Table of Contents

• Understanding the Two Year Lookback for IRMAA
• Income Thresholds & Surcharge Brackets
• Strategies to Manage Taxable Income
• When to Appeal a Surcharge Determination
• Your 2026 Medicare Planning Checklist
• FAQ

Medicare Planning for High Income Retirees in 2026

Did you know that the federal government determines your 2026 Medicare costs based on the tax return you file this year? For many high earning individuals in the United States, this two year lookback period creates a "stealth tax" that significantly increases monthly healthcare expenses. If you do not monitor your modified adjusted gross income (MAGI) today, you may face much higher premiums when 2026 arrives.

Medicare Part B besides Part D are not flat fee services for everyone. The Income Related Monthly Adjustment Amount or IRMAA, is a surcharge that applies to retirees who earn more than specific limits. Because the Social Security Administration uses tax data from two years prior, your financial decisions in 2024 are the direct foundation for your 2026 Medicare bill.

Understanding the Two Year Lookback for IRMAA

The government uses your 2024 tax filings to set your 2026 Medicare premiums - this delay is a standard part of the system because tax returns for the current year are not but complete when Medicare sets its rates. You must look at your income sources now to avoid surprises later.

Projections indicate the base monthly premium for Medicare Part B will be $202.90 in 2026. People with higher earnings pay this base amount plus an additional surcharge - these surcharges apply to both medical insurance (Part B) and prescription drug coverage (Part D).

Income Thresholds & Surcharge Brackets

The surcharge system uses five distinct income brackets to determine how much extra you owe. For the 2026 plan year, these thresholds begin at a MAGI of $109 000 for single tax filers and $218 000 for married couples who file joint returns. If your income is even one dollar over a bracket limit, you must pay the higher rate for the entire year.

Common events that increase your MAGI include

• Selling a home or investment property for a large profit.
• Converting a traditional IRA into a Roth IRA.
• Taking large withdrawals from tax deferred retirement accounts.
• Selling stocks that have gained significant value.

Strategies to Manage Taxable Income

You can use multiple methods to keep your income below the next IRMAA bracket. Timing is the most important factor in these decisions. If you plan to sell assets or convert retirement funds, you should calculate how those actions affect your 2024 MAGI. You might choose to spread a large withdrawal over two calendar years to stay within a lower bracket.

Another option involves using Qualified Charitable Distributions (QCDs) if you are at least 70.5 years old - these distributions go directly from your IRA to a charity. Because this money does not count as taxable income, it does not raise your MAGI - this helps you meet your required distributions without increasing your Medicare premiums.

When to Appeal a Surcharge Determination

The government allows you to request a new decision if your financial situation changes because of specific life events - this process is helpful if your 2024 income was high but your current income is much lower. You must file Form SSA-44 to start this formal request for a reduction in your premiums.

Valid reasons for an appeal include

• Work stoppage or a significant reduction in work hours.
• The death of a spouse.
• A divorce or the annulment of a marriage.
• The loss of an income producing property because of a disaster.

Your 2026 Medicare Planning Checklist

To prepare for the upcoming changes, you can follow the steps to organize your finances. Taking action now prevents permanent mistakes on your tax record.

• Review your 2024 tax projections to see if you are near an IRMAA bracket limit.
• Consult with a tax professional before you finalize large asset sales this year.
• Document any life changing events that might justify an official appeal.
• Verify your enrollment dates to ensure your income events do not overlap with your start date.

FAQ

What is the base premium for Medicare Part B in 2026?

The base premium is expected to be $202.90 per month - Individuals with high income will pay more than this amount.

Which tax year does Medicare use for 2026 premiums?

Medicare uses your 2024 tax return to determine if you must pay a surcharge in 2026.

Can a Roth conversion trigger IRMAA?

Yes, the amount you convert from a traditional IRA to a Roth IRA counts as taxable income - this increases your MAGI and can move you into a higher surcharge bracket.

How do I notify Social Security if my income drops?

You should use Form SSA-44 if you experience a life changing event - this form allows you to provide evidence that your current income is lower than the income from two years ago.