Medicare Planning Guide 2026

A practical framework for high-income retirees navigating IRMAA surcharges, coverage decisions, and enrollment timing. Updated for 2026 Medicare rules.

The Two-Year Look-Back: Your Planning Clock

The single most important concept in Medicare planning for high earners: your 2026 Medicare premiums are based on your 2024 adjusted gross income. Not 2026 income. Not 2025 income. What you reported on your 2024 tax return.

This means the planning window that actually matters for Medicare is two years before you enroll. If you retire at 65 in 2026, your first-year Medicare premiums were locked in by your 2024 income. If your final working year was high — executive bonus, RSU vesting, business sale, large Roth conversion — your Medicare bill reflects that peak, not your retirement income.

The good news: SSA does offer a formal appeal process (Form SSA-44) for qualifying life events like retirement. The better news: if you plan income two years ahead, you can avoid the problem entirely. See the Roth conversion + IRMAA guide and the IRMAA appeal guide for how both work.

2026 IRMAA Brackets: What You'll Actually Pay

Medicare Part B and Part D premiums include an income-based surcharge — IRMAA (Income-Related Monthly Adjustment Amount) — for anyone whose 2024 MAGI exceeded the base thresholds. The surcharges apply per person: a married couple with $300K income pays two surcharges.¹

Part B totals include the $202.90 base. Part D adds a separate IRMAA surcharge ($14.50–$91.00/mo). Source: CMS 2026 Medicare Premiums Fact Sheet.¹ Use the IRMAA bracket calculator to find your tier based on estimated MAGI.

The cliff is real. One dollar over a threshold means the full tier surcharge — not a proportional increase. A couple at $274,001 joint MAGI pays $5,768 more per year than a couple at $274,000. This makes bracket management worth specific, deliberate income planning.

See the full bracket detail page: 2026 IRMAA income limits reference.

What Income Counts Toward IRMAA MAGI

IRMAA MAGI is your AGI plus tax-exempt interest. That second piece surprises many people: municipal bond interest is added back even though it doesn't appear on your federal tax return as taxable income. Zero-rate capital gains and Roth conversions also count fully. A full explanation: What counts as income for IRMAA.

The income types that most often create IRMAA surprises for retirees, each with a dedicated planning guide:

• Roth conversions — the most controllable lever, and the most commonly misstimed. Roth conversion + IRMAA guide
• Required minimum distributions — grow over time, compound the IRMAA problem. RMDs and Medicare premiums
• IRA and 401(k) withdrawals — voluntary distributions, same MAGI impact as RMDs. IRA withdrawal IRMAA guide
• Capital gains — 0%-rate gains still count; mutual fund year-end distributions create invisible exposure. Capital gains and IRMAA
• Dividends — qualified dividends taxed at 0% still appear in MAGI. REIT ordinary dividends are fully included. Dividend income and IRMAA
• Bond and CD interest — Treasuries, CDs, I-bonds, and TIPS all count. Municipal bond interest is added back. Bond interest and IRMAA
• Pension income — every dollar of defined-benefit pension is in MAGI. Includes FERS, CSRS, state, and military pensions. Pension income and IRMAA
• Social Security — up to 85% of SS benefits are taxable income and count toward MAGI. Social Security and Medicare coordination
• Rental income — net Schedule E income counts. Selling a rental triggers a look-back spike two years later. Rental income and IRMAA
• Inherited IRA distributions — SECURE Act 10-year rule forces annual distributions; each counts in full. Inherited IRA and IRMAA
• Deferred compensation — NQDC lump-sum payouts can spike a single year's MAGI dramatically. NQDC and IRMAA
• Stock options and RSUs — W-2 income on exercise/vesting counts fully; ISO AMT calculation differs. RSU, NQSO, and IRMAA
• Business sale proceeds — asset vs. stock sale treatment, installment-sale timing options. Business sale and IRMAA
• Annuity income — non-qualified LIFO treatment vs. exclusion ratio for SPIA annuitization. Annuity income and IRMAA
• Trust distributions — depends on trust type; CRT four-tier ordering rule applies. Trust income and IRMAA
• Life insurance — non-MEC policy loans are excluded; MEC loans are taxable income. Life insurance and IRMAA

The One Decision You Can't Easily Undo: MA vs Medigap

When you first enroll in Medicare at 65, you choose between two coverage paths. This choice has long-term consequences that most people don't understand until it's too late to change.

Path 1: Medicare Advantage (Part C). A private insurance plan that bundles Parts A, B, and usually D. Often marketed as "free" because the base premium can be $0 (your Part B premium is still charged). Offers network-based care, often includes dental and vision, but requires prior authorization for many services and restricts you to a service area. In 2026, in-network OOP maximum is $9,250.²

Path 2: Original Medicare + Medigap. Fee-for-service Medicare, any Medicare-accepting provider nationwide, no network restrictions. Medigap (Medicare Supplement) fills the 20% coinsurance gap. Plan G is the most comprehensive option: covers everything except the Part B deductible ($283 in 2026). Monthly Medigap premiums typically run $100–$400 depending on plan, state, and age.

