Utah · IRMAA and retirement income

Does Inheritance Count as Income for Medicare Premiums?

Usually not — the IRS does not treat an inheritance as income, so a bequest of cash, a house or a life insurance payout cannot raise your Medicare premium. An inherited IRA is the exception, and for Utah retirees inheriting from a parent it is the common one. Here is what counts, what does not, and the ten-year clock that decides how much.

Medicare On Main Data Desk

Published September 11, 2026 · 9 min read · Reviewed by Brian Penner

The call usually comes a few months after the funeral. A daughter in St. George or a son in Logan has just been told that their mother's IRA is now theirs, and somewhere in the paperwork someone mentioned Medicare. "Is this going to raise my premium?" The honest answer has two halves, and people tend to hear only the reassuring one. So here is both.

The short answer, from the IRS

IRS Publication 525 states the rule in one sentence: "In most cases, property you receive as a gift, bequest, or inheritance isn't included in your income." Medicare's income-related surcharge — IRMAA — is set from your modified adjusted gross income, which is your adjusted gross income plus tax-exempt interest. Money that never enters your income cannot enter your MAGI, and money that never enters your MAGI cannot move you across an IRMAA threshold. A bequest of cash, the house in Sanpete County, the brokerage account, the life insurance policy: none of it is income to you when you receive it.

The same paragraph carries the two exceptions. First: "if property you receive this way later produces income such as interest, dividends, or rents, that income is taxable to you." Second, a few lines down under its own heading: "If you inherited a pension or an IRA, you may have to include part of the inherited amount in your income." That second sentence is the whole story for most Utah households, because the largest thing a parent in their eighties leaves behind is very often a traditional IRA or a 401(k) rollover — and every dollar you take out of it is ordinary income in the year you take it.

What Medicare actually looks at

Social Security sets your premium from the most recent tax return the IRS can provide, generally two years back, so an inherited-IRA withdrawal on your 2026 return sets the premium you pay in 2028. The 2026 Part B figures, keyed to 2024 MAGI, are these. The standard premium is $202.90 a month with a $283 deductible; each tier adds a fixed amount on top, and a separate Part D surcharge stacks alongside it.

Source: CMS — 2026 Medicare Parts A & B Premiums and Deductibles (Nov 14, 2025). Per person, per month. Part D income-related amounts are published separately in the same release. CMS says IRMAA affects roughly 8% of people with Part B.

Which inheritances count, and which do not

Sources: IRS Publication 525; IRS FAQ on the sale of inherited property; IRS FAQ on life insurance proceeds; IRS Publication 590-B.

The house row deserves a sentence, because it is where people expect a problem and usually do not find one. The IRS says "the basis of property inherited from a decedent is generally ... the fair market value (FMV) of the property on the date of the decedent's death." Sell your mother's house in Cedar City for roughly what it was worth the day she died and there is little or no gain to report. Hold it five years and sell into a higher market, and the gain from the date-of-death value is capital-gain income in the year of the sale — the same mechanism we described for selling your own house, just measured from a different starting line. Life insurance is the cleanest case of all: proceeds "aren't includable in gross income and you don't have to report them."

The inherited IRA: the ten-year clock

For anyone who is not the account owner's spouse, the rules changed for deaths after 2019, and Publication 590-B states the current version plainly: "The 10-year rule requires the IRA beneficiaries who are not taking life expectancy payments to withdraw the entire balance of the IRA by December 31 of the year containing the 10th anniversary of the owner's death. For example, if the owner died in 2025, the beneficiary would have to fully distribute the IRA by December 31, 2035."

Whether you must also take something out each year turns on one fact about the person who died: whether they had reached their required beginning date, which is age 73 for tax years 2023 and later.

• If the owner died before 73: "no distribution is required for any year before the 10th year." You may take nothing for nine years and everything in the tenth — or spread it however you like.
• If the owner died at or after 73 — the case for nearly everyone inheriting from a parent — you "base your required minimum distributions for years after the year of the owner's death on the longer of" your own single life expectancy or the owner's remaining life expectancy, and the account must still be empty by the tenth year. A minimum comes out every year, and the balance has to be gone by the deadline.

There is a narrower group the ten-year rule does not force: the IRS's "eligible designated beneficiaries" — the "spouse or minor child of the deceased account holder," a "disabled or chronically ill individual," or an "individual who is not more than 10 years younger than the IRA owner or plan participant." A sister inheriting from a brother seven years older is in that group and may stretch withdrawals over her own life expectancy, which spreads the income thinner and keeps each year's MAGI lower. A child inheriting from a parent is not, and takes the ten years. The Roth version of any of this runs on the same emptying clock but without the tax: a distribution "made to a beneficiary or to your estate after your death" is a qualified distribution once the account has passed its five-year mark, so it never touches MAGI.

