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Medicare and IRMAA: the retirement cost most calculators miss
Healthcare is the biggest variable in retirement spending. Here's what Medicare actually costs in 2026, what IRMAA does to high-income retirees, and how to plan around both.
By The Yearfold team · April 17, 2026 · Last reviewed May 4, 2026
Most retirement calculators show your projected portfolio balance and stop there. They quietly assume "healthcare costs come out of your monthly spending number." That's technically true. It's also a lie of omission — because healthcare in retirement is the single biggest source of variance in retirement spending, and IRMAA can suddenly add $4,000-$13,000/year per person in surcharges if your income crosses a threshold.
Here's what Medicare actually costs in 2026, what IRMAA is, and how to plan around the variance.
What Medicare actually costs in 2026
Medicare has four parts. Most retirees pay for some combination of A, B, D, and either Medigap or Medicare Advantage. The real-world monthly cost for a typical 65-year-old in 2026:
| Part | What it covers | 2026 base cost |
|---|---|---|
| Part A | Hospital stays | $0 if you have 40 quarters of payroll-tax history (most people) |
| Part B | Doctor visits, outpatient | $185.00/month standard premium |
| Part D | Prescription drugs | $36.78/month national average |
| Medigap (Plan G) | Fills Part A/B gaps | $150-$300/month depending on state and age |
| Medicare Advantage (alternative to Medigap + D) | All-in plan | $0-$80/month premium, but more out-of-pocket exposure |
A typical 65-year-old retiree pays roughly $370-$520/month for Part B
- Part D + Medigap (G), assuming median-cost Medigap pricing for their state. For a couple, double it.
Sources: CMS Medicare costs 2026 and KFF's annual analysis.
What IRMAA is, and why it bites
IRMAA — the Income-Related Monthly Adjustment Amount — is a surcharge that increases your Medicare Part B and Part D premiums based on your modified adjusted gross income from two years ago.
Yes — two years ago. The 2026 IRMAA is based on your 2024 tax return.
The 2026 brackets (MFJ):
| MAGI bracket (joint) | Part B surcharge | Part D surcharge | Combined per person |
|---|---|---|---|
| Up to $212,000 | $0 | $0 | $0 |
| $212,000–$266,000 | +$74.00/mo | +$13.70/mo | +$87.70/mo |
| $266,000–$334,000 | +$185.00/mo | +$35.30/mo | +$220.30/mo |
| $334,000–$400,000 | +$295.90/mo | +$57.00/mo | +$352.90/mo |
| $400,000–$750,000 | +$406.90/mo | +$78.60/mo | +$485.50/mo |
| Above $750,000 | +$443.90/mo | +$85.80/mo | +$529.70/mo |
Source: CMS 2026 Part B premiums and Part D analogue.
For a couple in the $266K-$334K bracket, that's an extra $5,287/year per person — $10,575 for the household on top of the base Medicare premiums.
The thresholds are per individual filer. For singles, the brackets start at half the joint thresholds.
The IRMAA cliff
IRMAA is a cliff, not a phase-in. You can be one dollar over a bracket threshold and pay the entire next-tier surcharge. A retiree who took a $5,000 RMD that pushed them from $211,500 MAGI to $212,500 MAGI just unlocked $87.70/month × 12 months × 2 people = $2,105/year in surcharges they wouldn't have paid for $999 less in withdrawals.
This is why "IRMAA management" is a real planning activity. Common moves:
- Delay an IRA withdrawal to next year if you're close to a threshold.
- Bunch large withdrawals (capital gains, Roth conversions) into one year so the surcharge bracket is hit once, not annually.
- Time Roth conversions in low-income years (typically the gap between retirement and age 73 RMDs) so they don't compound with RMDs into a permanent IRMAA bracket.
- Donate appreciated stock instead of cash for charitable giving — the cost basis avoids both income tax and IRMAA bracket inflation.
The Yearfold calculator's Taxes tab forecasts your year-by-year IRMAA exposure and suggests Roth conversion amounts that fit under each year's threshold.
What about long-term care?
Long-term care is the biggest healthcare variance most calculators don't even attempt to model.
The Genworth 2024 Cost of Care Survey reports:
- Median assisted-living cost: $5,350/month ($64,000/year).
- Median private nursing-home room: $10,646/month ($128,000/year).
- Median in-home health aide: $6,481/month if needed full-time.
Roughly 70% of people 65+ will need some form of long-term care (HHS 2025 report). The median lifetime LTC cost is around $172,000, but the right tail goes far higher: 20% of people who need LTC need it for 5+ years.
Medicare does NOT cover long-term custodial care. Medicaid does, but only after you've spent down your assets. Three honest options:
- Self-fund. Set aside $200K-$500K outside the simulated portfolio. Yearfold's calculator doesn't model this; you carve it out before running your numbers.
- Long-term care insurance. Premiums for a 60-year-old run $3K-$6K/year for $200/day-of-coverage. Increasingly hard to find traditional LTC policies; hybrid life/LTC products (with a death benefit if you don't use the LTC) are now the more common option.
- Plan to spend down to Medicaid. Honest acknowledgment that if LTC need is severe, your assets will be exhausted and Medicaid will pick up. Medicaid LTC has limited facility choices and has 5-year look-back rules on asset transfers.
There is no clean answer here. The honest move is to acknowledge the risk in your planning and pick a strategy explicitly.
The 2026 healthcare planning checklist
Before you finalise a retirement plan, sanity-check these:
- ☐ Have you budgeted Medicare Part B + D + Medigap (or Advantage) for both spouses? (~$700-$1,000/month combined for a 65-year-old couple)
- ☐ Have you forecasted your year-by-year MAGI and identified the years you might cross IRMAA brackets?
- ☐ If you're retiring before 65, have you priced ACA marketplace coverage for the gap years? (Premium subsidies disappear at 400% of FPL — careful income-management matters here too.)
- ☐ Have you carved out a long-term care reserve OR documented that spending-down is your plan?
- ☐ Have you checked whether you qualify for a Health Savings Account (HSA) before retirement? HSAs are the single most tax-efficient retirement-healthcare account available.
How Yearfold models this
Yearfold's calculator models Part B base premium, IRMAA brackets, and an estimated Medigap cost as line items in the Taxes + IRMAA tab. It does NOT model long-term care explicitly — set aside a separate reserve for that risk.
For the year-by-year IRMAA forecast, Roth-conversion-ladder suggestions, and tax-bracket projections, run the calculator and open the Taxes tab.
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