Signing up for Medicare isn't as clear-cut a process as some might think. That's because enrollees have a big decision to make — stick with original Medicare (Parts A and B) and pair it with a Part D drug plan, or sign up for an all-in-one Medicare Advantage plan.

As of February 2026, more than 35 million people were enrolled in a Medicare Advantage plan. And enrollment in Medicare Advantage has increased steadily in recent years, with 19% of eligible Medicare beneficiaries signing up in 2007 versus 54% in 2025, reports the Kaiser Family Foundation (KFF).

It's easy to see why so many people find these plans appealing. Not only do many Medicare Advantage plans come with $0 premiums, but most also offer supplemental benefits beyond what original Medicare covers.

Plus, some enrollees like the security of an annual cap on out-of-pocket spending, which Medicare Advantage plans offer. Original Medicare does not, though a supplement (Medigap) can help cap costs to a large degree.

That doesn't mean Medicare Advantage plans are perfect, though. Enrollees who ditch Medicare Advantage often cite reasons such as limited provider networks and strict prior-authorization rules.

Mark Prip, a Medicare supplement insurance agent at Policy Guide, says, "If you've kept up with the headlines over the last year or two, you've seen Medicare Advantage undergo a significant shift. More than a million Medicare beneficiaries have been affected by Medicare Advantage plan terminations, consolidations, and service-area exits due in part to lower federal reimbursement rates."

Prip also explains that to combat these lower reimbursement rates, many insurance companies have been shrinking provider networks and ending contracts with large hospital systems across the country.

Given these and other constraints, there are certain people for whom Medicare Advantage simply may be a poor fit. Here are three signs you may want to stick with original Medicare instead.

1. You don't have great health

There's a common saying that people in good health tend to do well with Medicare Advantage, while those in poor health tend to lose out financially. Scott R. Maibor, Managing Director at Senior Benefits Boston, says there's some truth to that generalization.

"For someone with multiple or severe health issues, a Medicare Advantage plan may prove to be ultimately more expensive than traditional Medicare with a supplement due to the higher copays and maximum out-of-pocket limit," he says.

Just beware of the "Medigap trap." Those supplemental insurance policies that wrap around Original Medicare can be almost impossible to get if you enroll in Medicare Advantage first and try to switch back later. In most cases, you can only sign up for Medigap plans without facing medical underwriting during the first six months after you become eligible for Medicare, though state rules do vary.

Another reason you might prefer original Medicare if you have a chronic illness? Out-of-pocket prescription drug costs under Part D are capped at $2,100 annually (for 2026).

Danielle K. Roberts, co-founder of Boomer Benefits, a national Medicare insurance agency, says Medicare Advantage plan maximum out-of-pocket limits matter more than some people realize.

"If you're managing a serious illness or anticipating frequent medical care, make sure to ask yourself, 'If I had a year with significant medical expenses, could I comfortably afford to reach that maximum?'" she says.

On the other hand, Roberts points out that Medicare Advantage plans aren’t automatically the wrong choice just because someone has health issues.

"They can be an excellent idea for many people, especially those with certain health conditions or life situations who qualify for both Medicare and Medicaid," she says.

Roberts also explains that Medicare Special Needs Plans (SNPs), a type of Medicare Advantage plan, are designed specifically for people with certain health conditions or who are dual-eligible for Medicaid and are "actually one of the strongest examples of how Medicare Advantage can work well."

As of February 2026, more than 8 million people were enrolled in an SNP, accounting for 83% of total Medicare Advantage enrollment growth over the previous year, per KFF.

2. You plan to split your time between different ZIP codes or travel frequently

Because Medicare Advantage plans limit enrollees to specific provider networks, Prip cautions that people who travel a lot may run into issues.

"While most plans will cover you out of state for medical emergencies, seeking care at specialty facilities in another state can become a real issue because of Medicare Advantage provider networks," he explains. "So if you're someone who travels frequently or simply wants the option to seek specialty care anywhere in the country, Medicare Advantage may not be the best fit."

Maibor agrees and says snowbirds or retirees with providers in two locations may find it difficult to use a Medicare Advantage plan.

3. You don't have the patience for constantly changing rules and providers

Another issue with Medicare Advantage plans? The rules aren't set in stone. And that could make managing care cumbersome.

"I think the main reason Medicare Advantage may not be a good fit for someone is if they're not comfortable keeping up with the rulebook that comes with these plans," Prip says.

"Whenever we conduct a needs analysis with a client, we ensure they understand exactly how Medicare Advantage works," Prip continues. "For example, I ask them, 'Are you OK knowing that your current medical providers who are in network today may not be in network in the future? Are you OK with having to switch doctors if your insurance company is no longer contracted with your medical providers?'"

Prip says that if you live in a smaller town and don't travel often, Medicare Advantage may be a more suitable option. However, he says that for those who want freedom, flexibility, and fewer surprises, original Medicare with supplemental insurance may be a better, less confusing choice.

How to choose the right Medicare Advantage plan

Medicare Advantage is wrong for some people but right for others. If you're in the latter camp, it's important to know how to choose the right one. To that end, Roberts says the key is not to get hung up on premium costs.

"The first thing I'd do is verify that your doctors, specialists, hospitals, and preferred pharmacy all participate in the plan's network," she says.

Next, Roberts says, you should make sure every prescription you take is covered by the plan's formulary and see what your copays will actually be. From there, you can compare each plan's out-of-pocket maximum.

Roberts says you should also estimate the cost of a major medical event.

"Understanding what you could owe if you need surgery, chemotherapy, or frequent specialist care is just as important," she says.

Finally, Roberts advises, don't let extra benefits be the driving factor. They can seem tempting, but you may not end up needing or using all of them.

"I always tell people to choose the plan that gives them confidence they'll have access to the care they need at a cost they can comfortably afford," she says.

Read More

• What Medicare Covers When You Travel in the US and Abroad
• How Medicare Advantage Costs Taxpayers — and Retirees
• Problems with Medicare Advantage Plans Keep Mounting
• What Does Medicare Not Cover? Eight Things You Should Know

As more people in the U.S. remain in their homes as they grow older ("age in place"), the cost of making a home safer and more accessible can be a significant hurdle.

A new proposal in Congress would ease that burden by creating a federal tax credit for older homeowners who invest in accessibility upgrades.

The Senior Accessible Housing Tax Credit Act of 2026 would provide a credit of up to $10,000 for taxpayers age 60 and older who make qualifying improvements to help them remain safely and independently in their homes.

The legislation addresses a gap for older adults because Medicare generally doesn't cover structural home modifications, like installing wheelchair ramps, widening doorways, or remodeling bathrooms for accessibility. As a result, many homeowners must pay those often substantial costs out of pocket.

Here's more to know.

New $10,000 home tax credit for older adults?

The Senior Accessible Housing Tax Credit Act of 2026, recently introduced by Sens. Angela Alsobrooks (D-Md.) and Kirsten Gillibrand (D-N.Y.), would create a federal tax credit of up to $10,000 for taxpayers age 60 and older who make qualifying accessibility improvements to their homes.

"This critical legislation allows for seniors to stay in their homes — for many that means homes they love and have been in for decades —and install essential, aging-related modifications," Sen. Alsobrooks stated in a release announcing the proposal.

Sen. Gillibrand, top Democrat on the U.S. Senate Committee on Aging, added that "a safe, accessible place for seniors to live should be a right, not a privilege."

The measure, which has received support from the National Association of Realtors, also has companion legislation in the House, introduced by Democratic Rep. George Latimer of New York. According to the bill's sponsors:

• If enacted, the bill would create a nonrefundable tax credit for eligible taxpayers age 60 or older for expenses related to certain home modifications on their principal residence or a qualifying second home
• The credit would be equal to the cost of eligible expenditures, with an annual limit of $10,000
• Qualifying expenditures would also include certain labor costs related to the preparation, assembly, or installation of an eligible modification

What kind of projects are lawmakers talking about? Installing wheelchair ramps, grab bars, non-slip flooring, bathtub cuts or shower seats, furniture risers or chair lifts, or widening doorways would generally qualify under the proposal.

Replacement of toilets and bathroom vanities and kitchen or bathroom faucets are also mentioned in the bill. However, a general remodeling project, like a kitchen renovation designed primarily for appearance, likely wouldn't qualify.

Aging in place home modifications

The proposal comes as more older adults in the United States look for ways to remain in their homes. According to AARP's 2024 Home and Community Preferences Survey, 75% of adults age 50 and older want to remain in their current homes as they age.

But so-called "aging in place" often requires more than simply remaining in a longtime home. As some people get older, features like stairs, narrow doorways, high thresholds, and traditional bathrooms can make everyday tasks more difficult or increase the risk of falls.

As a result, some homeowners may need to install grab bars or step-free entrances, widen doorways or make other accessibility upgrades to continue living safely and independently.

Those improvements can vary widely in cost. According to data compiled by NerdWallet on aging-in-place home renovations:

• Installing grab bars can cost about $100 to $400
• Widening doorways can cost roughly $600 to $2,000 per doorway
• A stair lift can cost about $7,000 on average

For homeowners who need multiple changes, the expense can be significant.

As mentioned, another challenge is that Medicare generally doesn't pay for these types of home modifications.

Medicare Part B may cover certain medically necessary durable medical equipment (DME) prescribed by a doctor for use in your home (e.g., walkers, wheelchairs, hospital beds), provided deductible and supplier rules are met. But Medicare doesn't cover structural modifications to a home or, for example, bathroom "convenience" items like grab bars or raised toilet seats.

That leaves many paying these expenses out of pocket or looking for other sources of assistance.

Home accessibility tax deductions under current law

Keep in mind that the proposed $10,000 tax credit isn't currently available. Congress would need to pass the legislation and have it signed into law by President Trump before eligible taxpayers could claim it. It's unclear if there's sufficient bipartisan support for the measure to gain traction.

But…all is not lost. As Kiplinger has reported, under current IRS rules, certain home modifications may qualify as deductible medical expenses.

Under existing law, a taxpayer generally must itemize deductions to claim medical expenses, and only eligible medical expenses that exceed 7.5% of adjusted gross income (AGI) can be deducted.

Reimbursed medical expenses are not deductible, and the modification(s) must be made primarily to provide medical care for the taxpayer, a spouse, or a qualifying dependent.

Additionally:

• The improvement generally must be tied to a specific medical need. A homeowner who installs a ramp because of a diagnosed medical condition may be able to deduct some of the cost, but someone who adds accessibility features simply as a precaution generally would not receive a tax benefit.
• If a home improvement increases the value of the property, only the portion of the cost that exceeds the increase in the home's value generally qualifies as a medical expense deduction.

For example, if an accessibility improvement costs $20,000 but increases the home's value by $8,000, generally only the remaining $12,000 may qualify as a medical expense deduction, assuming the other IRS requirements are met.

For more information and specific rules, see IRS Publication 502. Consider speaking with a trusted tax professional if you're unsure whether a specific upgrade might be deductible on your return, as this information is provided for educational purposes.

If you're concerned about the costs of making a home upgrade, you may also want to check for programs or organizations in your state or community that may provide assistance for eligible aging-in-place improvements.

What to Read Next

• Tax-Deductible Home Improvement in Retirement
• New Bill Proposes $1 Million Capital Gains Home Exclusion
• 5 Little-Known Senior Tax Deductions
• Property Tax Changes Homeowners Over Age 65 Should Watch in 2026

For nearly three decades, financial planning experts relied on a 30-year benchmark: retire at 65, and your money will last to age 95. However, medical advancements, earlier career exits, and active longevity have shifted the baseline.

According to Social Security Administration (SSA) data, a 65-year-old married couple has about a 50% chance that at least one partner will live past 90, and a 20% chance of reaching 95. So, preparing for a 40-year retirement is becoming the new normal for many.

Yet while most investors recognize that living longer requires a larger nest egg, few might account for how a four-decade timeline reshapes the tax landscape. Stretching a retirement portfolio across that span exposes wealth to escalating forced withdrawals, Medicare surcharges, and bracket jumps that standard 30-year models might not capture.

Here are the primary financial and tax risks of a potential 40-year retirement — and how you might adapt your strategy accordingly.

Financial Risks

1. The compounding math of inflation

Across a 30-year period, inflation is already a hassle to deal with. But over 40 years, it can significantly degrade your purchasing power.

A quick way to visualize this decay is the "Rule of 72." This rule states that, at a modest 3% annual inflation rate, your buying power is cut in half roughly every 24 years. By year 40, a single dollar retains barely 30% of its original value, as shown in the table below.

So, a lifestyle that costs $100,000 at age 60 could require over $326,000 annually by age 100 to maintain the same standard of living, assuming a flat inflation rate (though, of course, economic periods fluctuate — more on that below).

2. Exposure to more market downturns

Historically, the S&P 500 Index enters a bear market (a decline of 20% or more) roughly once every 4 to 5 years. While market cycles are unpredictable, these historical patterns suggest that over a typical retirement:

• A 30-year plan will navigate between 6 and 7 bear markets.
• A 40-year plan must survive 8 to 10 major downturns.

