A financial move that looks smart on your 2026 tax return could quietly increase your Medicare costs two years from now. That is because Medicare uses a two-year income lookback when determining whether higher-income retirees owe additional Part B and Part D premiums.
For investors, that means decisions involving Roth conversions, capital gains, IRA withdrawals, tax-exempt interest, and other income can have consequences well beyond this year’s tax bill. The good news is that 2026 is not over yet, and retirees who understand the rules still have time to shape the income Medicare will likely use when setting their 2028 premiums.
A Tax Move Today Can Raise Your Medicare Bill Two Years From Now
A large Roth conversion can look like a smart retirement move when markets are down, and an investor can shift assets into a Roth IRA at a lower valuation. But there is another number retirees need to watch before making the move: Medicare income.
Social Security generally determines Medicare’s Income-Related Monthly Adjustment Amount, or IRMAA, using federal tax information from two years earlier. That means 2026 Medicare premiums generally reflect income reported for 2024, while the income investors generate during 2026 will generally be used when determining their Medicare costs for 2028.
That two-year rule can be deceptive. Imagine a retiree completing a large Roth conversion in December 2024. The resulting income could begin affecting Medicare premiums in January 2026, barely 13 months later. The same issue exists today. A Roth conversion, large stock sale, capital-gain distribution, IRA withdrawal, or other income realized before Dec. 31, 2026 could eventually push a retiree into a higher Medicare bracket in 2028. The actual 2028 IRMAA thresholds and Medicare premium amounts have not yet been published, so planning requires estimates rather than knowing the final cutoff today.
Here Is Where Medicare Starts Charging More
IRMAA does not affect every retiree. CMS estimates that roughly 8% of Medicare Part B beneficiaries pay the additional income-related amount. For 2026, an individual with IRMAA MAGI of $109,000 or less, or a married couple filing jointly with $218,000 or less, pays the standard $202.90 monthly Part B premium and no Part D IRMAA. Once income crosses those thresholds, however, additional charges begin.
For Medicare purposes, MAGI has a particularly important definition. Social Security generally starts with adjusted gross income from the federal tax return and adds tax-exempt interest. That means income retirees may think of as “tax-free,” including tax-exempt municipal bond interest, can still matter when determining IRMAA.
The 2026 brackets show how quickly the cost can rise. Above $109,000 for single filers or $218,000 for joint filers, the first tier adds $81.20 per month to Part B and $14.50 per month to Part D for each affected beneficiary. At progressively higher income levels, the surcharges climb until the highest 2026 tier adds $487 per month to Part B and $91 per month to Part D. Part D IRMAA is charged in addition to the beneficiary’s regular prescription-drug plan premium.
| 2026 MAGI, Single | 2026 MAGI, Joint | Part B IRMAA | Part D IRMAA |
|---|---|---|---|
| $109,000 or less | $218,000 or less | $0 | $0 |
| Over $109,000 to $137,000 | Over $218,000 to $274,000 | $81.20 | $14.50 |
| Over $137,000 to $171,000 | Over $274,000 to $342,000 | $202.90 | $37.50 |
| Over $171,000 to $205,000 | Over $342,000 to $410,000 | $324.60 | $60.40 |
| Over $205,000 to under $500,000 | Over $410,000 to under $750,000 | $446.30 | $83.30 |
| $500,000 or more | $750,000 or more | $487.00 | $91.00 |
For a married couple with both spouses on Medicare, moving just over the first threshold can therefore add about $2,297 a year in combined Part B and Part D IRMAA. At the highest tier, those two surcharges alone can total $13,872 annually for the couple, before their standard Part B premiums or regular Part D plan premiums are included.
Roth Conversions Can Create an Expensive Medicare Surprise
The danger for investors is that IRMAA can be triggered by income that appears only once. Social Security specifically notes that MAGI can include one-time income such as capital gains, property sales, IRA withdrawals, and conversions from traditional IRAs to Roth IRAs. A large conversion that makes sense from a long-term tax perspective can therefore have a second cost that is easy to overlook: higher Medicare premiums two years later.
