Allow me to share some important Medicare information that could impact your retirement planning.
As you may know, most people on Medicare pay a monthly premium for Part B, which covers doctor visits, lab work, and other outpatient care. While Part A typically has no premium, Part B is a significant ongoing cost—one that continues to rise.
Part B premiums increased for 2026.
The standard monthly premium is $202.90 per person, a 9.7% increase over 2025. Even if you’re not enrolled yet, this is a key expense to factor into your long-term planning. Over the past decade, the standard Part B premium has risen nearly 53%, and it’s reasonable to expect this upward trend to continue. If the pattern holds, premiums could exceed $300 per month by 2036.
It’s also important to understand that the $202.90 rate is the minimum. Your actual premium depends on your income.
Income and Part B Premiums
For 2026, the standard premium applies if your modified adjusted gross income (MAGI) is:
- Below $109,000(individual), or
- Below $218,000(joint filers)
Above those levels, your premium increases. For example, individuals with MAGI between $109,000 and $137,000 (or couples between $218,000 and $274,000) will pay $284 per month. Higher incomes result in even higher premiums.
What Counts Toward MAGI?
MAGI includes:
- Your adjusted gross income (line 11 of your 1040)
- Any municipal bond interest
- Withdrawals from Traditional 401(k)s or IRAs
- Taxable portions of Social Security
- Any dollars converted from a Traditional IRA/401(k) to a Roth account
This means large withdrawals or big Roth conversions can push you into a higher premium bracket. And remember—Medicare uses your tax return from two years prior to determine your premium. So your 2024 income will affect your 2026 Part B cost.
This timing often catches people off guard. For example, a sizable Roth conversion at age 63 could result in higher Medicare premiums when you enroll at 65.
Planning Ahead Matters
If you’re considering Roth conversions or expect income changes in the coming years, it’s wise to plan ahead—ideally before age 63. A financial professional (like me) or a tax professional can be especially helpful in navigating this.
A Possible Exception
If, when you enroll in Medicare at 65, your current income is significantly lower due to a life-changing event —such as retirement, divorce, or the loss of a spouse—you can appeal to have your premium based on your current income rather than your income from two years earlier.
However, income changes from investment decisions (like Roth conversions, capital gains, or dividends) do not qualify for an appeal.
If you’d like help reviewing your Medicare options and how these rules might affect your retirement strategy, I’m here to support you. Let’s schedule a time to talk through your situation and plan ahead with confidence.
Looking forward to helping you navigate this important part of your retirement planning.