Medicare is not free. The standard 2026 Part B premium is $185/month per person. Add Part D drug coverage, Medigap supplemental insurance, and dental coverage, and a healthy retired couple spends $6,000-$12,000 per year on healthcare premiums alone.
For higher-income retirees, the IRMAA surcharge can triple the Part B premium.
Medicare Parts Explained
| Part | Covers | 2026 Monthly Premium |
|---|---|---|
| Part A (Hospital) | Inpatient care, SNF, hospice | $0 if 40+ quarters of work; $518 if not |
| Part B (Medical) | Doctor visits, outpatient, lab tests | $185.00 (standard) |
| Part C (Medicare Advantage) | All-in-one alternative to Original Medicare | Varies ($0-$200+) |
| Part D (Drug) | Prescription medications | Varies (~$30-$100) |
| Medigap | Supplemental coverage for Part A/B gaps | ~$100-$400/month |
Medicare Part B 2026 Deductible and Cost-Sharing
| Item | 2026 Amount |
|---|---|
| Part B annual deductible | $257 |
| After deductible, you pay | 20% of Medicare-approved amount |
| Part B out-of-pocket maximum | None (without Medigap) |
The lack of an out-of-pocket maximum is why most Medicare beneficiaries need Medigap (Plan G is the most comprehensive) or Medicare Advantage. Without supplemental coverage, a serious illness can cost tens of thousands in Part B cost-sharing.
IRMAA: The High-Income Surcharge
IRMAA (Income-Related Monthly Adjustment Amount) increases Part B and Part D premiums based on income from 2 years prior.
2026 Part B IRMAA brackets (based on 2024 MAGI):
| Individual MAGI | Married MAGI | Monthly Part B Premium |
|---|---|---|
| $106,000 or less | $212,000 or less | $185.00 |
| $106,001-$133,000 | $212,001-$266,000 | $259.00 |
| $133,001-$167,000 | $266,001-$334,000 | $369.00 |
| $167,001-$200,000 | $334,001-$400,000 | $479.00 |
| $200,001-$500,000 | $400,001-$750,000 | $515.00 |
| Above $500,000 | Above $750,000 | $590.90 |
A married couple with $250,000 in MAGI during their high-income earning years pays $369/month each in Part B premiums , $4,428/year each, or $8,856 together just for Part B.
Why Roth Conversions Affect Medicare
IRMAA uses MAGI from 2 years prior. A large Roth conversion at age 63 shows up in MAGI at 65. The year you enroll in Medicare. Many retirees are surprised to find their first-year Medicare bill is dramatically higher because of a conversion they did before retirement.
Roth conversion planning: Keep MAGI below the IRMAA thresholds in the 2 years before Medicare enrollment (ages 63-64 for Part B at 65).
Total Medicare Cost Estimate for a Retired Couple
| Coverage | Monthly Cost Per Person | Annual per Couple |
|---|---|---|
| Part A | $0 (if eligible) | $0 |
| Part B (standard) | $185 | $4,440 |
| Part D | $40 | $960 |
| Medigap Plan G | $160-$250 | $3,840-$6,000 |
| Dental (separate) | $40-$60 | $960-$1,440 |
| Total | ~$425-$535 | ~$10,200-$12,840 |
Medicare-related healthcare costs represent one of the largest fixed expenses in retirement. Often more than utilities and food combined.
Medicare Advantage vs. Original Medicare + Medigap
| Medicare Advantage | Original Medicare + Medigap | |
|---|---|---|
| Monthly premium | Often $0-$50 | $160-$250 for Medigap alone |
| Networks | Restricted | Almost any doctor/hospital |
| Referrals | Often required | Usually not required |
| Out-of-pocket max | $3,000-$10,000/year | Much lower with Medigap |
| Coverage while traveling | Often limited | Nationwide |
| Best for | Cost-conscious, local care preference | Those who want comprehensive, flexible coverage |
Frequently Asked Questions
When do I need to enroll in Medicare?
Initial enrollment period is the 7-month window centered on your 65th birthday: 3 months before, your birthday month, and 3 months after. Missing this window and not having creditable coverage through an employer can result in permanent premium penalties , 10% per year for Part B, 1% per month for Part D.
Can I appeal an IRMAA decision?
Yes. If your income has dropped significantly since the 2-year look-back period due to a qualifying life event (retirement, divorce, death of spouse), you can file Form SSA-44 to request reassessment based on current year income. IRMAA can be adjusted downward when income has materially declined.
What does Medigap Plan G cover?
Plan G covers: Part A deductible ($1,676 in 2026), Part A coinsurance, Part B coinsurance (20%), skilled nursing facility coinsurance, and foreign travel emergencies. It does not cover the Part B deductible ($257). Plan G is currently the most comprehensive Medigap plan available to new enrollees (Plan F, which covered the Part B deductible, is no longer available to those who became Medicare-eligible after 2020).
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