IRMAA also behaves differently from a conventional marginal tax bracket. Crossing into a higher tier can cause the higher monthly adjustment to apply, which is why investors close to a threshold should pay attention to relatively small changes in year-end income. Dividends, mutual-fund capital-gain distributions, required withdrawals, a stock sale, or a larger-than-planned Roth conversion can all affect the final MAGI calculation.
That does not mean investors should automatically avoid a Roth conversion simply to stay below an IRMAA line. Paying a temporary Medicare surcharge could still make financial sense if a conversion reduces much larger future tax bills, lowers future taxable distributions, or accomplishes other estate and retirement-planning goals. For MIN readers, the important point is to calculate both sides of the trade rather than evaluating the income-tax consequences alone.
Losing a Spouse Can Make the IRMAA Problem Worse
Another potential Medicare surprise appears after the death of a spouse. A surviving spouse can generally file a joint federal return for the year in which the spouse dies if the requirements are met. After that, the taxpayer may move to single status unless eligible for another filing status, such as qualifying surviving spouse.
That change can matter enormously for IRMAA because the single thresholds are roughly half the married-filing-jointly thresholds at many levels. In 2026, for example, the first IRMAA threshold is $218,000 for married couples filing jointly but only $109,000 for individual filers. A surviving spouse could therefore have considerably less household income than the couple previously had and still find themselves subject to the same or even a higher Medicare surcharge tier.
There is a potential escape valve when income falls because of certain major life changes. Social Security allows beneficiaries to request a new IRMAA determination after qualifying events such as marriage, divorce, death of a spouse, work stoppage or reduction, and certain losses of income. But investors should not assume Form SSA-44 can erase every Medicare surcharge. A Roth conversion or voluntary investment transaction, by itself, is not one of SSA’s listed life-changing events.
Three Moves Investors Can Still Consider in 2026
For retirees planning a Roth conversion, the first step is to estimate full-year 2026 MAGI before deciding on the conversion amount. That projection should account for pensions, Social Security that becomes taxable, dividends, interest, capital gains, IRA distributions, tax-exempt interest, and other income that could appear before year-end. Because the 2028 IRMAA thresholds have not yet been announced, investors cannot target an exact future cutoff today, but they can model several possibilities and build in a cushion. The goal is not necessarily to avoid IRMAA at all costs. It is to know the Medicare cost before intentionally generating additional taxable income.
Charitably inclined investors age 70½ or older have another powerful planning tool. A qualified charitable distribution, or QCD, allows an eligible IRA owner to have money sent directly from an IRA to a qualifying charity. A properly executed QCD is generally excluded from gross income and can count toward an IRA owner’s required minimum distribution. For 2026, the annual QCD exclusion limit rises to $111,000 per eligible IRA owner. Because the distribution can stay out of AGI, QCDs can be particularly useful when IRMAA is part of the planning equation.
Investors can also review taxable portfolios for capital losses. Capital losses generally offset capital gains, and when total capital losses exceed total gains, taxpayers can generally deduct up to $3,000 of the remaining net capital loss against other income, or $1,500 for married taxpayers filing separately. Unused losses can generally carry forward to later years. For an investor sitting near an IRMAA threshold, coordinating gains, losses, charitable giving, and Roth conversions before year-end can make a meaningful difference.
The December 31 Deadline Matters More Than the Filing Deadline
The Medicare charge that appears in 2028 may feel distant, but many of the decisions determining it will happen in the next several months. Social Security will generally look to 2026 tax information when calculating 2028 IRMAA, even though that 2026 return will normally be filed in 2027.
That makes Dec. 31 more important than April 15 for many retirement-planning decisions. Once a Roth conversion, investment sale, distribution, or other income-producing transaction has occurred, investors may have limited options for changing its effect on MAGI after the year closes.
For retirees with substantial portfolios, IRMAA should therefore be treated as another cost to model alongside federal income taxes, capital-gains taxes, and required distributions. A tax move that saves money over 20 years may still be worth making even if it temporarily raises Medicare premiums. But discovering that Medicare cost only after the bill arrives is the part investors can often avoid.