07/06/2025
By Harlon Pickett | Healthcare Strategist & Founder, Eagle Care Health Solutions
As more Americans choose to work past 65, a quiet but costly issue is surfacing in employer-sponsored health plans: IRMAA, the Income-Related Monthly Adjustment Amount.
While most discussions about IRMAA focus on retirees, employers may be overlooking how this โshadow taxโ affects their high-earning employees who remain on the job after age 65. Especially when Medicare enrollment is encouraged or required by the company.
Most employers donโt even know what IRMAA is until their high-value, 65+ employees come asking why theyโre suddenly paying $ 500 or more each month for Medicare coverage they didnโt request and barely use.
So, hereโs what you need to know: This isnโt just a retiree problem. Itโs a costly and unnecessary burden on your experienced, still-working employees, especially those in leadership, consulting, and specialized roles.
Whatโs IRMAA?
IRMAA is a Medicare surcharge tacked onto Part B and Part D premiums for individuals whose income crosses certain thresholds (starting at $103K single / $206K married in 2025). These surcharges are based on your income two years prior.
For high earners? These premiums can balloon to $500โ$600+ per month, even while theyโre still working, covered by your group plan, and not even using Medicare as their primary insurance.
How Employers Accidentally Create a Problem
Some employers, especially those with self-funded plans, encourage or require employees to enroll in Medicare at 65. Why?
To lower plan premiums
To shift claims risk to Medicare
To avoid high-cost utilization among older workers
I get it. On paper, it makes sense.
But hereโs the catch: Medicare enrollment triggers IRMAA for high earners who are still actively working. They canโt appeal. They canโt delay the cost. And in many cases, Medicare is secondary to your group health plan, which means theyโre paying a premium for coverage they barely use.
Letโs not sugarcoat it: this feels like a penalty for staying in the workforce.
Real-World Example
Letโs say your VP of Ops is 67 and earning $225,000. Your health plan requires her to enroll in Medicare Part B and D.
Hereโs what sheโs now paying monthly:
Base Part B: $185
IRMAA (2025 Tier 3): +$244.60
Part D + IRMAA: ~$110
Total Monthly: ~$530+
Annual Hit: Over $6,000
All while still paying into your group plan and with no access to Medicare subsidies or appeals.
Why This Matters
This isnโt just about dollars. Itโs about retention, equity, and planning:
You may be nudging your best talent out the door by making it more expensive to stay employed.
Most employees (and many HR teams) donโt know this is coming until itโs too late to plan around it.
There are better ways to manage health plan costs without inadvertently penalizing older, high-performing workers.
What Employers Can Do
Review your Medicare policies - For groups with 20+ employees, you are not required to make Medicare primary. Let employees opt-in on their own terms.
Educate employees before age 63 - Remember: IRMAA is based on income from two years prior. Help them time income events, such as bonuses, RSU exercises, and Roth conversions, wisely.
Offer IRMAA-aware planning support - If you're serious about retention and employee wellness, help them understand the financial implications of staying with your company past 65.
Consider Medicare premium stipends - Some employers cover the cost difference, especially for critical leadership roles.
Final Word
Employers often aim to reduce healthcare costs, but without realizing it, they may be offloading those costs onto the very people they want to keep: their experienced, still-working, older employees.
IRMAA isnโt just a retiree issue; itโs a workforce issue. As more Americans work past 65, this is going to get louder.
When you lead with transparency, compassion, and strategic thinking, your workforce and bottom line will thank you.
I talk about this and other difficult to understand issues every day with employers who are trying to do the right thing. If this hits home, letโs start a conversation.
