Many Americans overlook healthcare expenses when planning for retirement, which can result in unexpected financial burdens and reduced peace of mind.
When planning for retirement, you may assume your monthly Medicare premiums are accounted for. However, many retirees are surprised by the Income-Related Monthly Adjustment Amount (“IRMAA”), a Medicare surcharge that can significantly increase their monthly expenses. Failing to prepare for IRMAA is just one of several common retirement planning mistakes.
Each year, IRMAA is recalculated based on your modified adjusted gross income (“MAGI”) from two years earlier. If you retire at 65, your Medicare Part B and Part D premiums are determined by your income at age 63. In CY 2026, the surcharge applies to single filers with income above $109,000 and joint filers with income above $218,000.
While individual situations vary, in CY 2026, a single person with a MAGI above $109,000 and who is enrolled in Medicare Parts B and D will pay at least $1,148 more per year for coverage.
If you owe IRMAA, you will receive an “Initial IRMAA Determination” notice around December for the upcoming calendar year or, if you enroll mid-year, you will receive it after you enroll in Part B and obtain coverage for Part D. Approximately 6 million seniors, or nearly 10% of all Medicare recipients, are impacted by IRMAA, so there is a sizable chance you may be required to pay this surcharge.
There is good news, however. You may appeal the IRMAA determination. Certain changes can qualify you for a reduction or total removal of the surcharge. If you have experienced a “life-changing event,” such as a significant income change or death in the past two years, complete form SSA-44 and forward it to the Social Security Administration. This may allow you to keep more funds for your healthcare needs.
Bottom line: take time to review your healthcare coverage options to prevent medical expenses from depleting your retirement savings. The agents at MPC Insurance will be happy to review your case and assist you in understanding the impact of IRMAA.
