Author: Rob Sevilla
Agency: Agape Insurance & Financial Group, Tupelo, MS
If you have recently opened your mailbox to find a letter from the Social Security Administration about your Medicare coverage, you might be confused. For many of our neighbors here in Tupelo, this letter contains surprising news: your Medicare premiums 2026 are going up, not because of a standard rate hike, but because of your income.
This is the “hidden tax trap” of retirement. While you have worked hard to build your savings, the government has specific rules about how much you pay for Medicare Part B based on that success.
At Agape Insurance & Financial Group, we want to help you understand these costs. Below, we break down IRMAA, the 2026 IRMAA brackets, and how your retirement withdrawals (RMDs) can impact what you pay.
What Determines Who Pays an IRMAA for 2026?
IRMAA stands for Income-Related Monthly Adjustment Amount. It is an extra charge added to your Part B and Part D premiums. While most people pay the standard Medicare Part B rate, higher-income earners must pay an IRMAA.
The Centers for Medicare & Medicaid Services determines whether you pay an IRMAA based on your modified adjusted gross income (MAGI) reported on your IRS tax return from two years prior. This means your 2026 Medicare Part B costs are actually determined by your 2024 tax return.
The Social Security Administration looks at your 2024 tax information to see if you fall into one of the five income brackets that trigger these surcharges. If your income exceeds the threshold, you will receive a notice stating that an IRMAA is based on that income, and you must pay an IRMAA in addition to your standard premium.
2026 IRMAA Brackets and Medicare Part B Premium Costs
Understanding the 2026 IRMAA brackets is essential for planning. The Medicare Part B premium is not a flat rate for everyone. The standard Medicare Part B premium covers about 25% of the program costs, while the government pays the rest. However, if you are in a higher IRMAA bracket, the government assumes you can afford to contribute more.
For 2026, the income bracket thresholds will likely adjust for inflation, but the principle remains the same. As you move up in brackets, the IRMAA surcharge increases.
Here is how the IRMAA calculations generally work:
- Standard Bracket: You pay the base Part B premium.
- First Tier IRMAA: If you cross the income threshold by even $1, you enter the first IRMAA bracket and pay the surcharge.
- Higher Tiers: There are multiple brackets, with the highest earners paying the most substantial Medicare IRMAA surcharges.
It is important to note that the IRMAA is a surcharge added to both Parts B and Part D. You will see this reflected in your bill each month from Medicare or deducted from your Social Security check.
How Your 2024 Tax Return Affects Part B and Part D IRMAA
Many retirees in Mississippi are surprised when they see their Medicare Part B and Part D costs jump. Often, this is caused by Required Minimum Distributions (RMDs).
When you turn 73, the IRS requires you to withdraw money from your pre-tax retirement accounts. This counts as taxable income. If your RMD is large enough, it can push your Modified Adjusted Gross Income on your 2024 tax return into a higher income bracket.
The government uses these 2024 tax returns to see if you owe an IRMAA surcharge. This implies that a large withdrawal you made two years ago to buy a car or fix a roof could spike your B and Part D premiums today.
The Part D IRMAA works similarly to Parts B. It is an extra amount you pay for your prescription drug coverage. The Part D IRMAA surcharges are paid directly to Medicare, not to your insurance carrier. Even if you have a Medicare Advantage plan that includes drug coverage, the Part D IRMAA must be paid if your income dictates it.
Managing Premiums and IRMAA: The “Agape” Approach
At Agape, we believe in looking at the whole picture. Medicare Part B and Part D premiums are significant line items in your retirement budget.
Here are a few things to keep in mind regarding premiums and IRMAA:
- Understand the Cliff: IRMAA brackets are “cliffs.” If you are $1 over the limit, you pay the full IRMAA surcharge for that tier.
- Part D Monthly Costs: Don’t forget the drug plan. The Part D premium is separate, and the Part D IRMAA is added on top.
- Direct Payments: Unlike the standard premium which is often automatic, the IRMAA is paid separately in some cases if you aren’t drawing Social Security yet. The IRMAA must be paid directly to Medicare.
- Medicare Advantage: Even if you choose a Medicare Advantage plan (Part C), you must still pay your Part B premium and any applicable IRMAA surcharges.
The total monthly Part B cost can be a shock if you aren’t prepared. Additionally, while we focus on premiums here, remember that Part A deductibles and coinsurance are separate costs related to hospital stays.
Can You Appeal an IRMAA Surcharge?
Yes, you can appeal an IRMAA if you have had a “Life-Changing Event.”
Since the IRMAA is calculated based on 2-year-old tax data, your current financial situation might be different. If you have retired, divorced, or lost a spouse since 2024, you can file form SSA-44 to request a reduction in your Medicare IRMAA.
This appeal can lower your Medicare Part B premium and Part D premium back to the standard rates if approved. It effectively tells the government: “My 2024 tax return doesn’t reflect my income today.”
2026 Part B and Your Financial Health
Navigating 2026 Medicare Part B costs, Part D IRMAA, and the various Parts B regulations can be overwhelming. The 2026 IRMAA rules are strict, but knowing them helps you avoid surprises.
Whether you are concerned about the 2026 physician fee schedule affecting costs, or simply how to pay your Part B premiums efficiently, we are here to help.
Rob Sevilla and the team at Agape Insurance & Financial Group are dedicated to helping our Tupelo community manage these challenges. While we do not give tax advice, we can review your Medicare coverage, explain how the IRMAA bracket affects you, and help you find the right Medicare Advantage plan or Supplement to fit your needs.
Don’t let IRMAA brackets and surcharges catch you off guard.
Call us today at 662.260.5188 or visit us at 113 Clark Street, Suite 5, Tupelo, MS. Let’s ensure you have the right plan for 2025 and 2026.
Disclaimer: Agape Insurance & Financial Group does not provide tax or legal advice. Please consult your tax professional regarding your specific tax situation and how RMDs may affect your tax return.