Medicare's open enrollment window runs from October 15 through December 7 each year. Whatever you change during those eight weeks takes effect January 1.
Most of what gets written about this window covers the same ground. Compare your Part D plan against the prescriptions you take now. Check that your doctors are still in network. Look at whether a Medicare Advantage plan fits your situation better than what you have. That advice is sound, and you should follow it.
For the households we work with, there is a second conversation that doesn’t usually come up during these eight weeks. And it’s often the more expensive one.
The surcharge that catches higher-income households off guard
Above a certain income level, you don't pay the standard Medicare premium. You pay the standard premium plus a surcharge called IRMAA, short for Income-Related Monthly Adjustment Amount. It applies to both Part B and Part D.
What does that look like in 2026? The standard Part B premium is $202.90 a month. The surcharge starts once modified adjusted gross income passes $109,000 for a single filer or $218,000 for a married couple filing jointly. From there it climbs through five tiers, and at the top, the Part B premium reaches $689.90 a month per person. Part D surcharges run from $14.50 to $91.00 a month on top of whatever the plan itself charges. These figures come from CMS, which publishes the following year’s amounts each fall.
Modified adjusted gross income (MAGI) is your adjusted gross income plus any tax-exempt interest. For a married couple with both spouses on Medicare, crossing from no surcharge into the first tier adds about $2,300 to their combined premiums over a full year. The higher tiers cost considerably more than that.
The income that counts is from two years ago
Many people are surprised to learn Medicare doesn't look at what you earn this year; it looks at your tax return from two years earlier.
Your 2026 premium was set by your 2024 income, and the income you generate this year will determine what you pay in 2028.
That lag creates a specific problem for retirees. A single large event, the sale of a property, an unusually large withdrawal, a concentrated position you finally sold, can all raise your premiums two years later, long after the money has been spent or reinvested and the event has faded from memory.
One dollar over a threshold costs you the whole tier
IRMAA doesn't phase in gradually the way income tax brackets do. Cross a threshold by a single dollar and you owe the full surcharge for that tier, for the entire year.
Consider how the 2026 thresholds work. Two married couples both file jointly. Based on their 2024 tax returns, one reports modified adjusted gross income of $217,900; the other reports $218,100. Two hundred dollars separates them. Yet in 2026, the second couple pays roughly $2,300 more than the first couple in combined Part B and Part D premiums over the course of the year. (This example is hypothetical and is used only to show how the threshold behaves.)
That is why this planning should take place in the middle of the year, while there is still room to adjust what your tax return will say.
What tends to push income across the line
Several ordinary retirement events raise modified adjusted gross income:
- Required minimum distributions, meaning the withdrawals the IRS requires you to take from traditional retirement accounts once you reach the applicable age
- Roth conversions
- Realized capital gains from rebalancing or from selling a concentrated position
- The sale of real estate or a business interest
- Deferred compensation payouts
- Municipal bond interest, which counts toward this calculation even though it isn't taxable income
The Roth conversion item deserves a note, because it comes up constantly in our conversations. We wrote earlier this year about modeling your conversion window before your income is locked in. A conversion can still be a sound long-term decision even when it triggers a surcharge two years out. What matters is sizing it while the surcharge is visible as part of the cost, rather than finding out about it later.
For clients who give to charity and are already taking required distributions, a qualified charitable distribution is one of the few tools that satisfies the distribution requirement without adding to modified adjusted gross income. We walked through how those work in an earlier piece on QCDs.
If your income has already come down
The two-year lookback can charge you based on income you no longer have. When the drop came from a qualifying life-changing event, you can ask Social Security to use a more recent year instead. The form is SSA-44, and qualifying events include retirement or reduced work hours, marriage, divorce, the death of a spouse, loss of a pension, and loss of income-producing property.
A Roth conversion or a one-time capital gain doesn't qualify as a life-changing event, so those have to be planned for in advance.
