Most people assume Medicare premiums rise gradually as your income goes up.
However, this isn’t the case.
Instead of a smooth ramp, Medicare uses Income-Related Monthly Adjustment Amounts (IRMAA).
Think of IRMAA as a “cliff penalty.”
While standard income taxes are marginal, IRMAA is all-or-nothing. If you cross an income threshold by even one dollar, you “fall off the cliff”—triggering a significantly higher surcharge on your entire premium for the rest of the year.
(See our example below of how crossing a threshold by a single dollar costs a couple almost $3,500 in 2026.)
Chart Overview
The following chart highlights how 2026 Medicare premiums (based on 2024 income) behave in real life.
Your income can remain flat for years, and then suddenly trigger a meaningful jump in both Part B and Part D premiums.
How?
Keep in mind, households with $2–$10 million portfolios (or more) generally draw income from multiple sources: RMDs, realized capital gains, Roth conversions, interest and dividends, and liquidity events (e.g., business sales or real estate transactions).
Individually, each decision may make sense. Taken together, they can quietly push your income into a higher IRMAA tier.
At Windsor Wealth Management, Medicare premium thresholds are something we factor into planning conversations alongside taxes, income needs, required distributions and more.
The goal isn’t to avoid income.
Instead, it’s to control when and how income shows up, so healthcare costs don’t unnecessarily erode retirement cash flow.
CHART: Medicare 2026 Part B & D Premiums by Income
Things to know:
- Premiums are per person.
- The income used to determine your 2026 premium is your Modified Adjusted Gross Income (MAGI) from your 2024 tax return.
- The Part B column is your total monthly premium. The Part D column is an extra surcharge paid to Medicare; you add this amount to whatever you already pay your private provider for drug coverage.
- Medicare premiums “roll forward” each year and are based on income from two years prior (e.g., 2027 premiums are based on your 2025 MAGI, not when you first enrolled).
DEEP DIVE RESOURCE: Check out Fidelity’s Medicare Information Portal, which includes step-by-step resources to help you prepare for Medicare.2
One Dollar Can Cost You $3,500
Medicare premiums might seem like a small detail when managing a large portfolio, but the “cliffs” are steep.
If a married couple has a 2024 income of $274,000, they stay within their current bracket.
However, if they cross that threshold by just one dollar ($274,001), they trigger a higher tier for the entire year.
Here’s how that $1 “mistake” adds up for a couple in 2026:
- Part B Jump: +$121.70/month per person
- Part D Jump: +$23.00/month per person
- Total Monthly Increase: $289.40 for the couple
- Total Annual Cost: $3,472.80
This is nearly $3,500 in stealth taxes caused by a single dollar of extra income—money that could instead fund a family vacation or your grandkids’ 529 college savings plans.
If you’d like a better understanding of how Medicare fits into your overall retirement plan, reach out anytime.
–David Bunker, Financial Advisor & Licensed Fiduciary
P.S.— We recently took a deep dive into this season’s tax preparation. Read the post: 2026 Tax Planning Resources & Key Financial Data
Before You Go
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This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.
Sources:
1: Medicare.gov, 2026 Medicare costs fact sheet, https://www.medicare.gov/publications/11579-medicare-costs.pdf
2: Fidelity.com, Fidelity Medicare Services®, https://medicare.fidelity.com/home