A Roth Conversion Can Raise Your Medicare Premiums. Retirement Can Support an Appeal, but the Conversion Cannot.

Stopping work and making a Roth conversion in the same year may seem like a fresh start, but Medicare treats those events differently. For many people who request an appeal, only the retirement part can reduce a surcharge.

A Roth conversion adds the converted amount to your income for that year, and Medicare later uses that income to determine premiums. Some people convert in the same year they leave the workforce and assume Social Security’s appeal process will erase any added charge. It will not eliminate the conversion income.

Conversion Income Counts Toward Medicare’s Income Test

Under the tax code, money shifted from a traditional IRA to a Roth IRA is included in gross income to the extent it would be includible if it were not a qualified rollover contribution (26 U.S.C. § 408A(d)(3)(A)(i)). Treasury treats the converted amount as a distribution from the traditional IRA and a qualified rollover contribution to the Roth IRA, even when the transfer happens trustee to trustee (26 CFR 1.408A-4(c)). IRS Publication 17 for tax year 2025 says that part or all of the conversion contribution from a traditional IRA is included in gross income.

Medicare’s income-related monthly adjustment amount, or IRMAA, is based on modified adjusted gross income, which is adjusted gross income plus tax-exempt interest income. Social Security generally relies on the most recent tax information available from the IRS, usually from two years earlier. As a result, premiums are typically based on tax returns from two years prior, and a conversion done in one year usually affects premiums two years later.

Surcharges Increase Quickly Above the First Threshold

The standard Part B premium is $202.90 a month. CMS says income-related adjustments affect about 8% of Part B enrollees. The 2026 levels are shown below:

Retirement Can Support an Appeal. A Conversion Cannot.

After a life-changing event, Social Security allows you to request a new determination using a more recent tax year. The optional Form SSA-44 is used for that request. Federal rules list the qualifying events: the death of a spouse; marriage; divorce or annulment; you or your spouse stopping work or reducing hours; certain losses of income-producing property not caused by you; scheduled cessation, termination or reorganization of an employer pension plan; and certain employer settlements. A voluntary Roth conversion is not included. A revised determination also uses the more recent year’s MAGI, which includes any conversion income.

A Hypothetical Couple Shows Where the Appeal Stops

Example household: a married couple filing jointly, both enrolled in Part B and Part D.

• 2024 income: $200,000 of wages plus $100,000 of pension and investment income equals $300,000 of MAGI. That places them in the 2026 joint band above $274,000 and up to $342,000: $405.80 a month each for Part B, plus a $37.50 Part D adjustment each.
• 2026 events: both stop working in January, which qualifies as an appeal event, and they convert $200,000.
• Appeal estimate: $100,000 + $200,000 = $300,000. The wages disappear, but the conversion replaces the missing income. They remain in the same band, so the appeal makes no difference.
• Smaller conversion: $100,000 + $100,000 = $200,000, which is below $218,000. The appeal lowers each spouse to $202.90.

For the larger conversion, the 2026 cost is clear. The Part B surcharge is $202.90 times 12, or $2,434.80 per person. For two people, that is $4,869.60. Part D adds $37.50 times 12 times 2, or $900. The total is $5,769.60. No matter how much they convert, the amount also appears on the tax return that generally sets later Medicare premiums. The next set of premium levels has not yet been released.

Planning Conversions Around a Threshold

In this example, the couple has $218,000 minus $100,000, or $118,000, of room before reaching the joint threshold. Each level acts like a cliff. Under CMS’s wording, income above $218,000 triggers the full first-tier surcharge, so being over by $1 can cost the same as being over by much more. It is wise to leave room for year-end fund distributions, capital gains and tax-exempt interest, all of which count toward MAGI.

Weighing a One-Time Surcharge Against Long-Term Tax Savings

A surcharge in a single premium year is a fixed and known cost. That should be compared with the taxes you may save over the years when Roth assets grow tax-free. Conversions often make sense for people who:

• Expect to be in the same or a higher tax bracket later, including after required distributions begin
• Can pay the conversion tax from money outside the IRA
• Have a long time horizon or want to leave the account to heirs

They are usually less suitable for people who:

• Expect to be in a lower bracket in retirement
• Would need to use IRA money to pay the tax
• Need the money soon
• Would remain above a higher premium tier year after year because of repeated large conversions

Appeal Deadlines and Future Premiums

If a Social Security notice uses working-year income to set your premium, an SSA-44 filed for the year you stopped working can remove wages from the calculation. The adjustment generally does not reach back to a prior premium year. The exception is when the event occurred in the last three months of that year, in which case the form must be filed by March 31 of the current premium year. The latest figures were released in November, and updated levels are issued each fall. Review the newest numbers before planning a conversion, because no appeal will remove conversion income.