You Have Less Than Two Months to Act on a Choice That Could Affect Your Social Security

A few hundred dollars can make a meaningful difference in retirement, so it is especially frustrating when higher Medicare premiums chip away at that money.

For some retirees, the culprit is IRMAA, an added Medicare charge for people with higher incomes. It can increase monthly premiums by hundreds of dollars, and because those premiums are often deducted directly from Social Security, the result can be a smaller check than expected.

With Medicare open enrollment nearing its end, it is a smart time to review your coverage and look for ways to save in retirement. Understanding IRMAA is part of that process, including how it works and whether it applies to you.

How IRMAA can reduce the amount you receive from Social Security

IRMAA stands for Income-Related Monthly Adjustment Amount. It is an extra charge that raises Medicare Part B and Part D costs when your income is above certain thresholds.

Since Medicare premiums are typically deducted from Social Security benefits, IRMAA can leave you with less cash each month. Your Social Security benefit is not actually lowered, but Medicare takes a larger share before the rest reaches you.

Social Security generally looks at income from two years earlier to determine whether IRMAA applies and how much you will owe. The basic rule works like this:

• For 2026: Medicare costs are generally based on the income shown on your 2024 tax return.
• For 2027: Your 2025 tax return generally determines whether you pay extra and how much.

That means even if your earnings are lower now than they were a couple of years ago, you could still be paying higher Medicare premiums based on your earlier income.

How much more Medicare could cost in 2026

The standard Medicare Part B premium is $202.90 a month in 2026, but people whose 2024 income was above certain levels may pay much more. For a single filer, Part B costs are roughly as follows:

• $109,000 or less: $202.90, with no surcharge.
• Over $109,000 to $137,000: About $284.
• Over $137,000 to $171,000: About $406.
• Over $171,000 to $205,000: About $528.
• Over $205,000 to under $500,000: About $649.
• $500,000 or more: About $690.

For married couples filing jointly, the first surcharge begins when combined income passes $218,000, and the highest tier starts at $750,000.

You may also pay an extra $15 to $91 a month for Medicare Part D, depending on income. For retirees in the highest bracket, the added Part B costs alone can reach nearly $6,000 a year.

A high-income year can lead to higher premiums later

When Social Security determines whether IRMAA is owed, it considers income from several sources, including:

• Wages and pensions
• Withdrawals from traditional IRAs and 401(k)s
• Interest, dividends, and capital gains
• The taxable portion of Social Security benefits

Even if your usual income is not especially high, a year with unusual gains could push you above an IRMAA threshold. For example, selling property for a profit or converting a traditional IRA to a Roth account could lead to higher Medicare premiums two years later, after the money is already gone.

Losing a spouse can also increase what you pay, because moving from a joint return to filing as a single person usually comes with much lower income limits. That can place you in a higher IRMAA bracket even if your income has not changed much.

How open enrollment can still help lower Medicare costs

The open enrollment period gives you a chance to change Medicare coverage for the following year. However, your IRMAA surcharge is generally tied to your income from two years earlier, so choosing a cheaper plan will not reduce that added charge. If your income has fallen because of a qualifying life event such as marriage, you may be able to ask Social Security to review the surcharge separately.

Comparing Part D or Medicare Advantage plans can still produce savings, since premiums and out-of-pocket costs can vary widely. Be sure to weigh prescription and doctor costs too, not just the monthly premium.

Ways to reduce an IRMAA surcharge

If your income has dropped because you retired or went through another qualifying life change, you may be able to have your IRMAA reduced. Social Security lets you request a lower surcharge by filing Form SSA-44, which asks the agency to use a more recent income estimate instead of your tax return from two years earlier.

You can also try to keep future income below an IRMAA cutoff. Depending on your financial situation, possible strategies include:

• Taking qualified withdrawals from a Roth account
• Making a direct IRA donation through a qualified charitable distribution
• Spreading a large retirement account withdrawal across two tax years

To affect your 2026 income, you would generally need to act by the end of the year, not by the Medicare open enrollment deadline.

The bottom line

The good news is that you may have more control over Medicare costs than you think. Depending on your circumstances, you could qualify for a lower IRMAA surcharge or make changes that reduce what you pay in future years.

Keeping track of how close your income is to an IRMAA cutoff can help you avoid costly mistakes when drawing from retirement savings. And if a little planning means lower Medicare bills, that leaves more of your Social Security check for the things you want to enjoy.

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