Congress is looking at IRMAA again and a new bill that the GOP is introducing, surprisingly, may be some good news for retirees with primary residencies.
The bill from the GOP, known as the Medicare Protection Act of 2025: IRMAA Home Sale Exclusion Summary which is sponsored by Rep. Kevin Kiley of California is proposing a change to how the Income-Related Monthly Adjustment Amount (IRMAA) is calculated under Medicare Part B and Part D.
Overview:
Under current legislation the income that the government uses to determine IRMAA is practically everything a person has in retirement…even their sale of their primary residency.
The MPA of 2025 is looking to change at least the part that includes the taxable gain from the sale of any primary residency.
Key Provision:
Right now, IRMAA is based on a beneficiary’s Modified Adjusted Gross Income (MAGI) from two years prior. If a retiree sells their home and realizes a large capital gain, that income can increase their MAGI enough to push them into a higher IRMAA bracket, increasing their Medicare premiums for up to two years.
H.R. 3007 amends Section 1839(i)(4)(A) of the Social Security Act to exclude income from the sale of a primary residence (as defined under Section 121 of the Internal Revenue Code) from being counted toward MAGI for IRMAA purposes, effective for tax years beginning on or after January 1, 2025.
Limitations:
- A person can use this only once in their lifetime. If a person has already excluded a home sale under this clause, they cannot do so again.
- Only sales that qualify under Section 121 of the IRC are eligible. This is typically up to $250,000 of gain for individuals or $500,000 for couples.
Impact:
- Protects retirees and others from temporary IRMAA hikes due to a one-time, non-recurring event.
- Encourages housing transitions (e.g., downsizing, relocation) without fear of penalty in Medicare premiums.
- Aligns Medicare income calculations more closely with actual ongoing income.
Who Benefits:
- Retirees selling their long-time home
- Widows/widowers downsizing
- Seniors moving for health or family reasons
Conclusion to Congress is looking at IRMAA:
If the MPA of 2025 passes retirees will be able to realize the gains in their homes without their health costs increasing too. This will promote greater financial fairness and planning flexibility for older middle-income Americans.
