Asaf Fulks, Esq. | Asaf Fulks Law
Published: April 2026
The Problem Everyone Talks About
If you hold Bitcoin and you’re approaching Medicare age, you’ve probably heard some version of this warning: a large Bitcoin sale can spike your Medicare premiums through something called IRMAA — the Income-Related Monthly Adjustment Amount.
The basic mechanic is simple. Medicare uses a two-year lookback on your Modified Adjusted Gross Income (MAGI) to determine your premiums. For IRMAA purposes, MAGI means your adjusted gross income plus any tax-exempt interest income — so yes, your muni bond income counts too. If your income crosses certain thresholds, you pay a surcharge on top of the standard Part B and Part D premiums. For 2026, those thresholds start at $109,000 for single filers and $218,000 for married filing jointly. The thresholds are cliffs, not gradients — exceed them by a single dollar and you pay the full surcharge for that tier.
Two important details that often get lost. First, IRMAA is recalculated every year. A spike in one tax year affects your premiums exactly one time — two years later. If your income drops back down the following year, your premiums return to normal. Second, there are five IRMAA tiers, and the jumps between them are significant. The standard Part B premium in 2026 is $202.90 per month. At the highest tier, it’s $689.90. Part D surcharges add another $14.50 to $91.00 on top of your plan premium.
For Bitcoin holders, this creates a specific problem. Years of holding produce zero taxable events. Then one sale dumps a concentrated capital gain into a single tax year, spiking your MAGI and pushing you into higher IRMAA brackets. A married couple realizing $250,000 in gains on top of $100,000 in ordinary income can see their combined Medicare premiums jump by over $9,000 in a single year.
The conventional advice is to smooth it out: spread sales across multiple years, time them during low-income windows, use tax-loss harvesting to offset gains. That’s not wrong. But it’s incomplete, and in many cases, it’s optimizing for the wrong thing entirely.
The Question Nobody Asks
Here’s what the typical IRMAA planning article won’t say: what if selling the Bitcoin is the mistake, not the timing of the sale?
IRMAA is a known, fixed, one-year cost. The surcharge is painful but bounded. In the worst case for a married couple, you’re looking at roughly $12,000 to $15,000 in additional annual premiums.
Now compare that to the cost of selling Bitcoin to avoid the surcharge. If you sell $250,000 in Bitcoin today to smooth your income, and Bitcoin appreciates 3x to 5x over the following decade — which is entirely consistent with its historical adoption curve — you’ve given up $500,000 to $750,000 in future value to dodge a $9,000 premium hit. That math doesn’t work.
The real framework isn’t “how do I sell Bitcoin tax-efficiently.” It’s “how do I structure my financial life to sell as little Bitcoin as possible, and when I must sell, how do I minimize what leaves my stack?”
Once you adopt that framework, the planning looks very different.
Biting the Bullet: When Paying the Surcharge Is the Smart Move
There are scenarios where deliberately triggering IRMAA in a single spike year is the most rational decision.
Say you need liquidity in a year where Bitcoin is trading at a level you consider undervalued relative to its long-term trajectory. You could spread the sale across three years to stay below IRMAA thresholds — but that means you’re selling Bitcoin in years two and three at what may be significantly higher prices, giving up more sats per dollar of liquidity than if you had just ripped the band-aid off in year one.
Alternatively, you could take the full hit in one year, accept the IRMAA surcharge as a known cost, and keep the rest of your stack intact through the appreciation curve.
The surcharge is a one-time event tied to a single tax year. Because IRMAA is recalculated annually, one spike year means one year of higher premiums two years later — and then it’s over. Your premiums reset the following year if your income comes back down. The Bitcoin you kept, on the other hand, is a permanent addition to your long-term holdings. If you have conviction about where Bitcoin is headed, the calculus often favors paying the surcharge and holding.
The Surviving Spouse Problem
This is the angle that almost nobody in the advisory world addresses, and it’s where IRMAA planning intersects directly with estate planning.
When one spouse dies, the surviving spouse can still file jointly for the tax year in which the death occurred. But the following year, they generally drop to single filing status. There is one exception: if the surviving spouse has a dependent child living with them, they can file as a “Qualifying Surviving Spouse” for up to two years after the year of death, which preserves the married filing jointly thresholds. For most Bitcoin holders approaching Medicare age, dependent children are uncommon — but where they exist, this creates a meaningful two-year buffer. In the more typical case, the IRMAA thresholds for single filers are exactly half the married thresholds — $109,000 versus $218,000. A couple that was comfortably below the joint threshold can find the surviving spouse suddenly hitting IRMAA just from inherited income sources — Social Security survivor benefits, pension income, required minimum distributions — before they even consider touching the Bitcoin.
There is a partial safety valve here. Death of a spouse is a qualifying “life-changing event” under Medicare rules, which means the surviving spouse can file Form SSA-44 to request an IRMAA reduction if their income has dropped. But this only helps if the survivor’s current-year income is actually lower. If the inherited income sources keep their MAGI elevated — which is common — the appeal won’t change the outcome.
Now layer in the inherited Bitcoin itself. This is where estate planning becomes an IRMAA planning tool. Under current law, assets inherited through an estate receive a stepped-up cost basis to fair market value at the date of death. That means if the surviving spouse inherits Bitcoin and sells it at or near the stepped-up value, the realized gain is minimal or zero — which means minimal or no MAGI impact and minimal or no IRMAA exposure. Stepped-up basis isn’t just a tax benefit. It’s an IRMAA shield.
