You Have Less Than 60 Days To Make This Decision That Could Change What Social Security Costs You

A few hundred dollars could go a long way in retirement, which makes it especially frustrating when that money disappears into higher Medicare premiums.

For some retirees, the reason is IRMAA, an extra Medicare charge that applies to people with higher incomes. It could add hundreds of dollars to your monthly premiums, and because those premiums are often deducted directly from Social Security, you could end up with a much smaller check than you expected.

With Medicare open enrollment closing on December 7, now's a good time to review your coverage and find ways to save money in retirement. Getting a handle on IRMAA is part of that, so it helps to know how the surcharge works and whether it applies to you.

How IRMAA can leave you with a smaller Social Security check

IRMAA stands for Income-Related Monthly Adjustment Amount, an extra charge that raises your Medicare Part B and Part D costs if your income exceeds certain limits.

Because Medicare premiums are usually deducted directly from your Social Security benefits, IRMAA could leave you with less money in your bank account each month. Your Social Security benefit hasn't actually been reduced, but Medicare is taking more out of it before you receive the rest.

Social Security generally uses your income from two years earlier to determine whether you owe IRMAA and how much you'll pay. Here's how it works:

• For 2026: Your Medicare costs are generally based on the income reported on your 2024 tax return.
• For 2027: Your 2025 tax return generally determines whether you pay extra and how much.

So even if you're earning less today than you were a couple of years ago, you could still be paying higher Medicare premiums based on your previous income.

How much extra could Medicare cost you in 2026?

The standard Medicare Part B premium is $202.90 a month in 2026, but if your income was above certain limits in 2024, you could be paying considerably more. For a single filer, here is roughly what Part B costs at each level:

• $109,000 or less: $202.90, with no surcharge.
• Over $109,000 to $137,000: About $284.
• Over $137,000 to $171,000: About $406.
• Over $171,000 to $205,000: About $528.
• Over $205,000 to under $500,000: About $649.
• $500,000 or more: About $690.

If you're married and file jointly, the first surcharge applies when your combined income exceeds $218,000, with the highest tier starting at $750,000.

You'll also pay an extra $15 to $91 a month if you have Medicare Part D, depending on your income. For retirees in the highest bracket, the additional Part B charges alone might come to nearly $6,000 a year.

An unusually high-income year could mean higher premiums

When Social Security works out whether you owe IRMAA, it looks at income from several sources, including:

• Wages and pensions
• Withdrawals from traditional IRAs and 401(k)s
• Interest, dividends, and capital gains
• The taxable portion of your Social Security benefits

Even if your regular income isn't especially high, a year when you have more money coming in than usual could push you above one of the IRMAA limits. For example, selling a property at a profit or converting a traditional IRA to a Roth could leave you paying higher Medicare premiums two years later, long after you've spent that money.

Losing a spouse could also leave you paying more, since switching from a joint tax return to filing as a single person generally means much lower income limits. You could end up in a higher IRMAA bracket even if your income hasn't changed much.

How to use open enrollment to spend less on Medicare

The December 7 deadline gives you a chance to change your Medicare coverage for 2027. Your IRMAA surcharge, though, is generally based on your 2025 income, so switching to a cheaper plan won't lower it. If your income has dropped because of a qualifying life change such as marriage, you could separately ask Social Security to reconsider the surcharge.

Comparing Part D or Medicare Advantage plans could still help you save money, since premiums and out-of-pocket costs could vary quite a bit. Just remember to factor in what you'll spend on doctor visits and prescriptions, not just the monthly premium.

What you can do to lower your IRMAA surcharge

If your income has dropped because you retired or experienced another qualifying life change, you may be able to get your IRMAA reduced. Social Security allows you to request a lower surcharge by submitting Form SSA-44, which asks the agency to use a more recent income estimate instead of your tax return from two years ago.

You could also plan to avoid higher surcharges in future years by keeping your income below an IRMAA cutoff. Depending on your finances, a few options include:

• Taking qualified withdrawals from a Roth account
• Donating directly from an IRA through a qualified charitable distribution
• Spreading a large retirement account withdrawal across two tax years

For these strategies to affect your 2026 income, you'll generally need to act by December 31, rather than the Medicare open enrollment deadline of December 7.

Bottom line

The good news is that you may have more control over your Medicare costs than it might seem. Depending on your situation, you could qualify for a lower IRMAA surcharge or make a few changes that help you pay less in the years ahead.

Even something as simple as keeping an eye on how close your income is to an IRMAA cutoff could help you avoid money mistakes when withdrawing from your retirement savings. And if a little planning means paying less for Medicare, that's more of your Social Security check you get to spend on the things you enjoy.

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