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Retirement Income Sources That Won't Trigger Higher Medicare Premiums

Make sure your income doesn't trigger a Medicare premium increase.

By Michelle Smith

Edited by Lisa Dammeyer

Updated Jan. 13, 2026

As you calculate how much to withdraw from your retirement savings each year, it's essential to avoid money mistakes that could result in income-based tax penalties. Crucially, having a higher income can do more than bump you into a higher tax bracket. It can also increase your Original Medicare premiums and strain your health care budget.

Keep reading to learn how income impacts your Medicare premiums and get tips on avoiding increases without compromising your quality of life.

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How are Medicare Part A and D premiums calculated?

Original Medicare is made up of three parts: Part A (hospital coverage), Part B (medical coverage), and Part D (drug coverage). If you paid Medicare taxes throughout your working life, you shouldn't be charged a premium for Part A even if you earn a higher income.

Meanwhile, Medicare Part D premiums are based entirely on which Part D plan you choose.

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How are Medicare Part B premiums calculated?

In contrast, Plan B premiums are calculated based on your modified adjusted gross income (MAGI) from the tax year two years prior to this one. Incomes and premium amounts break down as follows:

If you earned $109,000 or less as an individual or $218,000 or less as a married couple filing jointly, your 2026 premium is $202.90.
If you earned between $109,000 and $137,000 as an individual or $218,000 to $274,000 as a married couple filing jointly, your 2026 premium is $284.10.
If you earned between $137,000 and $171,000 as an individual or $274,000 to $342,000 as a married couple filing jointly, your 2026 premium is $405.80.
If you earned between $171,000 and $205,000 as an individual or $342,000 to $410,000 as a married couple filing jointly, your 2026 premium is $527.50.
If you earned between $205,000 and $500,000 as an individual or $410,000 to $750,000 as a married couple filing jointly, your 2026 premium is $649.20.
If you earned between $500,000 or more as an individual or $750,000 or more as a married couple filing jointly, your 2026 premium is $689.90.

How can you avoid higher Part B premiums?

Since Medicare Part B premiums are based on your MAGI from two years prior, it's important to plan your income strategy well ahead of time to avoid Medicare Part B premium increases. Fortunately, not all income sources count against your premium, including the ones we list below.

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1. Roth distributions

Unlike traditional IRAs, Roth IRAs aren't tax-advantaged. Because withdrawals from these accounts are tax-free, they won't impact your MAGI. However, any money you convert from an IRA to a Roth IRA is considered taxable income, so make sure you can afford both the taxes and a potential Medicare premium increase two years after the conversion.

2. Health savings account (HSA) distributions

Health savings accounts (HSAs) are tax-advantaged spending accounts for people with high-deductible medical insurance. While you can't contribute to an HSA once you're on Medicare, you can withdraw money from an HSA to pay for medical expenses without having that money impact your income.

3. Qualified charitable distributions (QCDs)

Once you turn 73, the IRS requires you to start taking distributions from your IRA, which naturally increases your income for the year. If you want to keep your income low while still meeting required minimum distribution (RMD) standards, you can turn a certain amount of the withdrawal into a qualified charitable distribution (QCD). This ensures you meet the requirements without adding to your income.

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4. Traditional IRA contributions

If you're still working while qualifying for Medicare, you can lower your MAGI by continuing to contribute to a tax-advantaged IRA or 401(k) account. Since you're over age 50, you can contribute an extra $8,000 a year compared to your younger counterparts. Those between ages 60 and 63 can contribute even more — $11,250 per year.

5. Appealing the extra fee

If you've experienced a recent life-changing event, you can appeal your income-related monthly adjusted amount (IRMAA), or the Medicare premium surcharge you pay due to your higher income. Specifically, if you've recently experienced a marriage, the death of a spouse, divorce, or loss or reduction of work, you can directly appeal the cost to the Social Security Administration (SSA).

6. Tax-loss harvesting

Investments resulting in large capital gains can drastically increase your MAGI. You can offset those gains by strategically selling off worse investments, using your net capital loss to help offset your taxable income.

Consider consulting with a financial advisor or tax professional who can help you execute this effectively.

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Bottom line

Having a solid income strategy in place before leaving the workforce is essential to enjoying a stress-free retirement. However, understanding income, taxes, and Medicare on your own can be challenging. Consider scheduling a meeting with a financial advisor or retirement planner to find out which of these tips will work best for you.

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