges now hit nearly 8% of Medicare enrollees, up from 5% at launch, as three consecutive years of double-digit S&P 500 returns (26%, 25%, 18%) pushed realized capital gains and fund distributions above slowly rising thresholds
A man in Naples will open two letters from Social Security this December. One will tell him he is getting a $73 raise. The other will tell him his Medicare premium just jumped by $99. His January check will be smaller than his December check.
If you sold stock last year, this could be you. If you took a large IRA distribution, this could be you. The sale is done. The tax return is filed. Medicare already has the number.
Nine days from now, on October 14, the SSA announces the 2027 cost-of-living adjustment. Forecasters peg it at 3.5%. The average retiree collects about $2,086 a month right now. A 3.5% bump adds roughly $73. That is the biggest raise since 2023. Fox Business will run the number all morning. Every headline will call it a win. I can't stop thinking about why it isn't one.
Elon’s Warning About Money — Ignore At Your Own Risk
Last year, the richest man on Earth said the quiet part out loud. Elon Musk called the U.S. dollar — in a single word — “hopeless.” But he wasn’t just venting. He was offering a clue to his latest and greatest innovation yet. Now, with the blessing of President Trump and the U.S. Treasury, it’s finally about to go “live.” And investors who move early could see massive gains.
The first bite is the one we all expect. The Medicare Trustees project Part B premiums will climb to $209.50 a month. That is up $6.60 from this year. The increase gets pulled straight from your Social Security check. Not a dime hits your bank account first. The average retiree keeps about $66 of the $73 raise. Not great. But expected. That part is normal. That part is not the story.
I don't think most people realize that Medicare charges a second layer on top of the standard premium. It is called IRMAA. It stands for Income-Related Monthly Adjustment Amount. It is a surcharge. And it is based on your income from two years ago. Not this year. Not next year. Two years back. For your 2027 premium, Social Security looks at your 2025 tax return. The one you filed this past spring. It is done. You cannot change it. You made a trade eighteen months ago. That trade already set the price of your Medicare premium next January. Nobody sends you a heads-up. Nobody calls.
The surcharge works nothing like a tax bracket. With a tax bracket, only the dollars above the line get hit at the higher rate. IRMAA is a cliff. One dollar over $112,000 for a single filer triggers the full surcharge. For a married couple, the line is $224,000. For the entire year. That is $83.70 extra per month for Part B. Plus $15.40 for Part D. Total new surcharge: $99.10 more per month. The COLA raise was $73. The check does not stay flat. It shrinks by $26.10. The raise turns into a pay cut.
Elon Says the ‘S’ Word
Two of the most powerful men in technology, Elon Musk and Sam Altman, cannot stand each other. They have sued each other. They have been at war for years.
But within days of each other, both of them said the exact same peculiar thing: we are living at a tipping point in human history.
They call it "the Singularity."
I expect it will set off an unstoppable technological explosion. And that it will create unimaginable wealth for a small group of people.
For fifty years the idea was science fiction. Now the two men racing to build it say it is already here.
I have connected it all to something Elon could be about to switch on. He calls it his "infinite money glitch."
I lay out what these two men see coming in a short presentation. Watch it immediately.
Here's what worries me. Last year was the perfect trap. The S&P 500 posted close to 18% total return. It was the third straight year of double-digit gains. Three years running. Some rebalanced. Some sold a winner. Some took profits. Some held a mutual fund that paid out capital gains in December. All of them got pushed closer to the line. Or past it. Think about this. Say a retiree pulls in $90,000 from pension and Social Security. He sold $25,000 of VOO shares last year. He cleared the cliff. He paid zero tax on those long-term gains. IRMAA counts them in full. Even muni bond interest counts. Required minimum distributions count. From your 401(k). From your traditional IRA. Say you turned 73 last year. You took your first RMD from a fat retirement account. That alone could have done it. I keep coming back to this. A lot of people crossed that line in 2025. They have no idea what is headed for their mailbox.
You cannot appeal it. I get it. That feels wrong. But Medicare only allows appeals for eight specific life events. Retirement. Divorce. Death of a spouse. Loss of income. A voluntary stock sale is not on the list. Say a man sold Apple shares to help his daughter with a down payment. He cannot file an appeal. The surcharge locks in for all twelve months. And the pool of people getting caught keeps growing. IRMAA was built to hit the top 5% of retirees. It now snares close to 8%. About 5.1 million people paid it last year. The income thresholds creep up slowly. Our portfolios grew faster.
One dollar. That is the number I want you to take to the golf course. One dollar over $112,000 triggers $1,189 in yearly surcharges. Say both spouses are on Medicare. One dollar over $224,000 means $2,378 gone. Not on the marginal dollar. On every premium payment, every month, all twelve months. A retiree at $111,999 pays zero extra. A retiree at $112,001 pays $99.10 a month for the full year. There is no phase-in. There is no warning. There is just the letter in your mailbox this December. The door already closed behind you.
The IRS sent your 2025 income data to Social Security months ago. The letters are being prepared right now. In December you will find two pieces of mail with the same blue logo in the corner. One will say your check is going up 3.5%. The other will say what Medicare is taking back. Two envelopes on the kitchen table. One says raise. One says pay cut. And the stock sale that caused it happened a year and a half ago.
More on this tomorrow.
— American Ledger