Naturally, when these downturns occur matters just as much as how many you face.

Research on sequence-of-returns risk shows that a severe crash in the first three years of retirement is far more damaging to a portfolio’s longevity than one occurring two decades later.

Extending your retirement to 40 years compounds this vulnerability in two ways. 1) It doubles your chances of starting retirement during a market trough. 2) Even if you survive an early crash, adding a fourth decade increases the odds of a second prolonged downturn later in life — when years of withdrawals have already left your portfolio with less capital to recover.

3. A multiple-decade healthcare horizon

In a typical 30-year plan, healthcare and long-term care expenses are frequently modeled as a late-stage spike occurring in the final three to five years of life.

But in a 40-year plan, medical expenses can become a multi-decade expense.

Fidelity recently reported in its annual Retiree Health Care Cost Estimate that a single 65-year-old retiring today can expect to spend an average of $185,500 (or roughly $371,000 for a couple) out of pocket on healthcare throughout retirement (and that assumes standard Medicare coverage without long-term care needs).

Comprehensive long-term care or extended medical needs over 40 years can push total healthcare expenditures well beyond $600,000 for a couple, far outpacing general consumer price index (CPI) inflation rates.

Managing these financial risks over 40 years requires careful portfolio drawdowns. But withdrawing more capital to keep up with inflation and healthcare introduces a secondary threat: triggering a domino effect of late-life tax penalties.

Tax Risks

1. The RMD expansion spike

When you save money in a traditional IRA or 401(k), the government lets you defer paying income taxes on it right away. But they won't wait forever.

Under current law (SECURE 2.0), starting between ages 73 and 75, the government enforces a rule called a required minimum distribution (RMD). This rule requires you to withdraw a set amount each year so they can tax it.

The catch? The older you get, the bigger the percentage you are forced to take out.

The IRS divides your account balance by a life expectancy divisor that shrinks every year you live. Because you divide by a smaller number, the required withdrawal percentage spikes as you age:

• Age 75: Divisor 24.6 (~4.07% of balance mandatory withdrawal)
• Age 85: Divisor 16.0 (~6.25% of balance mandatory withdrawal)
• Age 95: Divisor 8.9 (~11.24% of balance mandatory withdrawal)

If tax-deferred accounts compound undisturbed for 15 to 20 years before RMDs begin, a $1.5 million balance at age 60 could easily grow to over $3 million by age 80.

A forced 6.25% withdrawal on $3 million means $187,500 in mandatory taxable income in a single year. This extra income can push you into higher tax brackets and exceed your actual lifestyle cash-flow needs.

2. The survivor or 'widow's tax' penalty

When one spouse passes away during a multi-decade retirement, the surviving spouse often inherits the combined balance of tax-deferred accounts. However, their tax filing status changes from married filing jointly to single the next year after their spouse passed away.

Single federal tax brackets are approximately half as wide as joint brackets for the same rate tiers. The result? Higher taxes on the surviving spouse, also known as the "widow's tax" penalty.

• For example, the threshold to enter the 24% or 32% single federal tax bracket is roughly half the dollar amount allowed for joint filers.
• The impact is that the surviving spouse receives nearly the same mandatory RMD income stream from inherited accounts, but pays higher marginal tax rates at much lower income levels. Over a 40-year horizon, this survivor penalty can erode wealth when late-life health costs peak.

For more information, check out Kiplinger's report, Avoiding the Widows' Penalty Tax Trap After a Spouse Passes.

3. Social Security 'tax torpedo' and IRMAA surcharges

During a standard 30-year retirement, tax traps are often viewed as short-term hurdles in late life. With a 40-year projection, however, decades of tax-deferred growth force larger required distributions, which can subject your wealth to multi-decade tax penalties:

Social Security tax torpedo. The IRS determines Social Security benefit taxation using a figure called "provisional income."

• This is basically your adjusted gross income (AGI) plus tax-exempt interest and 50% of your Social Security benefits.
• By increasing provisional income with, say, higher RMDs, up to 85% of your Social Security benefits may become subject to federal income tax.
• For instance, taking just $1,000 extra from an IRA can expose up to $850 of Social Security benefits to taxation, effectively pushing your marginal tax rate above 40%.

IRMAA Medicare surcharges. Realized capital gains or large IRA withdrawals can also cross Medicare's income-related monthly adjustment amount (IRMAA) thresholds.

• In 2026, the first IRMAA threshold begins at $109,000 for single filers and $218,000 for joint filers. (Because Medicare uses a two-year tax lookback, your 2026 premiums are actually determined by your modified adjusted gross income (MAGI) from your 2024 tax return.)
• Because IRMAA uses strict "cliff" thresholds rather than marginal tiers, crossing these thresholds by as little as $1 can cost you thousands in retirement through full monthly premium surcharges on Part B and Part D for both spouses.

Absorbing high-tier IRMAA surcharges ($6,900 to $13,800+ annually for a couple) over 15 to 20+ years, rather than just a few final years, can dramatically accelerate portfolio depletion in your 80s and 90s.

Related: 7 Ways to Plan Now to Save on Medicare IRMAA Surcharges Later.

Update Your Tax Plan

Although minimizing your taxes on a four-decade retirement plan isn't everything, avoiding taxes can help you control your tax brackets across different life phases.

Below are a few strategies that may help protect a 40-year portfolio (though this list is certainly not exhaustive; be sure to consult a qualified tax professional regarding your specific situation).

1. Maximize the 'gap years' with strategic Roth conversions

The period between your career exit and the start of Social Security and forced RMDs (typically ages 60 to 73 or 75) can be used as a valuable planning window. During these relatively "low" income periods, your marginal tax rate might be lower than when you were working.

Instead of letting this low-tax window go to waste, you can try a multi-year Roth conversion.

How it works: Suppose a retired couple (both born in 1960 or 1961) pays $80,000 in annual living expenses from savings, which generates $2,200 in high-yield taxable interest income.

To capitalize on this temporary "tax valley," they convert $100,000 from a traditional IRA to a Roth IRA in 2026:

• Gross income: $102,200 ($100,000 conversion + $2,200 interest)
• Deductions: -$35,500 (2026 standard deduction for joint filers 65+)
• Net taxable income: $66,700

This taxable income figure of $66,700 falls squarely into the lowest federal tax tiers — the 10% and 12% brackets (which max out at $100,800 for joint filers in 2026).

Paying this relatively low tax rate today permanently shifts those funds into tax-free Roth status.

By the time RMDs kick in at age 75, the couple’s traditional IRA balance is substantially smaller, suppressing forced distributions, mitigating the Social Security tax trap, and shielding them from higher tax brackets in their 80s and 90s.

Related: 6 Tax Reasons to Convert Your IRA to a Roth (and When You Shouldn't).

2. Treat your HSA as an extended-life medical account

Health savings accounts (HSAs) offer an unmatched triple-tax advantage: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are 100% tax-free.

In 2026, individuals can contribute up to $4,400 (or $8,750 for family coverage), plus a $1,000 catch-up contribution for those age 55 and older. (Provided they are not yet enrolled in Medicare, which stops all active HSA contributions).

Furthermore, expanded 2026 eligibility rules now include certain catastrophic marketplace plans and direct primary care (DPC) arrangements alongside traditional high-deductible health plans (HDHPs).

How it works: Instead of spending HSA funds as medical bills arise during your working years, pay those bills out of pocket, digitally scan and back up the receipts, and leave the HSA invested in low-cost index funds. Over 20 to 30 years, an HSA balance can grow into a multi-hundred-thousand-dollar tax-free health fund.

• Then, when late-life healthcare costs inevitably rise in your 80s or 90s, you can draw from the HSA completely tax-free to cover doctor bills and long-term care.
• This eliminates the need for extra traditional IRA distributions, keeping your taxable income low and protecting your core retirement portfolio.

3. Establish a three-bucket asset location model

A 40-year portfolio may need more spending flexibility than a 30-year window. To help navigate market cycles over four decades, structure your wealth across three distinct tax environments:

How it works: Having balanced amounts across all three buckets allows you to "blend" annual withdrawals. For example, if you need an extra $10,000 in a given year for a home improvement or medical event, withdrawing that money from a Roth account or using unrealized cash/principal from a taxable brokerage account may keep your taxable income from crossing an IRMAA cliff or perhaps triggering higher Social Security income taxes.

A quick warning on taxable accounts: Liquidating appreciated stock in a taxable brokerage account to generate cash triggers realized capital gains tax. These gains increase your modified adjusted gross income (MAGI), which can inadvertently trigger an IRMAA surcharge.

Furthermore, high earners should watch out for the 3.8% net investment income tax (NIIT), which sits on top of capital gains tax rates and can push your total capital gains tax rate up to 23.8%.

The bottom line

Living to 95 or 100 should be celebrated without fear of financial liability. But stretched over four decades, tax drag becomes a compounding weight on your portfolio if you rely on an outdated 30-year model.

Thus, achieving a 40-year retirement isn't just about accumulating a larger total sum — it's about controlling when, where, and how you pay the IRS over the next forty years.

By converting pre-tax assets early, building multi-bucket flexibility, and leveraging tax-free accounts like Roths and HSAs, you might help ensure your wealth lasts as long as you do.

This article does not cover state income tax and is for educational purposes only. The content does not constitute financial, legal, or tax advice.

Read More

• 5 Little-Known Senior Tax Deductions in 2026
• States With No Retirement Tax Ranked by Medical Care
• Taxes on Social Security Benefits: 6 Things to Know

This is a story about the largest lizard and the largest health care payer in the country. But mostly, it’s about the millions of Medicare beneficiaries who might receive coverage of GLP-1 drugs.

Americans have taken to these drugs fast. Eleven percent of U.S. adults now use a GLP-1 for weight loss, while 15% say they’ve used one at some point, according to Gallup.

Now Medicare has joined in. As of July 1, it covers weight-loss drugs for the first time in the program’s history. Eligible beneficiaries can get Wegovy, Zepbound or Foundayo for $50 a month through the Medicare GLP-1 Bridge.

Sounds great, right? Well, as with most things involving Medicare, it’s more complicated than the headline. There’s a catch. Or rather, catches.

Here’s what to understand before counting on cheap GLP-1 coverage in retirement.

Catch #1: The coverage has an expiration date

It helps to know where GLP-1s come from.

GLP-1 drugs trace back to a compound in the saliva of the Gila monster that mimics a human gut hormone signaling fullness. Researchers originally built it into a treatment for type 2 diabetes, not weight loss.

That distinction still governs everything. When Congress created Medicare Part D, it barred coverage of drugs used for weight loss, which were then considered unsafe, ineffective or both. The exclusion is still law today.

The wrinkle is that it applies to the use, not the molecule. Prescribe GLP-1s for type 2 diabetes, cardiovascular risk or sleep apnea and Part D covers them like any other drug. Prescribe the identical injection for obesity alone and Medicare is legally forbidden to pay.

So the Centers for Medicare & Medicaid Services, the federal agency that runs Medicare, built a workaround. The Bridge is a demonstration program that operates outside your Part D plan, through a separate CMS claims processor. It expires on December 31, 2027.

Catch #2: Long-term coverage remains in limbo

The Bridge was supposed to have a sequel. A longer-term program called the BALANCE Model would take over in 2027 and run through 2031.

BALANCE, however, needed insurers. Plans representing at least 80% of Part D enrollment had to volunteer by April 20, 2026. They didn't.

Therefore, CMS responded by extending the Bridge from six months to 18. That patched 2027 and did nothing for 2028. That leaves older adults trying to plan prescription costs around a program with no confirmed successor.

It’s why Jeff Judge, CFP® and managing partner of Chesapeake Financial Planners who works with Medicare-age clients, treats that date as fact rather than forecast.

“We build the plan assuming the Bridge ends on schedule, then treat any extension as a bonus, not something to count on,” he says.

Catch #3: You probably don’t qualify

An estimated 38.9% of U.S. adults 60 and older are living with obesity. Yet, very few will get this deal.

You’ll need a body mass index (BMI) of at least 27 paired with a qualifying condition such as prediabetes, a history of heart attack or stroke or peripheral artery disease. At a BMI of 30 or higher, heart failure, uncontrolled hypertension, chronic kidney disease or severe sleep apnea can open the door.

KFF estimates 3.8 million beneficiaries qualify, out of more than 69 million people on Medicare. That’s roughly one in 18.

Your doctor also has to clear prior authorization through the central CMS processor, not your own Part D plan.

Dorothea Vafiadis, the National Council on Aging’s Senior Strategist for Healthy Aging, expects people to get stuck well before that.

"Medicare beneficiaries aren’t routinely monitoring CMS demonstration programs, and many won’t know if this benefit exists unless they hear about it from a trusted source," she observes.

Catch #4: The $50 hides a few things

Without insurance, these drugs run roughly $900 to $1,400 a month, so $50 looks like a rounding error. Two design quirks, however, could make it cost more than it appears.