What to review before December 7
Four things to consider putting on the list this fall:
- Your Part D plan, measured against the prescriptions you take today rather than the ones you took when you enrolled
- Whether your physicians remain in network for the coming year
- Where your projected income for this year is likely to land, recognizing that the IRMAA thresholds that will apply to this year's income won't be known until closer to the applicable Medicare premium year
- Any IRMAA determination letter you received this year, and if it reflects income you still have
Why the timing matters
None of this is complicated once someone lays it out for you. It’s mostly a timing problem. The decisions that set your Medicare premium happen two years before the bill arrives, and by the time the letter shows up in the mail, the window to adjust anything has already closed.
Coordinating that kind of timing is part of what we do in ongoing financial planning and wealth management at FWM. As an independent, fee-only fiduciary firm, we don't earn commissions or sell products. Our job is to look at your whole situation and give you honest guidance in your best interest.
If you'd like a second set of eyes on where your income is likely to land this year, a short call is an easy place to start.
Common questions about Medicare premiums and IRMAA
When is Medicare open enrollment?
It runs from October 15 through December 7 every year, and changes you make during that window take effect January 1. A second window, Medicare Advantage Open Enrollment, runs January 1 through March 31 and allows a narrower set of changes for people already enrolled in a Medicare Advantage plan.
What is IRMAA?
Meaning Income-Related Monthly Adjustment Amount, IRMAA is a surcharge added to your Medicare Part B and Part D premiums once your income passes a set threshold. It works on a sliding scale with five tiers, and it applies for the full year once you land in a tier.
How does Medicare decide whether I owe the surcharge?
Social Security looks at the modified adjusted gross income reported on your tax return from two years earlier. Your 2026 premium was based on your 2024 return. Modified adjusted gross income is your adjusted gross income plus any tax-exempt interest.
What are the 2026 income thresholds?
The first surcharge tier begins at $109,000 of modified adjusted gross income for single filers and $218,000 for married couples filing jointly. The tiers continue upward from there and top out at $500,000 and $750,000. CMS publishes the following year's thresholds each fall.
Does a Roth conversion raise my Medicare premiums?
It can. A conversion adds to your modified adjusted gross income for the year you do it, which can move you into a higher tier two years later. Conversions can still be a sound long-term decision. The size of the conversion is what calls for modeling before you commit to it.
Does municipal bond interest count toward the threshold?
Yes. Tax-exempt interest is added back when Medicare calculates modified adjusted gross income, even though it isn't subject to federal income tax. This surprises people who assume municipal bonds sit outside the calculation entirely.
Can I appeal an IRMAA determination?
You can ask Social Security to use a more recent tax year if your income dropped because of a qualifying life-changing event. The form is SSA-44. Qualifying events include retirement or reduced work hours, marriage, divorce, the death of a spouse, loss of a pension, and loss of income-producing property. A one-time capital gain or a Roth conversion doesn't qualify.
Rocklin Senavinin, CFP®
Fiduciary Wealth Management, Little Rock, Arkansas
Fiduciary Wealth Management is an independent, fee-only fiduciary advisory firm. This article is for informational purposes only and does not constitute tax, legal, or investment advice. Medicare premium amounts and income thresholds are set annually by CMS and are subject to change. Please consult a qualified tax professional regarding your specific situation.
About Roc
With over 20 years of experience in the financial planning industry,Rocklin Senavinin, CFP®, has dedicated his career to helping individuals live comfortably in retirement and enjoy the assets they have spent their career building. He is co-founder of Fiduciary Wealth Management, a fee-only registered investment advisory firm in Little Rock, Arkansas. As a CERTIFIED FINANCIAL PLANNER® professional, he has advanced training in the holistic process of creating a personal financial plan that addresses a person’s comprehensive needs for the short and long term. To learn more, connect with Roc on LinkedIn or visitwww.fidwm.com. If you have questions, feel free toschedule a phone call using this link.
DISCLOSURES
The views expressed represent the opinions of Fiduciary Wealth Management, LLC and are subject to change. These views are not intended as a forecast, a guarantee of future results, investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial, or legal advice or service to any person.
Additional information about Fiduciary Wealth Management, LLC is also available on the SEC’s website at https://www.adviserinfo.sec.gov/Firm/284324. Please call or email with questions.