Treasury Inflation-Protected Securities

Part B costs, deductibles and IRMAA surcharges will all increase at least 9.7% next year.

By David Enna, Tipswatch.com

It was bad enough when we learned on Oct. 24 that Social Security benefits would increase 2.8% for beneficiaries in 2026, less than the U.S. rate of inflation at 3.0%.

And now, the really bad news: The Centers for Medicare & Medicaid Services announced in mid-November that monthly costs for Medicare Part B premiums, annual deductible and IRMAA surcharges will rise by a much higher amount, about 9.7% for 2026.

The Social Security Administration has already started posting 2026 benefits and cost summaries on its site. Just log in to SSA.gov and navigate to the messages area where you can find your full .pdf summary.

If you planned poorly for tax year 2024, you may be meeting up with IRMAA, the Income-Related Monthly Adjustment Amount. These surcharges can be lofty, so it’s smart to plan ahead to limit these costs.

See the fact sheet prepared by the Centers for Medicare & Medicaid Services for more detail. Here is a summary of the price and income-level changes for 2026:

• The Part B deductible is rising 10.1% to $283.00.
• The Part B base monthly premium is rising 9.7% to $202.90.
• The IRMAA surcharge costs for Part B are rising 9.7%.
• The IRMAA surcharge costs for Part D (drug plans) are rising about 6%.
• The IRMAA income tiers that trigger the surcharges are increasing at a lower rate, all below the inflation rate of 3.0%.

Let’s dive into the key Medicare changes for 2025.

Part A premium and deductible

Most people who reach age 65 go on Medicare Part A, even if they are still working. Medicare Part A covers inpatient hospital, skilled nursing facility and some home health care services. About 99% of Medicare beneficiaries do not have a Part A premium since they have at least 40 quarters of Medicare-covered employment.

Although coverage is generally free, Part A has some sizable deductibles and coinsurance costs, and those will be rising about 3.6% in 2026.

Keep in mind that most people on Medicare have a Medigap or Medicare Advantage plan that will cover all or most of the Part A deductible and coinsurance amounts. For example, all standardized Medicare Supplement (Medigap) plans, A through N, provide coverage for Part A coinsurance, and most also cover all or most of the Part A deductible costs.

Part B: Medical insurance

Medicare Part B can be described as covering “outpatient services,” things like doctor visits, some lab tests, an annual wellness exam, diabetes screenings, etc. Medicare Part B generally pays 80% of approved costs of covered services, and you pay the other 20%. Some services, like flu shots, COVID vaccines and a wellness visit, may cost you nothing.

Part B deductible. Before Medicare pays anything, you have to meet your Part B deductible each year. The annual deductible for all Medicare Part B beneficiaries will be $283 in 2026, an increase of $26 from the annual deductible of $257 in 2025. Once the deductible is met, Medicare and Medigap plans will cover some or all of your Part B costs.

Part B premium. The standard monthly premium for Medicare Part B enrollees will be $202.90 for 2026, an increase of $17.90 from $185 in 2025. This Part B premium is paid by all people on original Medicare and is incorporated into Medicare Advantage pricing, which may or may not result in a baseline monthly cost.

So, for most people on original Medicare, Medicare Part B is going to cost $202.90 a month for the premium, plus the cost of the $283 deductible. That’s a total cost of $2,717.80 a year for 2026, up about 9.7% from this year’s costs.

And then … IRMAA

Since 2007, a beneficiary’s Part B monthly premium is based on reported income, known as MAGI, or modified adjusted gross income. According to the Social Security Administration handbook, for Medicare’s purposes MAGI is adjusted gross income (line 11 of your 2024 federal income tax form) plus tax-exempt interest.

Note that I mentioned your 2024 income tax return. That’s the one you filed earlier this year and now, in November, CMS announced the IRMAA surcharge brackets applied to that 2024 return. In other words, you could not know the surcharge levels until after the fact. And this is a rather brutal surcharge, because going just $1 over any limit can trigger thousands of dollars of one-year costs.

CMS says about 8% of people paid the IRMAA surcharges in 2024, and the number is probably higher for 2025 and going into 2026. It’s important to note that people on Medicare Advantage plans continue to pay the Part B premium, and are also subject to the IRMAA surcharges. And keep in mind that for a couple, the costs are doubled because each person pays the surcharge.

Part B. Here are the 2026 Part B total premiums and surcharges for high-income beneficiaries, which apply to income reported on your 2024 tax return:

Annual income of $218,000+ for a couple may sound like a lot, but the lower IRMAA levels can easily be reached through Roth conversions, stock sales to fund a major purchase, a new pension starting up, etc. Be aware of the potential to trigger the IRMAA surcharges and plan around that possibility.

Part D. Medicare income-related surcharges also apply to Part D, the drug program which is offered by private insurers working with Medicare. Part D premiums vary by plan, but the Part D surcharges are deducted from Social Security benefit checks or paid directly to Medicare.

People in Medicare Advantage plans don’t pay a separate Part D premium, since those plans include Medicare Advantage Prescription Drug (MAPD) coverage. But Part D is built into Medicare Advantage, and the IRMAA surcharge still applies.

Be aware of IRMAA

If you are just a couple years away from going on Medicare, it’s a great idea to plan your total income for this year to avoid triggering IRMAA surcharges two years later. The surcharges last only one year and then get reset the next year. The costs can be substantial for people hitting the top IRMAA tiers.

And I repeat: When you filed your federal tax return in early 2025 for the 2024 tax year you could not know what these IRMAA brackets or surcharges would be. They were just announced Nov. 14. They are called the “2026 IRMAA levels” but apply to your 2024 tax return.

When you file your 2025 return next year, realize that you won’t know the relevant IRMAA levels until November 2026, many months after you have filed. Your only option is to use these ‘2026’ bracket levels as a guideline. It’s a crazy system.

You can appeal an IRMAA ruling

The Social Security Administration has very specific rules that will allow you to get a waiver of the IRMAA surcharge, if you meet certain criteria for a “life-changing event,” which include:

• Work stoppage
• Work reduction
• Employer settlement payment
• Death of spouse
• Divorce
• Loss of pension income

You’ll need to fill out IRS Form SSA-44 to request the waiver.

Final thoughts

Starting in January, the COLA increase will boost the average Social Security payment by about $56 to an average monthly benefit of $2,071. That’s an annual increase of about $672. Unfortunately, higher Medicare Part B costs will eat up about $241 of that increase for a beneficiary paying the base rates. And that doesn’t include potential increases in costs of Part D and supplemental pans.

We all hate the IRMAA surcharges, but I think it is fair for people with more wealth to carry a higher burden of Medicare costs in a system that is struggling. What isn’t fair is the ridiculous “cliff” structure of these surcharges, with just $1 in higher MAGI income potentially resulting in thousands of dollars of increased costs. And add to that the fact that the IRMAA levels aren’t announced until months after you file your tax return.

Sometimes I feel the need to remind younger people: “Medicare is not free.” There are expenses and for some people the costs can be lofty. I am fortunate to say — so far — my payments into Medicare have been higher than the services I have received. That means I am healthy. I’ll take that trade any day.

Original Medicare with a good supplement is very good insurance and worth the cost. But … don’t pay more than you need to. Keep an eye on IRMAA.

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