First, the $50 doesn’t count toward anything. Because the Bridge sits outside Part D, that copay never touches your deductible or your annual out-of-pocket cap, which is $2,100 in 2026.

"Clients assume hitting the cap means their drug costs are done for the year," Judge says. "This one keeps billing regardless."

Second, Extra Help doesn't apply. Beneficiaries in the Low-Income Subsidy program, who typically pay little or nothing for medications, owe the full $50.

"For many older adults living on fixed incomes, an additional $50 per month, or $600 annually, is a substantial financial burden that may put treatment out of reach," Vafiadis says.

A third cost catches people who aren’t in Part D at all. Roughly 14 million people eligible for Part D aren’t enrolled, Vafiadis notes, and the Bridge requires a drug plan. For them, she says, the true cost extends well beyond the $50 copay, adding monthly premiums and possibly late enrollment penalties.

Catch #5: Getting on it is easier than staying on it

Say you qualify and the drug works. Three things can still take it away.

Your plan can change, as any successor to BALANCE would likely be voluntary. So keeping your medication could require switching Part D plans.

"Switching Part D plans to chase GLP-1 access can quietly wreck coverage on someone’s other five prescriptions," Judge says. "A plan that covers the GLP-1 beautifully might reformulate their blood pressure medication into a higher tier."

You may also stop on your own. Between 50% and 65% of patients quit within the first year, usually over cost, side effects or coverage barriers. A 2026 meta-analysis in eClinicalMedicine found patients regain about 60% of lost weight within a year of stopping.

Perhaps most importantly, your doctor may hesitate. Only about one in 10 participants in the trials that made these drugs famous was 65 or older, which means information about benefits and side effects in the 60-and-older population is limited. Consider that muscle loss is a known side effect. In an older adult, that’s a fall risk rather than a cosmetic issue.

Steps you can take now to secure GLP-1

Older adults mostly aren’t chasing the cultural version of these drugs. KFF polling found that among adults 65 and older, 8% had taken a GLP-1 for a chronic condition while 1% took one for weight loss. For most, this is disease management, which makes it worth handling carefully.

Ask about a covered diagnosis first. If you have type 2 diabetes, sleep apnea, MASH or qualifying cardiovascular risk, that route runs through your regular Part D plan, counts toward your cap and isn’t scheduled to disappear at the end of 2027.

"For a client who qualifies both ways, I generally point them toward the covered-diagnosis route for the long-term stability, even if the near-term cost looks less predictable," Judge says.

Budget the $50 separately. That's about $900 over the program, and neither your out-of-pocket cap nor Extra Help will soften it.

Document your conditions now. Prior authorization requires it, and the paperwork could move slowly.

Bring your whole drug list to open enrollment, October 15 through December 7. Not just the GLP-1.

Ask your prescriber about 2028 before you start. What happens if coverage lapses? Have that conversation in year one.

Price your fallbacks. Manufacturer direct-to-consumer programs, TrumpRx and pharmacy discount pricing all exist.

Because of the growing popularity of these drugs, Congress or CMS may yet build something permanent. But that’s still to be determined.

The Gila monster gets through the desert by hunkering down and waiting out conditions. We don’t have that luxury. Better to start planning now, while the program is still in front of you, so you’re not left in a desert of information when the coverage runs dry.

Read More

• The Longevity Blueprint: 4 Everyday Signs You’re Tracked for a Longer Life
• 10 Medicare Changes to Watch in 2026
• How Obesity Drugs Like Ozempic Could Revolutionize Retirement

Medicare premiums are set to rise again for 2027. The latest Social Security and Medicare Trustees Report (page 207) estimates that Part B premiums will climb 3.5% in 2027, reaching $209.50 per month, up $6.60 from 2026. While another price hike is never good news for retirees, the increase is a relief compared to the almost 10% spike experienced in 2026.

Unlike Part B, Medicare Part D is sold through private insurance companies, either as a standalone drug plan alongside traditional Medicare or as part of a Medicare Advantage policy.

Because individual plan costs vary, the average premium enrollees pay is typically lower than the base beneficiary premium. According to the latest Trustees Report, the Part D base premium is projected to reach $41.33 per month in 2027.

Medicare Part B premiums in 2027

Medicare Part B pays for doctor visits, outpatient care and some home healthcare. When enrolled, you pay both a deductible and a monthly premium. For 2027, the premium is currently projected to rise 3.5% to $209.50, up $6.60 from $202.90 in 2025.

The Part B deductible is projected to reach $292 in 2027, a $9.00 increase from $283.00 in the previous year. On a percentage basis, it's an increase of 3.2%, in line with the estimated increase of the Part B premium.

The projected Part B increase impact on Social Security benefits

The 2027 Social Security COLA is projected to rise 3.8%, after accounting for the June CPI. In terms of dollars, if implemented now, that would translate into an increase of $79.14 per month or $949.68 per year, when using the average Social Security check amount for May 2026 ($2,082.76) as the base amount.

The Social Security Administration (SSA) automatically deducts the Part B premium cost from the Social Security benefits of most Medicare recipients. For 2027, the average Social Security check would fall from $79.14 to $72.54, subtracting the projected Part B increase ($6.60) from the projected COLA raise (79.14). In that scenario, the Part B increase would consume approximately 8.3% of the monthly increase.

Understanding Medicare Part D premiums

Unlike Part B, there isn't a single "standard" Part D premium, as it varies by plan. The Centers for Medicare & Medicaid Services (CMS) establishes a standardized base premium amount used to calculate late enrollment penalties and to determine Part D IRMAA surcharges. For 2027, the base premium is $41.33.

Most final premium and deductible amounts won't be announced until late October or early November; however, most of the Part D amounts have been finalized.

Annual deductible: The standard Part D deductible will increase to $700 in 2027, up from $615 in 2026. That's a steeper increase than in 2026, when the deductible rose to $615 from $590 in 2025, a $25 increase.

Out-of-pocket spending cap: On a positive note for 2027, Medicare Part D's annual out-of-pocket prescription cap will rise to $2,400, up $300 from the $2,100 limit in 2026. Once beneficiaries reach this cap, they no longer pay out-of-pocket costs for covered prescription drugs for the rest of the year.

Premium protections and stabilization: To shield enrollees from steep rate hikes, the premium stabilization provision of the Inflation Reduction Act (IRA) caps annual base beneficiary premium (BBP) growth at 6% yearly through 2029, while limiting how much extra cost plan sponsors can pass along.

While an IRA demonstration program previously stabilized average monthly premiums, CMS scaled back that support in 2026, stating in a memo that reducing federal subsidies is meant to help the Part D program "return to operating under regular market conditions."

Full table

Below you will find the projected deductible, premiums and coinsurance amounts for Part A and Part B. The Part D amounts are final.

*The 2027 Part D base premium, deductible and maximum out-of-pocket limit have been finalized. These numbers are not estimates.

The value of tracking the projected premiums

Medicare open enrollment runs from October 15 to December 7 annually. During this period, you can switch from original Medicare to a Medicare Advantage plan, or vice versa. You can also choose a new Advantage plan or Medicare Part D prescription drug coverage.

To get the most from your plan, it’s important to understand your out-of-pocket costs for premiums, which will vary depending on your plan and income. For instance, you could also owe a monthly surcharge on Medicare Part B and Part D premiums based on an income-related monthly adjustment amount (IRMAA).

Your IRMAA liability for 2027 will be based on the MAGI shown on your 2025 return. While you can't do anything to change your 2025 tax return, you can look over your finances to see if you are in danger of paying the IRMAA in 2028, which will be based on your yet-to-be-filed 2026 tax return.

Income planning can go a long way in limiting your exposure to the surcharge. For instance, a well-timed Roth conversion can reduce your taxable income and eliminate required minimum distributions (RMDs).

Projections for Medicare Part B 2026 are primarily derived from the annual Medicare Trustees Report. While the final figures are usually announced by CMS in November of the preceding year (so, November 2026 for 2027 premiums), the Trustees Report provides strong estimates. The Part D base premium, deductible and out-of-pocket maximum for 2027 have been finalized and are reflected in our tables.

Related Content

• Projected 2027 IRMAA Brackets and Surcharges for Medicare Part B and D
• Your Medicare Costs Are Set to Soar: What to Expect Over the Next Decade
• Why Your Medicare Premiums Are $200 Higher Than They Should Be

When planning for retirement, state taxes on your 401(k), pension, and Social Security benefits should be part of your strategy.

Yet while some states offer no retirement taxes on any of these sources, a zero-percent tax rate can lose its shine if you can't get a doctor's appointment when you need one.

After all, an average 65-year-old retiring in 2026 can reportedly expect to spend $185,500 on healthcare and medical expenses throughout retirement. And living comfortably on a fixed income requires balancing healthcare costs with other top retiree concerns, like housing and daily living expenses.

To help you navigate this balancing act, we cross-referenced states that don't tax retirement income against property tax data, cost-of-living metrics, and senior healthcare rankings. The final list highlights the five most tax-friendly states for retirees, ranked by the quality and accessibility of their older-adult healthcare.

How we ranked these retirement states

Our list draws from Kiplinger's analysis of states that do not tax retirement income. Among the 13 states meeting that baseline, we filtered for the ten with the lowest median property taxes paid on mortgage homes (using PropertyShark data referenced from the latest U.S. Census Bureau data points).

Cost-of-living data was drawn from the Missouri Economic Research and Information Center (MERIC) index, where a score of 100 represents the national average.

Then, states were ranked using the United Health Foundation's "America's Health Rankings Senior Report," specifically focusing on "Clinical Care for Seniors." This metric evaluates:

• Healthcare access: Including availability of dedicated primary care providers, home health aides, and care affordability.
• Clinical services: Including rates of routine cancer screenings, avoided care rates due to high costs, and flu and pneumonia vaccinations.
• Quality of care: Including hospice care usage, nursing home quality ratings, and preventable hospitalization stays (per Medicare beneficiaries aged 65 to 74).

Scores range around a national benchmark of 0.00. Positive scores indicate above-average healthcare performance, while negative scores reflect below-average metrics. However, it's important to note that these scores are statewide averages and are not indicative of any one area within a specific state.

This list evaluates state income tax only. Federal income taxes still apply. Consult with a qualified tax professional when necessary.

1. Washington: Outstanding healthcare, higher cost of living

Senior healthcare ranking: +0.528 (Top 10 nationwide)

Median property taxes paid: $4,556

Cost-of-living score: 114.6 (14.6% above national average)

Washington takes the top spot on our list. The Evergreen State exempts all retirement income from state tax, meaning your Social Security, pensions, 401(k)s, and IRAs remain untouched by local authorities.

Another retiree benefit is its healthcare system. With a score of +0.528, per the Clinical Care report, Washington's medical care for older adults is above average, placing it in the top 20% of all states nationwide, just behind Colorado.

Yet everyday affordability remains an issue.

• Washington's median annual property tax bill exceeds $4,500, and overall living expenses — like groceries and housing costs — run roughly 14.6% higher than the national average.
• Plus, Washington recently approved an increased capital gains tax structure ranging from 7% to 9.9% on certain high-value investments, which can make the state more expensive for higher-wealth individuals.

But if you're retired and can comfortably afford the often higher price tag of Pacific Northwest living, Washington delivers an ideal combination of state retirement tax income exemptions and top-tier healthcare.

Related: 10 Cheapest Places to Live in Washington

2. Pennsylvania: Strong healthcare and moderate living costs

Senior healthcare ranking: +0.320 (#16 nationwide)

Median property taxes paid: $3,311

Cost-of-living score: 96.2 (3.8% below national average)

Pennsylvania slides into second on our list. The Keystone State exempts retirement income from state tax, including Social Security, pension payouts, and 401(k) or IRA distributions.

Senior healthcare access also remains strong here. With a score of +0.320, older adults may expect high-quality medical care, placing the state in the top 32% nationwide, according to data from the United Health Foundation. Plus, the average cost of living sits nearly 4% below the national average.

• But while retirement income is exempt from state taxes, all other income sources (like interest and dividends) are subject to a flat 3.07% state income tax.
• Additionally, the median property tax bill, while lower than Washington, remains 11% above the national average according to data from PropertyShark.

For retirees, Pennsylvania may offer a more balanced financial profile than higher-tax northeastern neighbors, like New York. However, elevated property tax bills can be difficult on a fixed income.

3. Iowa: Affordable living with above-average care

Senior healthcare ranking: +0.185 (#21 nationwide)

Median property taxes paid: $2,897

Cost-of-living score: 88.6 (11.4% below national average)

Iowa may be a true hidden gem for budget-conscious retirees. The state exempts retirement income from state taxes for residents aged 55 and older, meaning you don't have to wait long before you get state income tax relief.

On top of that tax exemption, Iowa boasts the lowest property tax bill among our top three states on this list, at just under $2,900. This is right below the national average, according to the U.S. Census Bureau, and the savings don't stop there. The Hawkeye State's cost of living is more than 11% below the national average, according to MERIC.

And perhaps more importantly, low cost doesn't automatically mean low healthcare quality, either. Iowa's senior healthcare ranking sits in the top 42% of the nation (ranking 21st overall in the Clinical Care United Health report), supported by lower rates of preventable hospitalizations.

