Some retirees are choosing to never sell their home — and the reason is both logical and grim

But there’s another reason selling might make sense: Many retirees are counting on their home equity to provide financial security in retirement.

Yet, some retirees may choose never to sell, thanks to a little-known Medicare rule. Other retirees may have never heard of it, so they end up with an unexpected bill — only after they’ve sold their home and moved on with life.

Elizabeth Gavino, principal of financial and retirement planning firm Lewin & Gavino, told Fortune that more clients are “getting blindsided” by this issue. “And it’s getting worse.”

It’s called IRMAA. Here’s what you need to know.

How does IRMAA impact your Medicare premiums?

Most Americans know that when you turn 65, you qualify for Medicare. But you may not be aware Medicare comes with a premium surcharge called the income-related monthly adjustment amount (IRMAA) — sometimes referred to as the “Medicare surcharge.”

Here’s how it works: If you make a lot of money one year, your Medicare Part B (for doctor visits and outpatient services) and Part D premiums (for prescription drug coverage) will jump — two years later.

That’s because Medicare bases IRMAA on the modified adjusted gross income (MAGI) that you reported on your tax return two years ago. Surcharges start at $109,000 for individuals and $218,000 for joint filers in 2026.

Being pushed into a higher income tier could mean paying hundreds more each month. For example, in 2026, the standard Part B premium costs $202.90 per month. But if you trigger the surcharge, it can range from $284 to $690 a month.

While Part D prescription drug plans are provided by private health insurance companies — and vary widely — your IRMAA charge will be added to your monthly premium costs.

Selling your home is one way to push yourself into a much higher income tier — even if it’s a one-time income boost.

Home values have increased on average 4.5% per year since 2001, according to Zillow’s Home Value Index. When your home increases in value, you build equity. Depending on the state of the housing market in your region, you could profit from that equity when you sell. You can also borrow against your home equity, too.

While the housing market is cooling in some parts of the country, that’s not the case everywhere. And where home prices continue to rise, retirees may feel trapped.

Gavino told Fortune that a couple in coastal California who bought their home in the early ’90s could potentially see $800,000 to $1.5 million in home appreciation, resulting in $1 million in taxable gains.

What to know before you sell

The first step is actually knowing that IRMAA exists — so you don’t get a shockingly high Medicare bill two years after selling your home.

There are other ways to trigger IRMAA, too. While selling real estate is a big one, any transaction that generates significant income can trigger IRMAA, such as taking distributions from retirement accounts, converting funds in an IRA to a Roth IRA or selling stocks that have appreciated in value.

Before making any moves, it could be worth talking to a financial advisor or a tax professional — maybe both.

When it comes to selling your home, the easiest way to avoid IRMAA is to avoid triggering it in the first place. That can be done by selling your home before you turn 63 (to avoid the two-year lookback window).

Or, you can choose to age in place in your current home, which more retirees are doing these days. Research from Clever Offers found that 61% of boomer homeowners intend to live in their current home for the rest of their lives.