Is Your Healthcare Budget Ready for 2026?

Medicare Cost Increases, IRMAA Thresholds, and What Retirees Can Do About Them

Many retirees underestimate how much of their monthly income will be consumed by healthcare—until premiums rise, surcharges hit, or uncovered expenses start eating into the cash flow they thought was solid.

In 2026, several Medicare-related changes could directly affect your income plan, especially if you’re not adjusting for them.

Let’s walk through the numbers, identify who’s impacted, and cover what actions you can take now to protect your financial stability over the next 12 months.

Key Medicare Cost Increases in 2026

Here’s what’s changing:

Item	2025	2026
Medicare Part B Premium	$174.70/month	$202.90/month
Part B Annual Deductible	$240	$270

For a retiree couple, that’s a $56/month increase—or $672/year—just in Part B premiums. It may seem manageable, but in a fixed-income environment with rising living costs, these incremental increases compound quickly.

IRMAA: Why Your 2024 Income Matters in 2026

The Income-Related Monthly Adjustment Amount (IRMAA) adds a surcharge to Medicare premiums for retirees with higher income. But here’s the catch: your 2026 premiums are based on your 2024 income—a two-year lag most retirees don’t realize until it’s too late.

Filing Status	2024 MAGI Starts at	2026 Monthly Part B Premium
Single	$103,000	$234.80 to $578.90
Married Filing Jointly	$206,000	$234.80 to $578.90 per person

Just one Roth conversion, property sale, or large IRA withdrawal can trigger IRMAA, adding $1,000–$3,000+ in healthcare costs per year, per person.

Three Planning Steps to Adjust Your 2026 Healthcare Budget

These aren’t theoretical ideas—they’re practical moves retirees and pre-retirees should make in Q1 of 2026 to stay ahead.

1. Quantify Your MAGI Exposure Now

Before you can avoid IRMAA, you need to understand your MAGI (Modified Adjusted Gross Income). For retirees, MAGI typically includes:

• Taxable IRA or 401(k) withdrawals
  
• Required Minimum Distributions (RMDs)
  
• Capital gains
  
• Interest and dividends
  
• Certain Social Security income
  
• Roth conversions
  

Action:

• Review your 2024 tax return with your advisor or CPA.
  
• Identify any one-time events in 2024 (inheritance, Roth conversions, asset sales) that could inflate MAGI.
  
• If you’re impacted, you may be eligible to file Form SSA-44 with the Social Security Administration to request IRMAA relief due to a life-changing event (e.g., retirement, sale of a business, etc.).
  

2. Build a 12-Month Healthcare Cost Forecast

You likely already track your monthly income, but many retirees fail to break out healthcare as a separate budget category. You should.

Include:

• Medicare Part B and Part D premiums
  
• Any IRMAA surcharges (if applicable)
  
• Medigap or Medicare Advantage plan premiums
  
• Deductibles, copays, and prescriptions
  
• Out-of-pocket spending on dental, vision, hearing
  
• Long-term care premiums (if applicable)
  

Action:

• Set a realistic monthly healthcare allocation for 2026.
  
• Include inflation assumptions for the next 3–5 years.
  
• Revisit your emergency reserve to ensure it can absorb medical shocks without forcing portfolio withdrawals at a bad time.
  

3. Coordinate Withdrawals with Your Tax Plan

Remember: how and when you take money out of retirement accounts affects both your taxes and your Medicare costs.

Strategic Considerations:

• Can you offset RMDs with qualified charitable distributions (QCDs)?
  
• Should you delay further Roth conversions to avoid pushing 2026 or 2027 MAGI over IRMAA thresholds?
  
• Would it make sense to draw more from taxable accounts this year to lower future Medicare premiums?
  

Action:

• Revisit your withdrawal strategy in light of 2026 cost changes.
  
• Stress-test your plan against higher healthcare inflation scenarios.
  
• Use tax mapping to plan two years ahead, not just one.
  

Need Help Running the Numbers? Let’s Talk

Understanding how Medicare premiums, IRMAA thresholds, and tax planning intersect is not always straightforward—but making a mistake can cost you thousands over time.

To get a clear picture of where you stand and how to adjust, call Barbara Swiatek at (719) 597-2179. She’ll walk through your retirement income plan, review your exposure to rising healthcare costs, and help you take the right steps now—before small leaks become bigger problems.Healthcare costs will keep rising.
But with the right planning, they don’t have to erode your financial confidence—or your lifestyle.