• While Iowa ranks high nationally for average senior clinical care, its rural geography can create more care disparities for some areas than in, say, Washington or Pennsylvania.
• Plus, if you're used to a top #20 state for prime medical care, Iowa falls just short of that in the Clinical Care report.

Yet for fixed-income retirees seeking a balance of affordability and dependable healthcare (at least in more urban areas), Iowa may be considered a standout choice among tax-friendly states.

4. Florida: Low taxes, but rising costs and healthcare strain

Senior healthcare ranking: -0.103 (#31 nationwide)

Median property taxes paid: $2,730

Cost-of-living score: 100.7 (0.7% above national average)

Florida remains a classic choice for retirement because it levies no state income tax at all, protecting not just retirement distributions but also interest and dividends (and who doesn't love the weather?).

However, the Sunshine State's significant influx of retirees in recent years has created new friction points.

• Rapid population growth stretches the doctor-to-patient ratio, lowering Florida's senior healthcare access score to slightly below the national benchmark, according to the United Health Foundation.
• Additionally, rising housing expenses and skyrocketing home insurance rates have pushed Florida's overall cost of living slightly above the national average, according to MERIC.

So while Florida remains viable, a 2026 retirement plan in the Sunshine State might mean preparing for higher everyday expenses and longer waits for medical specialists than in previous decades.

Related: 10 Cheapest Places to Live in Florida

5. South Dakota: Maximum tax relief, lower healthcare access

Senior healthcare ranking: -0.263 (#35 nationwide)

Median property taxes paid: $2,724

Cost-of-living score: 94.1 (5.9% below national average)

Like Florida, South Dakota levies no state income tax on personal income (though its cold weather stands in sharp contrast to the Sunshine State).

South Dakota also has the lowest median property tax bill on this list, per U.S. Census Bureau data, and a cost of living roughly 6% below the national average.

One drawback for seniors requiring medical care in the Mount Rushmore State is medical availability, per the Clinical Care report.

• South Dakota ranks 35th in older adult clinical care, with a score below the national average.
• Rural geography and fewer medical centers mean accessing specialized care can require travel.

But if your primary goal in retirement is stretching your dollars as far as possible and you are comfortable with traveling for specialty care, South Dakota may offer your retirement nest egg significant financial benefits.

Read More

• How All 50 States Tax Retirement
• States That Won't Tax Your Death
• 5 Retirement Tax Traps to Watch in 2026
• How to Prepare Your Retirement Taxes for a Longer Life

High-income retirees are often surprised by a Medicare expense that can lurk behind the scenes, automatically deducted from their Social Security benefits each month.

It's a surcharge added to Part B and D premiums known as the income-related monthly adjustment amount (IRMAA).

These surcharges are tiered, meaning sometimes a single additional dollar of taxable income could trigger thousands in extra costs. Because it's based on income from two years ago, many retirees don't see it coming until it's too late.

The amounts aren't small. For 2026 the annual surcharges for Parts B and D range from slightly more than $1,100 for the lowest tier to nearly $7,000 for the highest tier. Those are per person, and on top of the base premiums.

Here's how the 2026 IRMAA brackets break down:

The good news is that it's reassessed each year, so you can take steps now to manage this hidden "tax" and optimize your Medicare costs.

Here are five situations in which you could pay more than you should in Medicare surcharges and strategies that could help.

1. After a major life event

Many Medicare enrollees are unaware that IRMAA can be reassessed under certain circumstances if an appeal is submitted.

The Social Security Administration (SSA) outlines specific eligible life-changing events, with the most common being retirement (or a work reduction such as moving from full-time to part-time), marriage, divorce and death of a spouse. A full list is available on Form SSA-44.

Strategy: You should consider appealing if it's likely to move you into a lower IRMAA bracket. This won't be the case for every life event.

For example, if you got married and your joint income would have pushed both partners in a higher IRMAA bracket, appealing won't be beneficial.

If you decide to appeal, you have 60 days from receiving your initial determination notice to do it, with instructions included in that notice. To start, you'll need to contact the SSA and will likely file Form SSA-44 and provide supporting documentation.

Depending on timing, you might need to appeal two years in a row. As an example, someone retiring in 2026 might need to appeal twice: Once for their 2027 assessment (which would otherwise be based on their 2025 working income); and once for their 2028 assessment (which would otherwise be based on their 2026 working income).

2. When your taxable income is near an IRMAA threshold

Distributions from retirement accounts such as traditional IRAs and 401ks typically increase taxable income. If you're near a threshold, an unnecessary distribution could push you into the next tier. The only thing worse than triggering IRMAA is triggering it by just a few dollars.

Strategy: If your income has historically been toward the top or bottom of an IRMAA bracket, try to stay (or get) in the lower tier. Be thoughtful about taking retirement distributions from pre-tax accounts that could pop you into the next tier.

If you have a health savings account (HSA), you can use distributions to cover qualified medical expenses without increasing your taxable income, including paying the premiums, deductibles and copays for Medicare Parts A, B, C and D (but not Medigap premiums).

If you have Roth accounts, you might be able to take tax-free distributions to keep you under the next IRMAA threshold.

3. When you start taking required minimum distributions (RMDs)

RMDs are withdrawals that must be taken from certain retirement accounts starting at age 73. For those with substantial traditional (pre-tax) retirement assets, this can translate to a meaningful increase in taxable income when they start taking RMDs, which can result in a surprise IRMAA bill two years later.

Strategy: If an RMD is pushing you into a higher IRMAA bracket, and especially if you're toward the bottom of that income bracket, a qualified charitable distribution (QCD) might be useful.

A QCD is a direct transfer from an IRA to a qualified charity. It can help satisfy your RMD without increasing your taxable income (up to $111,000 for 2026), all while giving to your charity of choice.

4. When you're doing Roth conversions

A Roth conversion involves moving funds from a traditional IRA to a Roth IRA. Because so many retirees have the bulk of their retirement savings in pre-tax assets, there can be many advantages to completing Roth conversions: The potential for tax-free distributions, no RMDs, and a tax-free asset for your heirs.

The cost is paying taxes now on the converted amount.

The tax impact means it's a good idea to work with a financial adviser and tax professional to execute the conversion, but even then, many well-intentioned professionals forget to mention (or consider) the impact on IRMAA.

Strategy: When considering Roth conversions, you'll want to keep in mind the immediate and future impact to IRMAA. Increasing your taxable income might trigger IRMAA two years after the conversion, but the resulting Roth assets can help save on IRMAA in future years, both by reducing future RMDs and providing a source for tax-free withdrawals.

The key is to understand the short-term and long-term impacts. It might also make sense to spread a conversion across multiple years.

5. When you choose your filing status at tax time (if you're married)

Filers who are married have a choice at tax time to file jointly or separately. But because IRMAA is a surcharge (generally deducted directly from Social Security payments) rather than a true tax (paid and reported to the IRS), it's often not considered as part of the calculation in determining which filing status is more advantageous.

This is problematic because the IRMAA determination for married individuals filing separately is particularly steep (some would say punitive), likely because the government doesn't want couples to file separately solely to avoid triggering IRMAA for both spouses.

Couples — even those working with experienced tax professionals — might save a few hundred dollars on their taxes by filing separately, only to trigger thousands of dollars in annual IRMAA surcharges that could have been avoided.

Strategy: Whether you're doing your own taxes or working with a professional, make sure potential IRMAA surcharges are part of the calculation of whether to file jointly or separately.

Final thoughts

By coordinating distributions, conversions and filing decisions with Medicare thresholds, retirees can avoid thousands of dollars in unnecessary surcharges.

The earlier you incorporate IRMAA into your planning, the more opportunities you'll have to keep your healthcare costs in check.

Related Content

• Projected 2027 IRMAA Brackets and Surcharges for Medicare Part B and D
• 7 Ways to Plan Now to Save on Medicare IRMAA Surcharges Later
• Will Your Retirement Income Trigger the IRMAA This Year? (Plus, 6 Ways to Avoid it in the Future)
• How One Extra Dollar of Income Can Cost You Thousands in Retirement
• 4 Ways to Make Debt Your Friend Instead of Your Frenemy

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

The death of a partner often forces a surviving spouse to face two challenging and conflicting timelines at once: The open-ended process of grief and the immediate reality of financial and tax deadlines and consequences.

Chief among these is the so-called "widow’s penalty."

Despite the name, we're not talking about an official IRS penalty or surcharge. Rather, the widow's penalty is a series of tax and financial shifts that occur when a surviving spouse's tax filing status changes from married filing jointly to single.

The amount of tax-friendly space available to the surviving spouse changes as the standard deduction shrinks, federal income tax brackets compress, and Medicare income thresholds become less favorable.

Meanwhile, tax returns still have to be filed. Retirement accounts continue generating required distributions, and Medicare premiums are recalculated according to established rules and deadlines.

To visualize this, imagine traffic flowing on a four-lane highway suddenly merging into one. The number of cars remains the same, but there is far less room to move.

Understanding these changes and how they interact can help surviving spouses anticipate surprises before they appear on a tax return, Medicare notice, or unexpected bill. Here's more of what you need to know.

The reality of single filing status after a loss

At the center of the widow’s penalty is a deceptively simple shift: moving from married filing jointly to filing as a single taxpayer.

In the year a spouse dies, the surviving spouse can generally still file a joint tax return. By the following tax year, however, many widows and widowers begin facing a very different tax landscape.

Wider federal income tax brackets, a larger standard deduction, and other advantages available to married couples may no longer apply, potentially increasing the taxes owed on the same retirement income.

You can see the differences in the following table.

2026 Tax Thresholds: Single vs Married Filing Jointly

For 2026, the 12% federal tax bracket extends to $100,800 for married couples filing jointly. For single filers, that same bracket tops out at $50,400.

Federal income tax brackets compressed. A widow whose retirement income once fit comfortably within the 12% bracket while married may suddenly find any income over $50,400 pushed into the 22% bracket the very next year.

The standard deduction is cut in half. Even if the surviving spouses' total household income drops slightly, a much larger portion of it is exposed to higher tax rates. This is because the surviving spouse is now claiming a smaller standard deduction; they often end up paying taxes on a much larger share of their remaining income than they expected.

In short, the widow's penalty shift isn’t necessarily driven by more income. Instead, it often reflects the reality that the tax code provides fewer advantages once a surviving spouse begins filing as a single taxpayer.

Your income may fall, but taxable income often doesn’t

One of the most common misconceptions surrounding the widow’s penalty is the assumption that household income is automatically cut in half after the death of a spouse.

Retirement finances, however, are rarely that simple, and a lower income does not automatically result in a lower tax bill.

A surviving spouse may lose one Social Security benefit and potentially a portion of pension income. Other sources of retirement income may continue unchanged, including:

• Investment income continues, survivor benefits may kick in, and retirement accounts must still generate Required Minimum Distributions (RMDs).
• These mandatory withdrawals increase adjusted gross income (AGI), which can further complicate the picture by triggering higher Medicare premiums and increasing the taxable portion of Social Security benefits.

Ultimately, household income may decline, but the tax advantages that once helped shelter that income decline as well.

For instance, if both you and your spouse qualified for the new "senior bonus" deduction, your total tax break might have been $12,000. Now, that tax deduction is capped at $6,000.

Other overlooked tax deductions and credits might be lower with just one individual in the household rather than two.

Why more of your Social Security benefits may become taxable

Many retirees assume that if they’re receiving fewer Social Security benefits after the death of a spouse, they’ll owe less tax on those benefits. In reality, the opposite can sometimes occur.

• Although a surviving spouse may lose one Social Security check, they often continue receiving the larger of the two benefits.
• At the same time, they may be filing as a single taxpayer under a different set of income thresholds.
• As a result, a larger percentage of Social Security benefits may become subject to federal income tax.

For single filers, the thresholds used to calculate taxable Security benefits are significantly lower than those available to married couples filing jointly.

But the rule of taxability remains the same. Up to 85% of their Social Security benefits may be taxable, depending on a survivor’s income, including from retirement accounts, pensions, and other sources.

That is another example of how the widow’s penalty can emerge through changes elsewhere in a surviving spouse’s financial picture.

Medicare premiums can rise even if income falls

For many retirees, Medicare premiums are one of the last places they expect to encounter the widow’s penalty. Yet for some surviving spouses, healthcare costs can become part of the equation.

In many cases, the answer lies in a Medicare surcharge known as the Income-Related Monthly Adjustment Amount, or IRMAA. Higher-income beneficiaries pay additional Medicare Part B and Part D premiums, and those surcharges are based on income reported on a tax return from two years earlier.

• Because IRMAA uses a two-year income lookback and lower income thresholds for single taxpayers, some surviving spouses may find themselves paying higher Medicare premiums even if household income has declined.
• In some cases, surviving spouses may be able to request an IRMAA adjustment based on a qualifying life-changing event, including the death of a spouse, by filing Form SSA-44 with the Social Security Administration (SSA).