But this only works if the estate plan is structured to deliver the step-up. Is the Bitcoin held in a trust structure that preserves the basis adjustment? Does the survivor have the technical ability to access and liquidate the Bitcoin when needed, or is it locked in a custody arrangement that introduces delays and forces sales at suboptimal times?
Every one of these variables — basis treatment, access, custody, and timing — feeds back into the survivor’s MAGI and their IRMAA exposure. The decisions you make today in your estate plan directly determine the surviving spouse’s Medicare cost structure for years or even decades after your death.
This is not something you can fix after the fact. It has to be designed into the plan from the beginning.
Multisig, Custody, and Forced Timing
The conventional IRMAA advice assumes you can sell whenever you want, in whatever amount you want. That’s true if your Bitcoin is sitting on an exchange or in a single-signature hot wallet. But if you’ve done the smart thing and set up a proper multisig custody arrangement — which you should, especially for generational wealth — your liquidation flexibility may be constrained.
A multisig inheritance structure might require coordination among multiple keyholders. It might involve time-locked transactions. It might depend on a trustee who needs to verify conditions before releasing funds. All of that introduces friction between the decision to sell and the actual execution of the sale, which means you may not be able to do the kind of surgical, year-by-year income smoothing that the standard advice recommends.
Your custody architecture and your tax planning need to be designed together. If your estate plan locks your Bitcoin into a structure that makes gradual liquidation impractical, then your IRMAA strategy needs to account for that constraint — not pretend it doesn’t exist.
The Roth Conversion Collision
There’s a direct conflict that rarely gets discussed: the years immediately before Medicare (roughly 60 to 65) are the ideal window for both Roth conversions and Bitcoin gain realization. Both strategies increase your MAGI. You generally cannot pursue both aggressively without triggering IRMAA.
This creates a sequencing problem. Roth conversions provide long-term tax-free growth and eliminate RMDs for your heirs. Bitcoin gain realization provides liquidity and resets your cost basis. Both are valuable. But doing both in the same year can push you into the highest IRMAA tiers while also generating a large current-year tax bill. And they stack differently for income tax purposes — Roth conversions are taxed as ordinary income, while Bitcoin sales generate capital gains — but for IRMAA, the distinction doesn’t matter. Both increase MAGI the same way.
The solution isn’t to avoid both. It’s to model the tradeoffs explicitly. In some cases, the Roth conversion delivers more long-term value than the IRMAA cost. In other cases, the better move is to prioritize holding Bitcoin, skip the conversion, and let the appreciation do the work. There’s no universal answer — it depends on your specific income projections, your Bitcoin position size, your basis, and your estate plan.
If you’re planning a Roth conversion of Bitcoin held in a Bitcoin IRA, this collision is especially acute. The conversion itself is the taxable event, and the amount is based on fair market value at the time of conversion. Converting during a bull market maximizes your MAGI impact. Converting during a drawdown minimizes it but also means you’re moving fewer sats into the tax-free bucket. These are real tradeoffs that require careful modeling, not generic advice.
Bitcoin-Backed Loans: The “Never Sell” Option
One approach that gets mentioned and then immediately hedged into uselessness by most advisors is borrowing against your Bitcoin instead of selling it.
The concept is straightforward. A loan is not a taxable event. Borrowing against your Bitcoin generates liquidity without increasing your MAGI, which means no capital gains tax and no IRMAA impact. If your thesis is that Bitcoin appreciates significantly over time, then paying interest on a loan while retaining the underlying asset can be mathematically superior to selling — even after accounting for the loan costs.
But this isn’t a risk-free strategy, and the last few years have made that painfully clear. The collapse of multiple centralized lending platforms wiped out borrowers who were overleveraged or who trusted the wrong counterparties. Any serious discussion of Bitcoin-backed loans in 2026 has to address platform risk, conservative loan-to-value ratios, and what happens to the collateral and the loan obligation at death.
That last point — what happens at death — is a legal question, not a financial planning question. If you die with an outstanding Bitcoin-backed loan, your estate needs to either repay the loan or surrender the collateral. How that interacts with your estate plan, your trust structure, and your surviving spouse’s financial situation is something that needs to be addressed in the planning documents themselves. It’s not enough to say “consider a loan.” You need to plan for every outcome of that loan, including the worst ones.
What This All Comes Down To
IRMAA planning for Bitcoin holders is not primarily a tax optimization problem. It’s a conviction problem.
If you view Bitcoin as just another asset in a diversified portfolio, then the conventional advice — spread your sales, smooth your income, stay below the thresholds — makes perfect sense. Optimize the liquidation.
But if you view Bitcoin as a generational store of value on a long-term appreciation trajectory, then the goal shifts. You’re not trying to liquidate efficiently. You’re trying to hold as much as possible for as long as possible, and every planning decision — tax timing, estate structure, custody architecture, Roth conversions, loan strategy — should be evaluated through that lens.
The IRMAA surcharge is a cost. Selling Bitcoin you didn’t need to sell is a much bigger cost. The planning should reflect that.
About the Author
Asaf Fulks is an attorney and the founder of Asaf Fulks Law, a practice focused on intellectual property, digital assets, and civil litigation. He is a solo Bitcoin miner, full node operator, and has over 20 years of experience in technology and digital media. He holds a J.D. magna cum laude and a B.A. in Computer Science.
This article is for informational purposes only and does not constitute legal, tax, or financial advice. Consult with qualified professionals regarding your specific situation.
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