The Hidden Way Your 2026 Income Could Pay More for Medicare in 2028

Many retirees are caught off guard by a little-known consequence of how Medicare premiums are calculated. If your income surges this year, you might find yourself paying significantly more for your Medicare coverage just two years from now. This timing gap between earning money and paying the price for it is something every retiree needs to understand.

Why Your Income from Two Years Ago Determines What You Pay Now

Here’s the surprising mechanism: Medicare uses your income from two years prior to calculate your premiums in any given year. This means the income you earn during 2026 will directly determine your Medicare Part B and Part D costs when 2028 rolls around.

While most enrollees pay a standard monthly premium for Medicare Part B (currently around $202.90), higher-income individuals face additional charges called Income-Related Monthly Adjustment Amounts, or IRMAAs. These surcharges apply to both Part B coverage and Part D prescription drug plans. Unlike a fixed premium, IRMAAs increase substantially as your income grows, meaning a significant income boost today could translate into hundreds of dollars in extra monthly costs two years down the line.

This two-year lag creates a planning challenge that many people overlook. If you anticipate a substantial income increase in 2026, consulting with a financial or tax professional now could help you understand the Medicare premium impact waiting for you in 2028.

Common Income Events That Could Lead You to Pay More

Several life events commonly trigger higher income in a single year. Perhaps you’re receiving a major raise or bonus from your employer if you’re still working. Or maybe 2026 is the year you decide to start collecting Social Security benefits, which adds to your overall income picture. Another common scenario involves taking your first required minimum distribution (RMD) from a retirement account—this mandatory withdrawal can substantially increase your taxable income overnight.

Each of these situations can propel your income into IRMAA territory, creating financial consequences that extend years into the future. Recognizing which events might apply to your situation is the first step toward informed financial planning.

Calculate the Real Cost: IRMAAs Can Add Hundreds Monthly

The financial impact of IRMAAs should never be underestimated. Depending on your income level, these surcharges can add $100, $200, or even more to your monthly Medicare premiums. For retirees on fixed incomes, this unexpected expense can strain budgets and force difficult choices about healthcare decisions.

Because the consequences are so significant, it’s crucial to understand exactly how IRMAAs might affect you. If a major income event is likely in 2026, you shouldn’t simply accept the resulting premium increases in 2028. Instead, this is a moment to take action.

Strategic Steps to Protect Your Finances

If you’re facing a potential income increase, you have options worth exploring with a professional. For example, you might delay claiming Social Security even if you’re currently eligible, postponing the income increase to a later year. Alternatively, if you’re facing an RMD, you could explore directing that distribution directly to a registered charity, which may reduce your taxable income.

The key is planning ahead. Your 2026 financial decisions ripple forward, affecting what you’ll pay more for Medicare in 2028 and beyond. Taking time now to map out your income strategy with a qualified advisor could save you thousands in unwanted premium charges down the road.