Still, IRMAA is another example of how several separate rules can quietly stack on top of one another, exacerbating the widow's penalty.

What surviving spouses can do now

Even though every situation is different, there are some planning opportunities worth discussing with a qualified tax professional or financial advisor who can advise you on your specific situation. Here are a few to get you started.

Taking advantage of the final joint-filing year. The year a spouse passes away provides a final opportunity to leverage the wider "married filing jointly" tax brackets and a larger standard deduction before your filing status changes.

Exploring strategic Roth conversions. Converting portions of a traditional IRA into a Roth IRA during the final joint-filing year — or during lower-income transition years — can help shrink future mandatory distributions and reduce long-term taxable income.

For example, converting $25,000 from a traditional IRA to a Roth IRA during a lower-income year may allow a surviving spouse to lock in a lower tax rate and create a source of tax-free income later in retirement.

Monitoring Medicare income thresholds. Because Medicare relies on a two-year lookback to determine IRMAA surcharges, spikes in taxable income today can dramatically increase your future Part B and Part D premiums.

Working with a tax professional to spread large withdrawals or Roth conversions over multiple years may help avoid crossing into a higher IRMAA bracket.

If your income falls due to a qualifying life-changing event, you may be able to request a new IRMAA determination using Form SSA-44.

Coordinating Social Security survivor benefits. Deciding when to switch from your own retirement benefit to a survivor benefit (or vice versa) requires careful timing to maximize lifelong guaranteed income while managing the sudden shift to single tax brackets.

Reviewing your Social Security claiming strategy may help optimize survivor benefits while minimizing potential tax consequences.

And keep in mind, this piece discusses federal income tax rules and changes, but state income tax consequences may differ. So always consult a trusted advisor who can help with your individual circumstances.

Related

• Taxes on Social Security Benefits: 6 Things You Need to Know
• 2026 Federal Tax Brackets and Income Tax Rates
• Filing a Deceased Person's Final Income Tax Return

Dear Wealth Wise: "I’m 63 and my husband is 62. We currently have employer private insurance. Do I have to choose Medicare when I turn 65, or can I defer until he turns 65? Upon turning 65, I’m eligible for TRICARE For Life [for veterans]. I want to discontinue private insurance once I become eligible for Medicare, but that would leave my spouse without coverage. What are our options?"
— One Year Closer to 65

Dear One Year Closer to 65: You've asked a great question; many Americans struggle with healthcare decisions in their early 60s and even after Medicare kicks in at 65. You have the added complexity of being a veteran.

This question was so challenging that we interviewed multiple experts in retirement planning and federal benefits. Even if you're not a veteran, you'll find good information here on how to approach healthcare as a couple in your 60s.

What is TRICARE for Life (TFL)?

If you served in the military, you might be entitled to certain benefits long after your service ended. That includes health coverage through TRICARE For Life (TFL).

TFL acts as a secondary payer to Medicare, thereby limiting your out-of-pocket costs once you turn 65. But enrolling in Medicare and TFL can be tricky when you and your spouse aren't the same age.

If you're a year older than your spouse, you're eligible for Medicare and TFL sooner. But if you're the one whose employer provides coverage under a workplace plan, dumping that plan at 65 could leave your spouse scrambling for healthcare coverage.

That's the situation we have here. While it might seem complex at first, it could be more manageable than you'd think.

The crucial Medicare rule for veterans

When you turn 65, you officially become eligible for Medicare. While standard rules allow some working beyond 65 to delay enrollment, the strategy is different for military retirees.

Once you turn 65, you're eligible to sign up for Medicare. But that doesn't mean you have to, says Brandon Hill, senior adviser at Beckett Financial Group.

"You could maintain your employer’s private insurance at age 65 and beyond, assuming you're still working then," says Hill. (Note that if your employer has less than 20 employees, you will be required to enroll in Medicare Part B as your primary coverage.) "There is nothing that says you have to enroll in Medicare or TRICARE For Life at age 65 if you have creditable coverage elsewhere, such as an employer plan."

While delaying Medicare is perfectly legal under a large employer plan, doing so will completely freeze your veteran benefits. TRICARE For Life strictly requires active enrollment in both Medicare Parts A and B.

If you want to enroll in TFL, you also have to enroll in Medicare Parts A and B and pay the Part B premium, Hill says, which might happen automatically if you don't actively say no to that coverage.

"If you are already drawing your Social Security retirement benefits prior to age 65, then the Social Security Administration will automatically enroll you in Original Medicare, which is Part A and Part B, at age 65," Hill explains. He adds that the Part B premium in 2026 is $202.90 per month.

Your husband still has options if you drop your workplace plan

Dropping your workplace plan at 65 might make sense from a financial perspective. But that doesn't mean your husband will be out of options.

The solution for military families.

The best option for your husband's healthcare bridge to Medicare at 65 is likely a TRICARE Select or Prime plan, says Julie Mesaros, a federal benefits expert at Federal Solutions Support.

"Gaining eligibility for Medicare Part A is itself a qualifying life event for your husband," Mesaros says. "If you decide to drop your employer health plan, once you're covered by Medicare and TFL, that loss of coverage would also generally be considered a qualifying life event. That may allow your husband to enroll in another available TRICARE option, such as TRICARE Prime or TRICARE Select, if he's eligible. Either event would open a 90-day window."

Mesaros explains that from there, once your husband turns 65, he can enroll in Medicare Parts A and B and he'll transition to TFL as well.

For nonmilitary families.

For civilians who don't have access to TRICARE, Nick Punzio, wealth adviser at VestGen Wealth Partners, says that once you drop your employer-sponsored plan, there are several ways to bridge your husband's coverage gap.

"Some employers allow a spouse to remain on the plan even if the employee transitions to Medicare," Punzio says. However, he cautions, policies vary, so you'll need to check with your benefits department to see if you can do that.

Another option worth looking into is COBRA, says Punzio.

"This option lets your spouse temporarily keep the same coverage, usually for up to 18 to 36 months, though at a higher cost," he explains.

There are also Affordable Care Act Marketplace plans you can look into.

"Individual policies may be more affordable than expected, especially if your household qualifies for subsidies," Punzio says, though it's more difficult to qualify for marketplace subsidies in 2026.

You can get TRICARE while retaining your existing coverage

If you're on the fence about dropping your workplace plan entirely, there is a third path: keeping both. You might assume that you need to give up your workplace plan to enroll in TFL. But Hill says that's not necessarily the case.

"You can have both TRICARE For Life and employer coverage simultaneously," he insists. It could be worth doing to keep your spouse on your workplace plan until he's 65.

"In that situation, the employer plan would be the primary payer on claims, Medicare would pay second, and TRICARE would pay last," Hill explains.

Either way, Punzio says, you're doing the right thing by thinking about this now.

"Planning ahead ensures both partners maintain continuous, affordable coverage during the transition years before both are eligible for Medicare," he says.

How TRICARE For Life and Medicare work together

The relationship between Medicare and TFL can be complicated. The one thing Mesaros emphasizes is that TFL doesn't replace Medicare. It works with it.

"Medicare pays first, and TFL generally picks up many of the remaining eligible costs, which is one reason many retirees find the combination to be very comprehensive coverage," she says.

Mesaros also explains that a common mistake people make is treating Medicare and TRICARE as unrelated decisions.

"In reality, the timing must be coordinated because employer coverage changes can trigger a qualifying life event, and TRICARE eligibility at Medicare age depends on having both Part A and Part B. Dropping the private employer plan does not leave your husband uncovered, provided he enrolls in an available TRICARE option."

Mesaros also says that there's nothing wrong with having two different coverage arrangements within the same household.

"You may be covered by Medicare and TFL, while your husband may be covered by TRICARE Prime or TRICARE Select. That is completely normal," she explains.

Finally, Mesaros says, before initiating any moves, it's important to confirm your benefits.

"Before making any changes, I'd suggest confirming your specific situation with TRICARE and DEERS and comparing the cost of keeping your current employer coverage vs moving your husband to a TRICARE plan until he reaches age 65. That's likely where the biggest planning decision will be," she says.

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our writers and experts, in this advice column, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not and is not intended to constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial adviser regarding any questions you may have in relation to the matters discussed in this article.

Read More

• We're 64 With $4.3 Million. I Want to Retire Now and Pay for Health Insurance Until We Get Medicare. My Wife Says We Should Work. Who's Right?
• My First $1 Million: Retired Military Veteran and Federal Worker, 60, Virginia Beach
• I'm 60 With $2.8 Million Saved. I'm Tired of Working, But Need Health Insurance Until Medicare Kicks In.
• Don't Let Health Care Costs Wreck Your Retirement: Here's How

In my years as a writer and editor for Kiplinger Personal Finance, I frequently advised readers to prepare for substantial out-of-pocket healthcare costs after they retire. Fidelity Investments estimates that a 65-year-old who retired in 2025 will spend an average $172,500 in healthcare and medical expenses in retirement. In a recent column, I discussed my out-of-pocket dental costs, which elicited a lot of interesting feedback from readers who have successfully lowered their dental expenses.

But while I was prepared to pay for expenses that aren't covered by Medicare, I was taken aback by the cost of Medicare itself — specifically, Medicare Part B, which covers doctor's visits and other outpatient services. While Part A, which covers hospitalization, is free to most beneficiaries, retirees pay a monthly premium for Part B. I also pay for Part D, which covers prescription drugs.

In 2026, most beneficiaries pay $202.90 a month for Part B. But a small subset of retirees pay a high-income surcharge, also known as the income-related monthly adjustment amount (IRMAA). IRMAA premiums range from $284.10 to $698.90 this year, depending on your modified adjusted gross income, which is your AGI plus adjustments, including tax-exempt interest on your investments. For 2026 premiums, the IRMAA kicks in at a MAGI of more than $109,000 for single filers or $218,000 for those married filing jointly.

Even though I retired from full-time work early last year, I'm subject to the surcharge because Medicare uses your household income from two years prior to calculate the IRMAA. So the surcharge I'm paying in 2026 is based on what my husband and I earned in 2024, when we were both working full-time. I also pay a high-income surcharge for Part D. While I have self-employment income now, I'm not earning as much as I was two years ago.

Requesting an adjustment

The good news is that you can ask Social Security, which determines Medicare premiums, to reduce or waive the surcharge based on specific life-changing events. Those events include marriage, divorce, death of a spouse and, crucially, retirement. Since I'm no longer working full-time and my husband retired this spring, I plan to request an adjustment in my premiums on Form SSA-44. The form allows you to ask for a redetermination based on an anticipated reduction in income or one that has already occurred. I plan to do the former.

That's going to require some legwork, because I will have to estimate the amount of income we'll receive in 2026 from self-employment, required minimum distributions, investments and other sources. I'll also have to gather some documents, and veterans of this process say more is better. I'll provide letters confirming that we'll both be retired for most of 2026, as well as anything else I can find to confirm an expected decline in our income.

Because I'm basing my appeal on an anticipated drop in income, rather than one that I can prove has already happened, I'm prepared for it to be rejected. But appealing the IRMAA won't cost anything but my time, so I don't see any downside to filing the request.

There's no limit on the number of times you can request a reconsideration, so I can submit a second request after I file our 2026 tax return, which will show how much our income has actually declined. I'm also prepared to make an appointment at a Social Security office — I've been told that an in-person visit is sometimes necessary to achieve an IRMAA reconsideration. If my request is approved, Social Security will credit the premiums I overpaid and apply them to future premiums.

I'll keep you posted on my results. If you've successfully appealed a high-income Medicare surcharge, I'd love to hear from you.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

Related content

• How to Appeal the IRMAA for Medicare Parts B and D
• When Does Retirement Income Trigger the IRMAA? (And 6 Ways to Avoid it)
• Projected 2027 IRMAA Brackets and Surcharges for Parts B and D

Editor’s Note: This article is the last in a five-part special report exploring the connection between your money and your health. Other stories in the series look at 15 ways to lower your healthcare costs, how your finances affect your physical and mental health, the challenges of long-term care and managing the costs of mental health treatment.

If you're among the roughly 70 million people who get health coverage through Medicare, the federal insurance program for people age 65 and older and some younger people with disabilities, you're probably already aware of some of the big changes to the system in 2026 — changes that have hit budgets hard.

This year's 9.7% jump in premiums for Part B, which covers outpatient care, was the biggest increase in four years and eats up more than 25% of this year's 2.8% annual inflation adjustment (COLA) for Social Security benefits.

Meanwhile, cost pressures have caused some Medicare Advantage plans sold by private insurers to scale back extra benefits, such as dental, vision and hearing coverage, or eliminate others, such as allowances for transportation and over-the-counter purchases.

In some cases, private insurers have shut down plans or exited markets entirely. Those headline-grabbing shifts, however, aren't the only big changes to Medicare this year — and not all of the developments hurt your bottom line. You may benefit from new policies regarding drug pricing and telehealth services. But the new requirements for prior authorization in some areas and possible further shake-ups to Advantage plans? Not so much.