The one-way door: Your Medigap Open Enrollment Period (OEP) is a 6-month window starting when you turn 65 and enroll in Part B. During this window, insurers must offer you any Medigap plan at standard rates with no medical underwriting. After the OEP closes, most states allow insurers to deny you Medigap coverage or charge more based on health history. You have one 12-month trial right to exit Medicare Advantage and return to Medigap with guaranteed issue — but only once, and only in the first year.³

Most people with significant health needs or frequent specialist care are better served by Original Medicare + Medigap. The guaranteed-issue window at 65 is the most favorable Medigap pricing you will ever receive.

Detailed comparisons: Medicare Advantage vs Medigap · Medigap Plan G vs. N vs. High-Deductible G · How Medicare Advantage works in 2026 · Medigap guaranteed issue rights · Medigap rate increases: attained-age vs issue-age states

Enrollment Windows and Traps

Missing a Medicare enrollment window creates permanent financial consequences. The Part B late enrollment penalty is 10% per year of delay, added to your premium for life.⁴ Part D LEP: 1% of the base premium ($38.99 in 2026) multiplied by each month you went without creditable coverage — also permanent.

Initial Enrollment Period (IEP). A 7-month window: 3 months before your 65th birthday month, your birthday month, and 3 months after. Enrolling in or after your birthday month delays coverage start by 1–3 months. Full enrollment timeline guide with IEP calculator.

Special Enrollment Period (SEP) — working past 65. If you're covered by a qualifying employer group plan at a company with 20+ employees, you can delay Medicare without penalty. You get an 8-month SEP after your employer coverage ends (not after you leave your job — after coverage ends, which may include COBRA).⁵ Medicare at 65 while still working.

The COBRA trap. COBRA is not employer group coverage for SEP purposes. If you leave a job, take COBRA, and think the 8-month SEP clock doesn't start until COBRA ends — you're wrong. The SEP clock runs from when your active employer coverage ended. Many people lose their SEP window, then face LEP, by relying on COBRA.⁴

The HSA trap. Enrolling in Medicare Part A — even voluntarily, before 65, or as a result of claiming Social Security — ends your eligibility to contribute to an HSA under IRC § 223(b)(7). Part A enrollment also applies retroactively up to 6 months if you claim Social Security after 65. You cannot un-enroll from Part A once you've claimed Social Security. If HSA contributions matter, delay both. Medicare and HSA rules explained.

Medigap OEP. 6-month window, starts when you are both 65+ and enrolled in Part B. Miss it, and most insurers can medically underwrite (or deny) Medigap applications in 37+ states. Special guaranteed-issue situations exist (see GI rights guide), but none are as broad as the original OEP.

Annual Enrollment Period (AEP). October 15–December 7, changes take effect January 1. Lets you switch between Medicare Advantage and Part D plans. Does NOT give you a new Medigap guaranteed-issue right. AEP guide for high-income retirees.

IRMAA Reduction: Five Core Strategies

1. Roth conversions before age 65 (or between Medicare enrollment and RMDs). Each year you convert traditional IRA assets to Roth, you pay taxes now — but the future Roth withdrawals don't count toward IRMAA MAGI. The optimal window is often age 62–64 (before Medicare look-back matters) or the gap between retirement and age 73 (before RMDs kick in). Guide: Roth conversions and IRMAA.

2. Qualified Charitable Distributions (QCDs). Starting at age 70½, you can donate up to $111,000 per person per year directly from a traditional IRA to charity. QCDs satisfy RMD requirements and are excluded from MAGI — unlike a normal withdrawal plus a charitable deduction, which still counts as income. The QCD limit is indexed; 2026 limit is $111,000.⁶ A couple can use $222,000 in QCDs per year.

3. Capital gain and income timing. Spreading asset sales across multiple tax years, timing mutual fund distributions, avoiding year-end mutual fund tax events, and harvesting losses to offset gains can all keep MAGI below cliff thresholds. Specific analysis: capital gains and IRMAA, dividend income and IRMAA.

4. SSA-44 appeal for qualifying life events. If a qualifying event — retirement, death of a spouse, divorce, work reduction, loss of pension — caused your income to drop, SSA will substitute more recent income for your 2026 premium calculation. This can immediately eliminate a surcharge. The 7 qualifying events and the filing process: IRMAA appeal guide. If you just received an IRMAA notice: what to do in the next 60 days.

5. QLAC (Qualified Longevity Annuity Contract). A QLAC lets you defer up to $210,000 from RMD calculations, potentially keeping you in a lower IRMAA bracket during the deferral period. Trade-off analysis vs. QCDs and Roth conversions: QLAC and IRMAA.

All seven strategies together: How to reduce IRMAA surcharges: 7 strategies.

