As Medicare recipients plan and budget for healthcare expenses next year, the common question is, “What will Medicare cost.” And no wonder. The cost of healthcare for America’s senior citizens is out of control. According to a report from RBC Wealth Management , the projected lifetime cost of care for an average 65-year-old couple is $683,306—and that doesn’t factor in long-term care costs, which could be upwards of $100,000 a year.

 

Medicare premiums and out-of-pocket expenses are projected to take a big jump in 2026 from higher Part B and Part D costs to bigger deductibles.

 

Part B

According to the Centers for Medicare and Medicaid Services (CMS), the standard monthly Part B premium is expected to be $206.50, up from $185 in 2025. That’s an 11.6% increase, the largest jump folks on Medicare have seen in several years. Deductibles and other out-of-pocket expenses are also projected to rise. Part B’s annual deductible could climb from $257 to $288.

 

Part D

Part D coverage, offered by private insurers, is also expected to be more expensive.

  • The base beneficiary premium is estimated to rise 6%, from $36.78 to $38.99.
  • Deductibles are increasing from $590 to $615
  • The catastrophic coverage threshold is rising from $2,000 to $2,100

 

Why?

  • A rising demand for healthcare as more Americans become eligible for Medicare
  • Growing expenses for hospital and outpatient care
  • Increasing drug prices
  • A steady Medicare payroll tax rate that hasn’t kept pace with program costs

 

Income-related monthly adjustment amount (IRMAA)

The other Medicare number of interest is the income-related monthly adjustment amount (IRMAA). High-income households pay an extra charge on top of the standard Medicare premium. IRMAA can apply to either Medicare Part B or Medicare Part D premiums or both. If you fall into one of the high-income categories, you’ll be notified by the Social Security Administration (SSA). The IRMAA notification from SSA might happen when you first apply for Medicare, but it can be triggered any time after your initial Medicare enrollment if your income exceeds the threshold.

 

The IRMAA applies to all Medicare beneficiaries whose earnings fall within the IRMAA brackets, including people on Medicare Advantage. Additionally, if you have a Medicare Advantage plan that includes prescription drug coverage, the Part D IRMAA also applies.

The IRMAA is calculated on a sliding scale with five income brackets, topping out at $500,000 for individual filing and $750,000 for those married filing jointly.

 

There is a two-year lookback for IRMAA. For example, if your income as reported on your tax return from 2024 fell into the high-income category, you would pay IRMAA on 2026 Medicare monthly premiums.

 

What determines IRMAA

  1. Modified Adjusted Gross Income (MAGI) from 2024

Modified Adjusted Gross Income is:

  • Adjusted Gross Income (AGI), which includes your total gross income from all sources. For retirees that includes taxable distributions from traditional IRAs, 401(k)s and 403(b)s, capital gains, dividends, interest, and the taxable portion of Social Security.
  • Plus, all non-taxable interest, usually from municipal bonds.

 

  1. Inflation

The IRMAA brackets are adjusted every year based on the inflation number from the CPI-U, the Consumer Price Index for All Urban Consumers. The indexing is determined by how much the average CPI-U has changed from August of one year to the next August.

 

The Medicare Trustees Report projects the Part B surcharges to increase by 1.04% and Part D surcharges may increase by almost to 6%.

 

2026 Projected IRMAA Brackets and Surcharges for Medicare Part B with IRMAA adjustment
Single Married filing jointly Projected total Part B Premium plus IRMAA Projected 2026 Part B IRMAA only 2025 Part B IRMAA only
Less than or equal to $109,000 Less than or equal to $218,000 $206.50- no surcharge n/a n/a
More than $109,000 and less than or equal to $137,000 More than $218,000 and less than or equal to $274,000 $289.10 $82.60 $74.00
More than $137,000 and less than or equal to $171,000 More than $274,000 and less than or equal to $342,000 $413.00 $206.50 $185.00
More than $171,000 and less than or equal to $205,000 More than $342,000 and less than or equal to $410,000 $536.90 $330.40 $295.90
More than $205,000 and less than or equal to $500,000 More than $410,000 and less than or equal to $750,000 $660.80 $454.30 $406.90
More than $500,000 More than $750,000 $702.10 $495.60 $443.90

 

 

 

2026 Projected IRMAA Brackets and Surcharges for Medicare Part D with IRMAA adjustment
Single Married filing jointly Projected total 2026 Part D Premium plus IRMAA 2025 Part D IRMAA only
Less than or equal to $109,000 Less than or equal to $218,000 Premium only (varies) n/a
More than $109,000 and less than or equal to $137,000 More than $218,000 and less than or equal to $274,000 Premium + $14.50 $13.70
More than $137,000 and less than or equal to $171,000 More than $274,000 and less than or equal to $342,000 Premium + $37.50 $35.30
More than $171,000 and less than or equal to $205,000 More than $342,000 and less than or equal to $410,000 Premium + $60.40 $57.00
More than $205,000 and less than or equal to $500,000 More than $410,000 and less than or equal to $750,000 Premium + $83.30 $78.60
More than $500,000 More than $750,000 Premium + $91.00 $85.80

 

IRMAA is not a one-time event. Social Security reviews your income every year to see if you will be required to pay the IRMAA surcharge. The annual review of your income continues as long as you do.

 

If you are married filing jointly and your MAGI exceeds any of the Medicare income thresholds and both spouses are on Medicare, then both will be required to pay the IRMAA penalty.

 

Paying IRMAA

Just like your monthly Part B premium, IRMAA surcharges are deducted from your Social Security check If you’re already enrolled in Social Security. If you’re on Medicare but not receiving Social Security yet, you’ll receive a quarterly invoice from the Centers for Medicare & Medicaid Services (CMS). You can pay the bill online by using a secure Medicare account you set up at Medicare.gov, or you can use your bank’s bill pay service.

 

Income planning to avoid the IRMAA

The IRMAA is a “cliff” surcharge. That means if your modified adjusted gross income exceeds the threshold by as little as one dollar, you will have to pay higher premiums. And be careful of one-time events that could spike your income and trigger the IRMAA; things like proceeds from the sale of a home or doing a Roth IRA conversion.

 

Good planning can help avoid some of the financial pitfalls that might throw you into the IRMAA surcharge quagmire. Talk to the experienced financial planners at Alhambra Investments. Contact us at info@alhambrapartners.com.

 

 

Disclaimer:

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