“There's a lot to think about and a lot to compare, and it can just be really overwhelming,” says Lindsey Copeland, director for federal policy at the Medicare Rights Center.

Here's the lowdown on this year's Medicare changes.

Some drugs are getting cheaper

New, lower prices went into effect on January 1 for 10 drugs covered under Medicare Part D, the first price reductions to be negotiated by Medicare directly with pharmaceutical companies under a landmark provision in the 2022 Inflation Reduction Act.

The medications include blood thinners Eliquis and Xarelto, diabetes drugs Jardiance and Januvia, and heart-failure treatment Entresto.

The nearly 9 million Part D beneficiaries who take these drugs will pay about 50% less on average than in 2025, according to the Centers for Medicare & Medicaid Services (CMS). But individual savings will depend on the particular drug and drug plan, and could range from a few hundred dollars to several thousand, says Gerard Anderson, a professor in the department of health policy and management at Johns Hopkins Bloomberg School of Public Health.

Lower, negotiated prices on an additional 15 drugs, including the diabetes and weight-loss medications Ozempic and Wegovy, will go into effect in 2027. A third round of negotiations, announced in January, will cover 15 more drugs, including Botox (to treat migraines and muscle conditions, not for cosmetic purposes), the GLP-1 diabetes drug Trulicity, and several cancer medications. Those prices will take effect in 2028.

What to do: If you have diabetes or another condition commonly treated by drugs whose prices have been negotiated by Medicare, but your particular medication is not among them, ask your doctor if it would be appropriate for you to switch to one that is. A 30-day supply of diabetes medications Januvia and Farxiga now costs 79% and 68% less, respectively, than their 2023 list prices. If you currently take other medications to treat the condition, such as Mounjaro or Afrezza, you could save a bundle.

You may also qualify for a temporary program, Medicare GLP-1 Bridge, that will cover GLP-1 drugs Wegovy and Zepbound for weight reduction this year. If you're enrolled in Part D, you'll pay just a $50 monthly co-pay for treatment between July 1 and December 31. You need preauthorization from your doctor.

Telehealth is sticking around

Before the pandemic, Medicare's telehealth coverage was generally limited to rural areas and required patients to travel to a designated clinic to receive care remotely. Many restrictions were lifted during COVID, making telehealth more widely available, but those benefits have been on the government's chopping block recently.

In February, Congress extended key provisions through 2027. These include allowing beneficiaries to receive services at home by video and audio, regardless of geographic location; audio-only visits for those who can't use video; and expanded coverage for remote care by physical and occupational therapists and other health providers.

“Telehealth has been an important tool to ensure that people can access the care they need, when and where they need it,” says Gretchen Jacobson, vice president of Medicare at The Commonwealth Fund.

What to do: Ask your doctor's office which appointments can be handled through telehealth, such as test result reviews or medication check-ins. Many practices that expanded services during the pandemic have kept it as an option.

Telehealth can't replace all types of primary care, however, such as wellness visits, immunizations, and some urgent or acute-care needs.

You may need to jump through a few more hoops

Under a six-year pilot program that launched in January, you now need prior authorization to receive certain medical services if you're covered under original Medicare and live in one of six states: Arizona, New Jersey, Ohio, Oklahoma, Texas or Washington.

The 17 procedures subject to artificial intelligence-assisted prior review include some steroid injections for pain management and some nerve-stimulation techniques used to treat Parkinson's disease, incontinence and sleep apnea.

The CMS says approval decisions will be made within 72 hours and that licensed clinicians, not AI or the outside organizations running the program, will make final coverage decisions.

But some policy experts have expressed concern over the potential impact. “The companies that have been hired to administer the approval process are incentivized to reduce spending, which means approving fewer services,” says Jacobson.

What to do: If you live in one of the affected areas and your doctor recommends one of the services identified in the pilot program, make sure the provider gets prior approval. Otherwise, you could be hit with a huge bill afterward.

Advantage plans could become more restrictive

In January, the Trump administration issued a proposal to keep reimbursement rates to Medicare Advantage insurers nearly flat next year, compared with the 4% to 6% boost insurers had anticipated. The news prompted dire warnings about the possible impact on enrollees.

“Flat program funding at a time of sharply rising medical costs and high utilization of care will impact seniors' coverage,” said Chris Bond, a spokesperson for AHIP, the national health insurance trade organization, in a statement at the time.

“If finalized, this proposal could result in benefit cuts and higher costs for 35 million seniors and people with disabilities when they renew their Medicare Advantage coverage in October 2026,” Bond said.

In early April, CMS announced the reimbursement rate had been finalized at 2.48%, higher than the initial 0.09% proposal, but probably not high enough to prevent changes in some plans for 2027.

What to do: If you're enrolled in a Medicare Advantage plan, carefully review the “annual notice of change” you get this fall for any adjustments to premiums, deductibles, co-pays and benefits. That will give you time to consider alternatives before open enrollment, which runs from October 15 to December 7.

If you sign up for an Advantage plan but then have second thoughts, you'll have another shot at choosing during the separate Medicare Advantage open enrollment period from January 1 to March 31. During this time, you can switch to a different plan or to original Medicare. Says Jacobson, “It's important to remember you have options.”

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

Related Content

• What You'll Pay For Medicare in 2026
• Turning 65 in 2026? Here's Exactly How to Sign Up for Medicare
• What You Must Know About the Different Parts of Medicare

Editor’s Note: This article is the fourth in a five-part special report exploring the connection between your money and your health. Other stories in the series look at 15 ways to lower your healthcare costs, how your finances affect your physical and mental health, the challenges of long-term care and what’s new in Medicare this year.

In 2023, Kent Scheibel finally found a psychologist who seemed like the perfect fit. The therapist specialized in treating people with bipolar disorder, which Scheibel, then 51, had been diagnosed with at age 20. After decades of trying to manage extreme emotional highs and lows, the treatment helped him find steadier footing at last.

The problem was the price. Scheibel was paying $175 a week out of pocket for therapy because the psychologist, like many mental health professionals, didn’t accept health insurance. By 2025, the expense had become impossible to sustain.

“I was feeling pressure financially,” says Scheibel, who was then self-employed as a life coach. “The first thing that goes is something like therapy. I guess you could call it a luxury even though it’s actually a necessity.”

Scheibel eventually took a full-time staff job selling insurance to qualify for employer-sponsored health coverage, a less expensive option than the $792 a month he’d been paying in premiums for a marketplace plan. He’s found a psychiatrist in his insurance network who has prescribed helpful medication. But he has yet to find an in-network therapist who meets his needs.

“My ability to function in life has to do with the care I get,” says Scheibel, now 53 and living in Marina del Rey, Calif. “I’m looking forward to having a therapist again, but it’s just not feasible financially right now.”

Scheibel’s experience underscores a difficult reality for millions of Americans: Getting mental health care can be a challenge. Paying for it may be even harder.

Nearly one in four adults in the U.S. experienced anxiety, depression or another mental, behavioral or emotional health condition in 2024, according to the latest data from the National Survey on Drug Use and Health run by the Department of Health and Human Services. The rate climbs to one in three for young adults ages 18 to 25, a group that often depends on a parent’s support — and health insurance — for care.

Yet despite how common mental health issues are, getting care is problematic for many people seeking treatment for themselves or someone they love. About half of those facing a mental health challenge in 2024 didn’t receive any treatment, according to the national survey.

Cost was one of the top barriers, cited by nearly two-thirds of adults 18 and older. About four in 10 didn’t have insurance coverage that would cover mental health treatment.

Those who do receive care often struggle to pay for it. Out-of-pocket costs for insured people who receive treatment for depression or anxiety, for instance, are almost twice as high as those for enrollees not being treated for a mental health condition, according to data from KFF, a nonpartisan health policy research organization.

Among adults with medical debt, 20% said they’d borrowed to pay bills for mental health treatment, a separate KFF survey found.

“These are choices no one should have to make,” says Jennifer Snow, national director of government relations and policy at the National Alliance on Mental Illness (NAMI). “You shouldn’t be forced to choose between your financial stability and the essential, life-improving care that you or your loved ones need.”

If your family is grappling with high out-of-pocket costs for mental health treatment, experts say there are steps you can take to help make those bills more manageable and avoid that trade-off.

Here’s what they recommend.

Why affordable care is elusive

It wasn’t supposed to be this tough. For decades, lawmakers at both the federal and state level have tried to require insurers to cover mental health and addiction treatment the same way as they cover physical health care — a concept known as parity.

The 2008 Mental Health Parity and Addiction Equity Act (MHPAEA), for example, required group health plans that cover mental health or substance use disorders to make treatment limits and financial requirements, such as deductibles, co-payments and coinsurance for those benefits, equal to those for medical care.

Two years later, the Affordable Care Act went further by requiring most individual and small-group health plans to include mental health and substance use treatment as essential health benefits. All 50 states and Washington, D.C., also have their own parity laws.

Together, the requirements have helped millions of Americans gain insurance coverage for therapy, psychiatric care and addiction treatment. But coverage on paper doesn’t always translate into care people can actually get.

Evidence, in fact, is plentiful that mental health treatment is still not on par with benefits for medical and surgical care. “No question, there is a big gap,” says Mark Covall, interim president and CEO of the National Association for Behavioral Healthcare.

One of the biggest challenges for people with coverage is finding mental health providers in their plan’s network. Insurers have struggled to build networks of mental health providers large enough to offer the same level of access that patients typically have for medical care, says Stoddard Davenport, who has researched disparities in care as a health care management consultant at Milliman, an actuarial and consulting firm.

Part of the problem is a nationwide shortage of mental health professionals, he says. But many therapists, psychologists and psychiatrists also choose not to belong to insurance networks because administrative requirements can be burdensome, and reimbursement rates are much lower compared with what other medical providers receive.

As a result, people with insurance often go outside their plan’s network to get care. A 2024 study by the Research Triangle Institute found that patients sought out-of-network care 8.9 times more often for psychiatrist visits and 10.6 times more often for psychologist visits than patients who went for medical and surgical office visits.

“Going out of network is almost always going to mean a significant increase in costs,” Snow says.

Even when people do find in-network care, out-of-pocket costs still can add up quickly. That’s because, despite parity laws, many insurers have continued to use stricter prior-authorization reviews for coverage, exclude key mental health and substance abuse treatments from benefits, and deny claims after treatment at a higher rate than they do for physical health care, according to a 2024 report to Congress on MHPAEA enforcement.

A 2024 federal rule addressed some of the disparity by requiring insurers to document how their mental health coverage plans work in practice and to measure outcomes, says Kaye Pestaina, a vice president at KFF, where she directs its program on patient and consumer protections. But the rule has faced legal challenges, and the Trump administration has not been enforcing some of its regulations, she says.

Know your rights around mental health care costs

If you have health insurance, the first step to getting mental health treatment at a price you can afford is understanding what your plan covers.

The MHPAEA doesn’t require employer group health plans to cover mental health and addiction treatment. But if they do, those benefits must be comparable to medical coverage. That means the plans typically can’t impose higher co-pays, stricter limits on appointments or separate out-of-pocket maximums for mental health services.

The parity law also applies to Medicaid plans and individual plans sold through the Health Insurance Marketplace, which are required to cover mental health and addiction treatment. It doesn’t apply to Medicare, although the program does cover a range of mental health services, including an annual screening for depression and individual and group therapy, as long as the provider is certified and accepts the insurance.

Signs that your health plan may be violating parity requirements include higher costs or fewer allowable visits for mental health services than other types of care, and requiring permission to get mental health care but not for other kinds of medical treatment and services, according to NAMI. Another red flag: None of the plan’s in-network mental health providers are taking new patients.

Before seeking treatment, ask your insurer about deductibles, co-pays and out-of-network reimbursement, as well as whether prior authorization is required. “You want to get as much information as possible up front about what you have to pay,” Pestaina says.

Also double-check with your insurer that any therapist, psychiatrist or other mental health professional you plan to see is actually in its network. Directories are often outdated and may include mental health providers who don’t accept new patients or have left the network, Pestaina says. If you contact several listed providers and can’t find one with availability, ask your insurer to identify an in-network provider who can see you. If one isn’t available, ask whether the plan will allow you to see an out-of-network provider at the in-network rate.

If your insurer denies coverage after you submit a claim for mental health treatment, you generally have up to 180 days from the date you’re notified to appeal the decision. If that’s turned down as well, you can request an independent external review. The denial notice should include information about assistance programs that can help you file an appeal, Pestaina says.

Look for lower-cost options

Can’t find a therapist, psychologist or psychiatrist in your health plan’s network who is accepting new patients? You might have other treatment options that don’t involve going out of network and being forced to pay more.

Telehealth is one of them. Your health plan might cover the cost of mental health care delivered remotely through online video conferencing. “That gets rid of geographical constraints to some extent,” Davenport says.

Your small town might not have a therapist, but a big city in your state could have several providers participating in your health plan’s telehealth network. Medicare also covers some telehealth services for mental health and addiction treatment.

