One in Five Workers Over 60 Skip Care Because of Cost — and Side Income Can Lift Medicare Premiums Later

Quick Read

• 21% of workers 60 and older skip medical care because of cost, while extra income intended to help cover those bills can trigger higher Medicare premiums two years later.

• A widow who brings in $20,000 from freelance work on top of $95,000 in MAGI exceeds the $109,000 single-filer limit, adding $1,148 a year in Medicare Part B and D surcharges.

• Deductible SEP-IRA contributions can lower AGI enough to get under the threshold, and Form SSA-44 allows beneficiaries to seek reduced premiums after qualifying life events such as leaving work.

• The biggest 401(k) decisions often get made once and never revisited: when to roll it over, what to keep inside it, and when to start withdrawing money. That is exactly what the report 401k & IRA Tips and Answers was created to explain, and it is free today. (Sponsor)

A recent WTW survey found that 21% of employees age 60 and older delayed or skipped medical care because of cost. Consider a hypothetical 66-year-old widow who starts freelance bookkeeping to pay for dental work and a rising pharmacy bill. The extra income helps this year's budget, but it could also push her Medicare premiums higher later, after those bills are already paid.

Most people with side jobs never face this problem. CMS says income-related surcharges affect about 8% of people enrolled in Medicare Part B. For a single filer, no surcharge applies up to a modified adjusted gross income, or MAGI, of $109,000 in 2026; for joint filers, the cutoff is $218,000. As long as household income remains well below those levels, Medicare does not charge anything extra on side-job earnings. The risk is greatest for people already near the line, and widowhood can move someone into the single-filer category.

Now Available: The 401k Answers Nobody Gives You.

For many Americans, saving in a 401(k) only leads to more retirement questions. Should you roll a 401(k) into an IRA, and when? What happens if the rollover check is made out incorrectly? When do required withdrawals begin, and how much must be taken?

Every Side-Job Dollar Counts Toward Medicare's Income Test

Medicare's surcharge, known as IRMAA, is based on modified adjusted gross income. That figure includes adjusted gross income plus tax-exempt interest, which means even municipal bond income can count. Wages are included in AGI, while freelance income generally counts after business expenses and the deduction for half of self-employment tax. Medicare does not distinguish between money earned for medical expenses and money earned for anything else.

Widowhood can complicate matters further. If her husband died in an earlier tax year and she no longer qualifies for joint or surviving-spouse filing status, she may now be subject to the lower income threshold for single filers. In 2026, that limit is $109,000, compared with $218,000 for married couples filing jointly. Even if much of her retirement income stays the same, she has less room before Medicare's income-based surcharges begin.

Her $20,000 Side Job Could Add $1,148 to Her Medicare Bill

Medicare uses a two-year lookback, so her 2026 tax return would determine her 2028 premiums. CMS has not released 2028 brackets yet, so this example uses 2026 limits for illustration.

Assume her pension, IRA withdrawals and taxable Social Security benefits produce $95,000 in MAGI. That leaves her $14,000 below the 2026 threshold. If her bookkeeping work adds another $20,000 to MAGI after expenses and deductions, her income would rise to $115,000, or $6,000 above the line.

Below the threshold, she pays the standard $202.90 Part B premium plus her Part D plan premium. Under the 2026 brackets, crossing $109,000 would lift her monthly Part B bill to $284.10 and add another $14.50 for Part D. That comes to $1,148.40 in extra annual premiums. Her actual 2028 costs will depend on income limits and surcharge amounts that have not yet been announced.

The Medicare surcharge is separate from the income taxes owed on bookkeeping profits. Social Security reviews income each year, so a temporary jump does not necessarily mean permanently higher premiums. If her 2027 MAGI falls below the applicable limit, she could return to standard premiums in 2029. IRMAA is only one of several Medicare surcharges that can quietly raise retirement costs, and the rest were outlined in a free guide to Medicare's hidden bills.

SSA-44 Relief Requires a Qualifying Life Change

Social Security allows Medicare beneficiaries to request a lower IRMAA after certain life events that reduce income. These can include marriage, divorce, the death of a spouse, stopping or reducing work, losing income-producing property, certain pension changes and qualifying employer settlement payments.

If she shuts down her bookkeeping business in 2027 and her income drops, she may be eligible to have her 2028 premiums recalculated using more current income information. She can ask for a new determination with Form SSA-44. However, simply having a very profitable year does not qualify, and neither does a voluntary IRA withdrawal on its own.

Moves to Make Before December 31

She can keep earning, track her income and review whether she may qualify for IRMAA relief if she later stops working.

Released: 401k & IRA Tips and Answers

(sponsor) 401(k)s are powerful retirement tools, but even experienced savers can make mistakes that quietly cost money for years. Choosing the wrong fund, overlooking small fees, or handling rollover steps in the wrong order can all create long-term damage.

These are exactly the kinds of mistakes 401k & IRA Tips and Answers was created to help prevent. It is a free guide from Fisher Investments covering rollovers, contributions, required withdrawals and the errors that do the most harm to retirement accounts. Learn More Here ›