Life Events That Change Your Medicare Math

Several life transitions create immediate Medicare planning decisions, often under time pressure:

• Death of a spouse: The IRMAA threshold drops from $218,000 (MFJ) to $109,000 (single). The look-back delays the full cliff by ~2 years, creating a Roth conversion window most surviving spouses don't know to use. Medicare IRMAA after your spouse dies
• Divorce: Same bracket cliff as widowhood — but arrives one year sooner because the divorce year files as single. SSA-44 helps the lower-earning spouse in most cases. Medicare and divorce
• Retiring mid-year with a high-income year: The SSA-44 work-stoppage appeal is available. File with an estimate of current-year income; SSA will reconcile with your actual return later. IRMAA appeal guide
• Retiring before 65: Health coverage bridge matters — COBRA (up to 18 months), ACA marketplace (note: subsidies ended for many after 2025), or spouse plan. This is also the best window to pre-position income for lower IRMAA. Retiring before 65: health insurance options
• Transitioning from ACA marketplace: Your ACA coverage ends when you become eligible for Medicare. Missing the IEP creates permanent LEP. ACA to Medicare transition guide
• Federal employees (FEHB) and military retirees (TRICARE): Each program has specific Medicare coordination rules and Part B enrollment decisions. FEHB and Medicare · TRICARE for Life and Medicare

Medicare Planning by Profession

Certain professions have recurring IRMAA traps tied to their specific income patterns. If one of these fits, the profession-specific guide covers the tax treatment, common mistakes, and income-reduction strategies in detail:

• Physicians and doctors — hospital W-2, group K-1, locum tenens; cash balance plan strategy
• Attorneys and law firm partners — K-1 passthrough, equity wind-down look-back trap, contingency timing
• Business owners — S-corp, partnership, sole prop; QBI misconception, SEHID, cash balance strategy
• Engineers and tech workers — RSU cliff, COBRA enrollment trap, early retirement bridge
• Nurses and healthcare workers — travel nurse income spike, shift-differential exposure
• Teachers — state pension + 403(b) + new WEP/GPO repeal SS stacking
• Airline pilots — mandatory FAA retirement at 65, SSA-44 cessation-of-employment appeal
• Police officers and firefighters — DROP plan IRMAA trap, IRC § 402(l) $3,000 exclusion, early retirement bridge
• Federal employees — FEHB coordination, PSHB postal rules, Part B reimbursement programs
• Military retirees — TRICARE for Life as Medigap, TSP QCD access via IRA rollover
• Self-employed and freelancers — no ACA SEP protection, IRC § 162(l) SEHID deduction

Year-by-Year Planning Checklist

Medicare planning starts a decade before enrollment for anyone with meaningful retirement income. Key milestones:

• Ages 60–61: Model your projected MAGI at 65. Identify which IRMAA tier your current income trajectory lands in. Start the planning clock.
• Ages 62–63: Prime Roth conversion window — you're still 3+ years from Medicare look-back affecting first-year premiums. Maximize conversions up to your bracket cliff.
• Age 63–64: Two-year look-back window for first-year Medicare premiums. Avoid one-time income spikes (large asset sales, peak bonus, NQDC payouts, large Roth conversions) unless you'll qualify for SSA-44 relief.
• Age 64: Wind down HSA contributions. Medicare Part A enrollment (voluntary or triggered by SS) ends HSA eligibility — including retroactively.
• Age 65: IEP opens. Medigap OEP begins when you enroll in Part B — the best pricing you will ever receive. Enroll in the right Medigap plan within this window. Evaluate Medicare Advantage only if you're certain you want the network tradeoff.
• Ages 66–69: Annual AEP review (Oct 15–Dec 7). Model income for next year's IRMAA look-back. Consider RMD + Roth conversion stacking strategy before age 73.
• Age 70½+: Begin QCDs to offset RMD-driven MAGI increases. QCDs are the most tax-efficient lever for reducing IRMAA after RMDs start.

The full checklist with specific action items for each age band: Medicare planning checklist: ages 60–70+.

Sources

1. CMS — 2026 Medicare Parts B Premiums and Deductibles Fact Sheet. IRMAA brackets and surcharges verified. Cross-checked with SSA POMS HI 01101.020 — IRMAA premium determination.
2. CMS — Medicare Advantage 2026 Plan Benefits Data (MA OOP maximum $9,250).
3. Medicare.gov — Medigap Guaranteed Issue Rights (Trial Right and 12-month MA switch).
4. Medicare.gov — Enrollment Periods, Late Enrollment Penalties (Part B 10%/yr; Part D 1%/mo).
5. CMS — Medicare Secondary Payer Rules (20-employee threshold; 8-month SEP after coverage ends).
6. IRS Rev. Proc. 2025-67 — 2026 QCD limit $111,000 per person; HSA limits $4,400/$8,750.

IRMAA brackets and Medicare premiums verified against CMS 2026 publications. QCD limit verified via IRS Rev. Proc. 2025-67. Information current as of June 2026.