Depending on your needs, your primary care provider might also be able to provide treatment or prescribe medication. “More mental health is seen in primary care than in the other setting,” says Benjamin Miller, a psychologist and adjunct professor at Stanford University School of Medicine.

There’s a growing trend known as the collaborative care model that integrates behavioral health managers and mental health clinicians into primary care practices. “It’s the easiest way to be able to have kind of a one-stop-shop, more-comprehensive approach to care,” Miller says.

Availability of this type of care varies by state. If your current primary care provider doesn’t offer integrated care, Miller recommends checking with other providers in your health plan’s network to see whether they do.

Negotiate a lower price

Therapists, psychologists and psychiatrists might be willing to adjust their rates. The key is knowing what to ask.

“Even if you have health insurance, one of the best things you can ask anybody is, Is there a difference in price if I pay cash or if I use my insurance?” Miller says. Also ask providers whether they use a sliding scale — that is, if they lower their rates based on a patient’s income or if the patient is experiencing financial hardship, he says.

Another option to keep down costs, if your health permits: Ask your provider whether you can meet less frequently, says Nancy Ruddy, a psychologist and behavioral health care consultant in Portland, Maine — say, every other week instead of weekly.

Explore other kinds of support

If the cost of traditional individual therapy is out of reach, there are other ways to get help that may be more affordable. Here are some of the approaches you might try.

Group therapy. Getting counseling in a group setting can cost half as much as one-on-one therapy, Miller says. Or there may be free peer-support groups in your community led by people with conditions similar to yours (to find out, check with community centers or the local branch of the Mental Health Association). NAMI also offers free groups for a variety of mental health conditions (find one here).

Employee assistance programs. Nearly all large and midsize U.S. companies, along with many small businesses, offer this free benefit, which provides short-term, confidential counseling for employees. The program typically covers three to six sessions, and counselors can help with referrals to other mental health care providers as well. “It’s a good place for people to start,” especially if you don’t need long-term treatment for a chronic condition, Ruddy says.

Certified Community Behavioral Health Clinics. These clinics are required to serve anyone with a mental health or substance use need, regardless of their ability to pay. The National Council for Mental Wellbeing has a list of CCBHCs by state. Telehealth services are available, and you don’t have to live in the state where they’re based to access them.

Student therapists. If you live near a university, you or your loved one might be able to see a student who is training to be a psychologist, social worker or family therapist. These clinicians-in-training typically charge much lower rates and are supervised by experienced mental health care providers, Ruddy says.

Online services. If you simply need some tips to get through a tough time, Ruddy suggests you look for therapist posts online that offer techniques to deal with conditions such as stress and anxiety. Look for videos that offer evidence-based strategies, she says. For example, mental health education platform Psych Hub has a YouTube channel featuring mental health experts.

Stay persistent

“All of these things may feel like you’re jumping through a hoop of fire backwards, blindfolded,” Miller says. He suggests trying to reframe how you think about the challenge: “It’s just trying to find a way you can get more timely access to the things that you have a right to get access to.”

Adds NAMI’s Snow, “Unfortunately, it’s set up that people have to stand up and fight for what they need.”

The payoff is usually worth it, says Kent Scheibel, who is all too familiar with how staying proactive about your care can make a meaningful difference in your overall well-being. “I’ve learned firsthand that without good mental and physical health, it’s difficult to achieve and enjoy anything in life,” he says. “Remember, you do have options.”

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

Related Content

• Don't Let Your Finances Control Your Mental Wellbeing — Here's How
• When Mental Health and Aging Collide
• The Delightful Way to Protect Your Cognitive Health

If you have Medicare Part B or Medicare Part D prescription drug coverage, your monthly costs could look drastically different than the standard rates. High-income retirees are subject to the Income-Related Monthly Adjustment Amount (IRMAA) — a progressive surcharge added directly to your Medicare premiums if your income crosses specific thresholds.

Understanding how the projected 2027 IRMAA brackets are calculated and how the two-year tax lag impacts you is essential to preserving your retirement savings. Failing to plan for these thresholds can trigger an unexpected financial "cliff," at which a single dollar of excess income can cost you thousands in annual surcharges.

This year, forecasting the 2027 numbers was more difficult because the Bureau of Labor Statistics (BLS) did not publish official CPI-W data for October 2025, due to the federal government shutdown last year. The official numbers should be released by the Centers for Medicare & Medicaid Services (CMS) by early November of this year.

There was no change to the projections after the release of the June CPI that came in at 3.5%, a decrease from the May CPI of 3.8%. So far, 9 of the 11 data points needed for the 2027 IRMAA brackets (based on 2025 income) are out.

All the numbers included are estimates and forecasts. The bracket estimates come from The Finance Buff, and surcharge amounts are forecasts from the 2025 Medicare Trustees Report (PDF).

Missing data impacts the 2027 IRMAA brackets forecast

While it's usually possible to accurately estimate the many IRMAA brackets early, projecting the 2027 IRMAA thresholds carries a unique math problem: the missing Consumer Price Index (CPI) data point from October 2025.

The statutory formula used by the CMS to calculate inflation adjustments relies on a highly specific 12-month window. It evaluates the average Consumer Price Index for All Urban Consumers (CPI-U) from September of the previous year through August of the current year. Because the official October 2025 data point is missing from the record, an estimated "fill-in" value must be used to run the month averaging formula.

How The Finance Buff compensated for the missing data point: The Treasury Department used 325.604 as the October CPI to calculate interest on inflation-indexed Treasury bonds. The Social Security Administration won’t necessarily use the same number for IRMAA. I calculated the projected 2027 brackets in two ways: (a) using a straight average of the projected 11 monthly data points, omitting October 2025; and (b) using 325.604 for October 2025. The projected 2027 brackets are largely the same under the two methods due to rounding. I put an asterisk on the number calculated by method (b) where they differ.

I will be sharing one set of numbers; more about that below.

The IRMAA brackets round to the nearest $1,000, so a minor rounding variance caused by that missing data point can shift a projected bracket threshold up or down by a full $1,000. Keep that in mind as you use this information to assess your liability.

Projected 2027 IRMAA income brackets and surcharges

The following tables represent early projections for 2027 based on current inflation mapping and cost-of-living adjustment (COLA) trends. The final, official brackets will be released by the CMS in late autumn, typically by the first week of November.

Due to the missing data I referenced earlier, I am providing more context for the estimated IRMAA brackets in the table below. These income limits I am presenting were prepared by the Finance Buff as if "annualized inflation from May through August 2026 is 3%, approximately a 0.25% increase every month." As of May 2027, seven of the 11 data points needed to compute the 2027 IRMAA brackets are out. As the remaining data points (CPI-U numbers) are released, the table below will be updated.

Let's get to those numbers. Fortunately, the first four brackets are indexed annually for inflation, while the highest bracket remains legislatively frozen at $500,000 for individuals ($750,000 for joint filers) until 2028.

Projected married filing separately brackets. Taxpayers who are married but choose to file separate returns face highly restrictive IRMAA thresholds:

$112,000 or less: Standard premiums apply ($0 surcharge).

$112,001 to $386,000: $480.90 Part B surcharge plus $88.30 Part D surcharge.

$386,000 or more: $524.60 Part B surcharge plus $96.40 Part D surcharge.

The two-year tax lag: why your 2025 income matters for 2027

The Social Security Administration (SSA) determines your 2027 IRMAA eligibility using your tax returns from two years prior. Therefore, the income tax return you file for 2025 dictates your 2027 Medicare surcharges. If you are liable for the IRMAA in 2027 and amended your tax return, you should make sure the Social Security Administration (SSA) has the correct information on file.

You can't report an amended tax return using the standard Life-Changing Event form (SSA-44) (PDF) unless an actual qualifying event, such as retirement or a divorce, also occurred. Instead, you must contact SSA directly by phone or in person. Be prepared to provide a signed/stamped copy of your amended tax return (Form 1040-X) and official IRS proof of acceptance, an IRS Form CP21B notice or a transcript showing the adjustment.

For IRMAA purposes, eligibility is based on your modified adjusted gross income (MAGI). This is calculated as your adjusted gross income (AGI) plus any tax-exempt interest income, such as interest earned on municipal bonds.

Because of this two-year lookback period, financial decisions made throughout the 2025 calendar year are already locked into your healthcare premium structure for 2027. If your 2025 MAGI exceeds the projected baseline thresholds — estimated to begin at around $112,000 for single filers and $224,000 for married couples filing jointly — you'll face an IRMAA surcharge.

How IRMAA shifts the actual cost of Medicare

Many retirees don't realize that the standard Medicare Part B premium doesn't cover the full cost of the program. Standard premiums are heavily subsidized by the federal government's general fund.

By law, the standard monthly Part B premium is set to cover exactly 25% of the projected actuarial cost of the program for aged beneficiaries. The remaining 75% is funded by taxpayers through general federal revenue.

Where does the 2.9% Medicare tax go? That revenue goes into the Hospital Insurance (HI) Trust Fund to pay for Medicare Part A. Most beneficiaries earn fee-free coverage; you qualify if you or your spouse worked and paid Medicare taxes for at least 10 years (40 quarters).

IRMAA is designed to systematically reduce this government subsidy for higher-income beneficiaries, shifting a much larger percentage of the actual program costs directly onto the enrollee. Depending on which bracket your 2025 income falls into, your IRMAA surcharges will force you to cover a significantly higher share of Medicare's true expenditures:

• Lowest (standard premium): Covers 25% of actual program costs (75% subsidized).
• First IRMAA tier: Covers 35% of actual program costs (65% subsidized).
• Second IRMAA tier: Covers 50% of actual program costs (50% subsidized)
• Third IRMAA tier: Covers 65% of actual program costs (35% subsidized).
• Fourth IRMAA tier: Covers 80% of actual program costs (20% subsidized)
• Fifth IRMAA tier: Covers 85% of actual program costs (15% subsidized)

Beware the IRMAA 'cliff'

Unlike progressive federal income tax brackets — in which only the money within a specific bracket is taxed at a higher rate — IRMAA operates as a strict cliff. If you cross into a higher tier by a single dollar, your entire surcharge for the year defaults to that higher tier.

Crossing from the first tier to the second tier by just $1 in 2025 income means an estimated extra $1,233.60 to $7,452 annually per person in combined Medicare surcharges in 2027. For a married couple filing jointly, that single extra dollar spikes combined health costs to a range of $2,467.20 to $14,904 for the year.

For a detailed look at the types of income that often trigger the IRMAA and actionable income planning strategies to reduce/eliminate your IRMMA liability, read:

You have time to plan for 2027 expenses and the 2028 IRMAA

You can't rewrite your 2025 tax history to escape a 2027 IRMAA surcharge, but you can eliminate the sticker shock. Despite the forecasting challenges brought on by the missing October inflation data, matching your locked-in 2025 income against these projected brackets allows you to estimate where your upcoming health costs will land.

Treat these numbers as a financial early-warning system: If your 2025 return puts you on a cliff, updating your 2027 cash-flow projections today ensures you won't be caught flat-footed when the official CMS bills arrive. Use the lesson to plan your current tax year distributions to protect against the future 2028 cliffs.

Related Content

• How to Appeal the IRMAA for Medicare Parts B and D
• 2027 Social Security COLA Forecast Surges Amid Spike in Inflation
• What You'll Pay for Medicare in 2026
• Medicare Premiums 2026: IRMAA Brackets and Surcharges for Parts B and D
• Your Medicare Costs Are Set to Soar: What to Expect Over the Next Decade

As the 2026 travel season hits its stride, the allure of the open sea is being met with a sobering reality check. While most travelers are busy packing formal wear and sunscreen, recent reports of Norovirus clusters on major lines and localized Hantavirus warnings have shifted the conversation from excursions to endurance. For those relying on Medicare, the risk isn't just physical — it’s fiscal.

Beyond the discomfort of a "stomach bug" or the severity of respiratory distress lies a complex web of "territorial waters" and a six-hour rule that could leave you responsible for a five-figure medical bill before you reach the next port of call.

The six-hour rule

Medicare coverage on a cruise ship is strict and depends largely on the ship’s distance from a U.S. port. However, Medicare does allow a cruise ship’s doctor to provide medically necessary health care services under certain conditions.

As of 2026, the regulations remain focused on the six-hour rule. This rule means that if the ship is more than six hours away from a U.S. port, Medicare won't cover the health care services.

Original Medicare (Part A and Part B) will only cover medically necessary services on a cruise ship if:

• The ship is in a U.S. port or within territorial waters adjoining the U.S.
• The ship is no more than six hours away from a U.S. port.
• The doctor is legally authorized to provide services on the ship.

When original Medicare or Medicare Advantage won't help you

If you're in international waters and more than six hours from a U.S. port, original Medicare generally does not provide coverage, even in a life-threatening emergency.

Those with original Medicare might have coverage through Medigap insurance and some Medicare Advantage policies include some travel coverage. If you're a frequent or adventurous traveler, consider seeking one of those plans the next time you have an opportunity to update/change your coverage.

Prescriptions: Medicare Part D (drug plans) generally do not cover medications purchased outside the U.S. or at sea.

