Talking with clients over the last few months, I’ve noticed a recurring theme: concerns about higher medical premiums and expenses! The United States has one of the highest per capita costs for health care expenses, and yet we don’t seem to be getting the best and most reliable care from our healthcare institutions. As Congress faces another potential shutdown and a decision to be made regarding subsidies for health care, we can expect to face higher costs for our health care plans. For those of you close to retirement or already retired, there’s a critical cost that deserves your attention: the Income-Related Monthly Adjustment Amount, or IRMAA. This surcharge can significantly increase your Medicare costs based on your income from two years prior. Since we’re early in 2026, you have the entire year to implement strategies that will affect your 2028 Medicare premiums, potentially saving thousands of dollars.

Understanding IRMAA

IRMAA is a surcharge added to your Medicare Part B and Part D premiums if your modified adjusted gross income (MAGI) exceeds certain thresholds. Your 2026 premiums are based on your 2024 income, while your 2028 premiums will be determined by decisions you make throughout this year.

For 2026, individuals pay additional monthly premiums at these income levels:

• $109,000 to $137,000: Extra $81.20/month
• $137,000 to $171,000: Extra $202.90/month
• $171,000 to $205,000: Extra $324.60/month
• $205,000 to $500,000: Extra $446.30/month
• Above $500,000: Extra $487/month

For married couples filing jointly, thresholds roughly double. The “cliff effect” means crossing a threshold by just one dollar triggers hundreds in additional annual premiums.

Immediate Relief Available

If your 2026 premiums are higher than expected, you may qualify for relief through an appeal if you’ve experienced a qualifying life-changing event since 2024, including retirement, divorce, death of a spouse, or loss of pension income. File Form SSA-44 with Social Security to request they use more recent income information. We can assist you with this filing.

Key Planning Strategies for 2026

• Project Your Income Early: Calculate your expected 2026 MAGI to identify which IRMAA bracket you’re tracking toward. Reach out to us to determine if modest adjustments could keep you in a lower tier.
• Calibrate Roth Conversions: Calculate exactly how much you can convert while staying within your target bracket. If you’re single with $80,000 of other income, you have roughly $29,000 of room before hitting the first IRMAA threshold. Sometimes paying moderate IRMAA makes sense for long-term tax benefits—just decide intentionally.
• Maximize Qualified Charitable Distributions: If you’re 70½ or older, donate up to $111,000 directly from your IRA to charities. QCDs satisfy RMDs but are excluded from MAGI entirely, reducing IRMAA while supporting causes you care about.
• Harvest Tax Losses Strategically: Harvest losses that reduce MAGI and keep you below thresholds. BFSG conducts tax loss harvesting annually for clients to minimize their taxable gains.
• Time Large Transactions Carefully: Spread capital gains across multiple years to avoid income spikes. For business sales or large asset dispositions, consider installment sales or bunching income into years when you’re already in higher brackets.
• Manage RMD Timing: If you turn 73 in 2026, you can delay your first RMD until April 2027, but you’d then take two RMDs in 2027, potentially creating a larger spike. We can assist you with running the numbers both ways to minimize your total IRMAA exposure.

Multi-Year Perspective

Effective IRMAA management requires thinking several years ahead. If you know 2027 will bring unusually high income, consider accelerating some income into 2026 or deferring other income to 2028 to avoid compounding surcharges.

Your 2026 Action Plan

Review your 2025 tax return to understand your 2027 premiums. If you’ve had a qualifying life-changing event, reach out to us to help you file an IRMAA appeal.

Project your 2026 income, and if you find yourself close to the income levels mentioned earlier, we may be able to help you strategize to stay below the thresholds.

The Bottom Line

IRMAA is manageable with awareness and proactive planning. Early in 2026, you have time to implement strategies that will reduce your 2028 premiums. If you have questions about how IRMAA affects your situation, please Talk With Us!

Disclosure: BFSG does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to BFSG’s website or blog or incorporated herein and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Forecasts are based on current conditions, are subject to change, and may not come to pass. Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy (including those undertaken or recommended by BFSG), will be profitable or equal any historical performance level(s). Please see important disclosure information here.