A Utah example, with the arithmetic shown

Take a single filer in Washington County, retired, with $82,000 of MAGI from a pension, Social Security and some dividends, who inherits a $300,000 traditional IRA from a parent who died at 88. Those two numbers are assumptions chosen to sit near a tier line; everything after them is arithmetic on the CMS table above. Because the parent was past 73, a life-expectancy minimum comes out each year, and the account must be empty by year ten.

Arithmetic on the 2026 Part B tiers in CMS — 2026 Medicare Parts A & B Premiums and Deductibles (Nov 14, 2025); inherited-IRA rules from IRS Publication 590-B (2025) — Distributions from Individual Retirement Arrangements (10-year rule; beneficiaries). Illustrative; Part D surcharges and income tax not included. The $27,000 row assumes the life-expectancy minimum is at or below that amount.

Two things in that table are worth sitting with. The first is the cliff: the difference between $27,000 and $30,000 a year is $3,000 of income and $974.40 of Part B surcharge, every year it repeats. The second is less intuitive. Measured on IRMAA alone, one enormous year — Tier 4, $446.30 a month, $5,355.60 for a single year — costs less than ten Tier 1 years at $974.40 each, about $9,744. That is not a recommendation to take it all at once, because the income tax on $382,000 in a single year dwarfs either Medicare figure, and that calculation belongs with your tax advisor. It is a reason to run both numbers together rather than optimizing the premium by itself.

What you cannot do about it

Two things. You cannot decline the withdrawals to protect the premium — an inherited IRA left untouched past its deadline is a missed required distribution with an excise tax attached, which is a far larger number than any Part B surcharge. And you cannot appeal the premium. Social Security will use a more recent tax year only after one of the life-changing events in 20 CFR § 418.1205 — a marriage, a divorce, a spouse's death, a work stoppage or reduction, the loss of income-producing property, the loss of a pension, an employer settlement — and § 418.1210 says it "will not consider events other than those." A parent's death is a life event, but it is not on the list, and the income it produces is income you chose the timing of. The surcharge stands for the year and drops off when a lower return works through. We covered the appeal mechanics themselves in the SSA-44 post.

A spouse's death is different in almost every respect — a surviving spouse can roll the account into their own IRA, and the filing-status change that follows is its own IRMAA problem. That is a separate post, and so is the widow penalty.

Why this lands in Utah

Utah families are large and long-lived, which is the demographic recipe for this exact question: a retiree in their late sixties, already on Medicare, inheriting a traditional IRA from a parent who lived into their nineties and had been taking required distributions for two decades. The household is often already near the $109,000 or $218,000 line on its own pension and Social Security, and a mandatory ten-year drawdown lands on top of the years when Medicare is measuring. The health side of the ledger cuts the same way here in Grand County, where per CDC PLACES 33.3% of adults live with high blood pressure and 11.2% with diabetes — households that use their Part B and Part D and pay every surcharge dollar on both.

What I would do this year

1. Sort the inheritance by kind. Cash, house, life insurance, brokerage on one list; traditional IRA, 401(k), 403(b) on the other. Only the second list is the Medicare question.
2. Find out when the owner died relative to age 73. That decides whether you take a minimum every year or only by year ten.
3. Find your own line. Estimate this year's MAGI without the inherited IRA and see how far the next tier is. That gap is the room you have each year.
4. Ask the custodian to title it correctly as an inherited IRA and to confirm the deadline year in writing.
5. Take the schedule to your tax advisor with the IRMAA tiers in hand. The withdrawal plan is a tax decision; the premium is one input to it, not the answer.
6. Bring the Medicare questions to us — which tier a given year lands in, what it does to Part D, and whether the plan you are in still fits.

How we know all this: the Medicare On Main Data Desk frames every article with public data. The "isn't included in your income" rule, the interest-dividends-rents exception and the "inherited pension or IRA" sentence are quoted from IRS Publication 525. The 10-year rule and its 2025-to-2035 example, the "no distribution is required for any year before the 10th year" rule for owners who died before their required beginning date, the life-expectancy minimum for owners who died on or after it, the age-73 required beginning date, and the Roth beneficiary and qualified-distribution language are quoted from IRS Publication 590-B (2025). The three eligible-designated-beneficiary categories are from the IRS "Retirement topics — Beneficiary" page. The date-of-death basis rule is from the IRS FAQ on the sale of inherited property; the life insurance exclusion is from the IRS FAQ on life insurance proceeds. The $202.90 premium, $283 deductible, "roughly 8%" figure and every 2026 IRMAA tier and dollar amount are from the CMS fact sheet of November 14, 2025; the two-year lookback is Social Security's published rule; the closed list of life-changing events is 20 CFR §§ 418.1205 and 418.1210 on the eCFR. The worked example's $82,000 base and $300,000 inherited IRA are stated assumptions, not figures from any table, and every dollar that follows them is arithmetic on the CMS tiers. County chronic-condition prevalence is CDC PLACES County Data 2023. No investment, annuity or financial product is named or recommended; no carrier is endorsed. This is education, not tax, legal or investment advice — the withdrawal schedule belongs with your tax advisor, and Medicare premium questions with a licensed agent or Medicare.gov.