Reimbursement: Whether you have original Medicare or Medicare Advantage, you will likely have to pay the ship’s medical facility upfront, then submit a claim for reimbursement (PDF) once you return.

Norovirus and hantavirus have impacted travelers in 2026

On norovirus: You might note that because norovirus spreads rapidly in confined spaces such as cruise ships, shipboard infirmaries can become overwhelmed. Since Medicare generally won't pay for these visits once you're six hours past the U.S. coast, the cost of "quarantine care" falls entirely on the passenger.

On hantavirus: While hantavirus is typically associated with land-based rodent exposure, it serves as a critical reminder for travelers visiting rural ports or embarking on "land-and-sea" expeditions.

If a traveler contracts a serious respiratory illness and requires an emergency med-evacuation from a ship to a mainland hospital, the cost can easily exceed the standard $50,000 lifetime limit found in many Medigap policies.

Medical evacuation from a cruise ship in the Caribbean to Florida could cost around $20,000, according to Allianz, and that's just for the flight. If you're evacuated on a "stretcher flight," you might need a medical escort ($25,000 to $30,000) and must purchase eight seats to accommodate the stretcher. In 2026, without medical coverage, EmergencyAssistancePlus says that air ambulances can cost from $20,000 to $200,000.

Medigap coverage on a trip

If you have original Medicare plus a Medigap policy, you might have "Foreign Travel Emergency" coverage depending on your plan.

• Plans D, G, M and N. These typically cover 80% of the cost of emergency care during the first 60 days of a trip, after you meet a $250 annual deductible.
• Lifetime limit. Most Medigap policies have a $50,000 lifetime limit for foreign travel emergency care.

Medicare Advantage (Part C) coverage

Medicare Advantage is required, at a minimum, to cover all the services that original Medicare provides. If you have a Medicare Advantage plan, your basic coverage isn't better or worse than original Medicare. As those with original Medicare can purchase a Medigap policy with a travel coverage, you can shop for a Medicare Advantage plan that offers coverage while traveling abroad.

Depending on the provider, you MA travel coverage could include:

• Emergency and urgent care. Some Advantage plans cover emergency or urgent care worldwide, including on cruise ships in international waters.
• Travel features. Some plans include specific "traveler" benefits that extend coverage for longer durations or provide dedicated assistance lines.

Check your coverage before embarking, then — relax

Navigating the Medicare six-hour rule is a bit like steering a ship through a narrow strait — it requires precision and a clear view of the horizon.

Whether you're dealing with the sudden onset of norovirus in a crowded dining room or something more rare but serious, assuming your domestic Medicare coverage follows you into international waters is a gamble you likely can't afford to lose.

Before you set sail, take a moment to audit your Medigap coverage or your Advantage plan’s travel network. A small investment in specialized travel insurance today is often the only thing standing between a memorable vacation and a permanent dent in your retirement nest egg.

Related Content

• What Medicare Covers When You Travel in the US and Abroad
• Hantavirus: What Retirees Need to Know Before Boarding a Cruise Ship This Summer
• What’s the Best Medigap Plan?
• Projected 2027 IRMAA Brackets and Surcharges for Medicare Part B and D

As we near retirement, we're often told that we'll pay less in taxes once we've retired. But is that always the case?

For some, yes, but for many, I would contend that you'll pay just as much, if not more, in taxes in retirement than you did in your pre-retirement years.

Some people have misconceptions about taxes and retirement. They believe their income will drop significantly but ignore that taxable withdrawals from retirement accounts and other income sources could put them in a higher tax bracket.

Others fail to seek tax advice as they near retirement and don't plan proactively, resulting in the lack of a tax-efficient, long-term distribution strategy.

The complexity of tax laws and how they differ for various accounts and investments is another contributing factor to unforeseen tax liabilities.

Here are some financial aspects of retirement that can lead to a tax trap.

Your lifestyle

Most experts recommend planning to replace 75% to 85% of your pre-retirement annual income to maintain your current lifestyle. While expenses such as commuting or saving for retirement might drop, others, such as healthcare and leisure (travel, entertainment, hobbies, social activities, etc.), often increase.

Without a significant reduction in expenses, you'll need to have an income similar to your later working years, likely keeping you in the same tax bracket.

Social Security

Up to 85% of your Social Security benefits can be taxable, depending on your combined or provisional income, a specific IRS formula used to determine whether Social Security benefits are taxable.

It's calculated by adding your adjusted gross income (wages, interest, dividends, pensions, capital gains and retirement account withdrawals), nontaxable interest (typically, interest from tax-exempt bonds, such as municipal or government bonds) and half the total gross Social Security benefits received during the year.

That combination could create a "tax domino effect" if you withdraw money for living expenses and unintentionally trigger higher taxes on your Social Security.

Here are the income thresholds at which Social Security benefits become taxable:

Medicare

Medicare premiums can increase due to the income-related monthly adjustment amount (IRMAA). That's an extra, income-based surcharge added to Medicare Part B (medical) and Part D (prescription drug) premiums for individuals with higher incomes.

For 2026, single tax filers with a modified adjusted gross income (MAGI) above $109,000 and joint filers above $218,000 are subject to IRMAA. The Social Security Administration uses tax returns from two years prior to determine if the additional fee applies.

Required minimum distributions (RMDs)

RMDs, which for most people begin at age 73 (it's age 75 for those born 1960 or later), could push you into a higher tax bracket. At those ages, the federal government requires people to make withdrawals from tax-deferred, pretax retirement accounts that they built over decades of their working life.

Those accounts include 401(k)s, 403(b)s, 457(b) plans, traditional IRAs, SEP IRAs, SIMPLE IRAs and Thrift Savings Plans (TSPs). The money you withdraw from those funds is considered taxable income.

The potential downside tax impacts of RMDs:

• They could potentially bump you into the next higher tax bracket
• They could increase your taxes on Social Security
• They could also increase your Medicare premiums due to IRMAA

Ways to help reduce the tax trap in retirement

How can you avoid paying unnecessary taxes in retirement? Here are a few strategies to consider.

1. Make Roth conversions (if appropriate).

A Roth IRA might be able to insulate you from future unknown taxes. Roth conversions are moving money from a pre-tax retirement account (such as a 401(k) or traditional IRA) into a Roth IRA.

You pay taxes on the amount you convert in the year you convert; the tradeoff is that you get tax-free growth and in retirement, withdrawals are tax-free. There's no limit on how much you can convert.

A Roth conversion is a popular strategy to help reduce future tax burdens, especially for those expecting higher tax brackets later or wanting tax-free inheritance for their beneficiaries. There are no RMDs for the original owner of the account.

Because Roth withdrawals are tax-free, using funds in your Roth account in retirement can help prevent you from a higher tax bracket.

2. Consider using the low tax window before your RMDs start.

Some people will experience a drop in income when they retire. A prime time to begin withdrawing or converting assets is when you're in a lower tax bracket.

Also consider that the next administration might increase taxes and make it more difficult from a yearly tax-rate perspective for some people to do such withdrawals or conversions.

Along with Roth conversions, here are other strategies to potentially take advantage of the low tax window:

• Consider early voluntary withdrawals. Start taking money out of IRA accounts after age of 59½ to lower the account balance and spread the tax liability over more years, rather than waiting for large, taxable RMDs.
• Balance tax brackets and IRMAA. Target a specific tax bracket in the years between retirement and RMDs to stay below higher tax brackets and avoid Medicare IRMAA surcharges.
• Consider qualified charitable distributions (QCDs). For those age 70½ and older, direct transfers from an IRA to a qualified charity can satisfy upcoming RMD requirements while reducing taxable income, even if you do not itemize deductions.
• "Fill" tax brackets. Purposefully take just enough income from tax-deferred accounts to reach the top of your current, lower tax bracket. You could end up paying less in taxes compared with the higher rates you might face when combined with future Social Security and RMDs.

3. Organize withdrawals by bucket.

In my experience, retirees often pull money from accounts in the wrong order, incurring tax consequences they could have otherwise avoided.

Taking too little from your tax-deferred accounts can lead to huge RMDs later in life. Taking too much early can increase your taxes and, potentially, your tax bracket.

It would be ideal to have a strategy that balances withdrawals from your taxable accounts, IRA (tax-deferred accounts) and Roth, while considering the income from Social Security and pensions.

The order in which you take withdrawals isn't a hard-and-fast rule. A sensible approach is to have three buckets of money:

• Taxable (brokerage accounts)
• Tax-deferred (IRA/401(k), etc.)
• Tax-free (Roth)

Deciding which bucket to withdraw from depends on what's going on in your life at that time.

Let's say you're married and filing jointly in the 12% tax bracket, which tops out at $100,800 of income for the 2026 tax year. Your taxable income for the year was close to that limit. You want to go on a cruise, and it's going to cost $5,000. Should you pull that amount from your tax-deferred bucket? No.

In this example, it may be better to pull it from your Roth because it's not taxable, and that $5,000 is not going to bump you into the next tax bracket.

Portfolio structure matters, especially in retirement.

• Consider placing tax-inefficient investments (e.g., taxable bonds, high-turnover funds) in tax-advantaged accounts, such as IRAs or 401(k)s
• Put tax-efficient investments (e.g., ETFs, index funds, municipal bonds) into taxable brokerage accounts
• Potentially avoid unnecessary capital gains, manage your dividends and distributions, and use tax-loss harvesting to offset capital gains and reduce tax burden

Review periodically and coordinate your plan

A retirement portfolio is not "set it and forget it." Too many things can change year to year, so make sure to review your plan periodically and adjust it as needed.

Keep these priorities in mind when reviewing:

• Income changes
• Market shifts that can affect your portfolio
• New tax laws that can affect your lifestyle, taxation and withdrawals
• Health care cost adjustments
• RMDs and Social Security

Retirement tax planning should be geared toward reducing taxes and avoiding ugly surprises, helping ensure you keep more of what you've worked hard to build and save.

If you're nearing retirement or already retired, it's important to ask yourself: Am I heading toward a possible tax trap in my retirement?

The earlier you spot the tax trap, the easier it may be to avoid and ensure you can retire relaxed and happy.

Dan Dunkin contributed to this article.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

Related Content

• The New Retirement Math: How an Active Lifestyle Can Lower Your 2026 Taxes
• 7 Tax Blunders to Avoid in Your First Year of Retirement, From a Seasoned Financial Planner
• Will Taxes Shred Your 401(k) or IRA During Your Retirement? It's Very Likely
• Will Your Retirement Income Trigger the IRMAA This Year? (Plus, 6 Ways to Avoid it in the Future)
• The New Retirement Math: How an Active Lifestyle Can Lower Your 2026 Taxes

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Naming a beneficiary seems like a "set it and forget it" task, but a lot can change between the time you open an account and the time your heirs need to access it. From the complications of leaving money to minors to the importance of naming a backup, a few simple designations can make or break an estate plan.

By reviewing your forms annually and understanding how these choices interact with your broader financial goals, you can provide your family with clarity and peace of mind during a difficult time.

And don't worry if you miss an answer; you can use the links below the quiz to brush up on appointing beneficiaries and estate planning.

More on Estate Planning, from the Kiplinger retirement team:

• Choose a Beneficiary for Your Estate Plan: It's Not 'Duck, Duck, Goose'
• Wills Gone Wild: How to Avoid Estate Planning Disasters
• 15 Estate Planning Terms You Need to Know
• Estate Planning for Millionaires
• Six Reasons to Disinherit Someone and How to Do It
• Revocable vs Irrevocable Trusts: It Comes Down to Control vs Protection
• Estate Planning Checklist: 13 Smart Moves

I'm a retired financial adviser and retirement income professional with more than 35 years of experience helping people to accumulate retirement funds and meet their goals.

One thing that constantly catches retirees out is the income-related monthly Adjusted amount (IRMAA), which can substantially increase the cost of Medicare Parts B and D or Medicare Advantage.

In 2003, the Medicare program was amended to include an increase in premiums for retirees whose modified adjusted gross income (MAGI) exceeded certain thresholds.

Today, these increases apply if your MAGI for 2024 exceeds each threshold by as little as $1. For example, if you are single and you have MAGI of $109,000, you don't pay IRMAA. If your income in 2024 was just $1 higher ($109,001), IRMAA is charged in 2026 for Part B and Part D.

If you're married, IRMAA applies if your 2024 MAGI was more than $218,000, and it will apply to both you and your spouse. At the lowest level, this could mean $81.20 per month. Just one extra dollar of income can cost you and your spouse $1948.80. If you earned more in 2024, your IRMAA costs are even higher.

How to limit or avoid IRMAA

What can you do to limit or avoid this surcharge? If you had a major life change such as a marriage, divorce, loss of job or loss of a pension, you can apply to the Social Security Administration by completing form SSA-44 or by making an appointment with your local Social Security office.

To adjust or eliminate future IRMAA costs, you need to consider ways to reduce your MAGI. There are several different definitions of MAGI depending on different parts of the tax code.

For IRMAA, MAGI is your adjusted gross income from line 11 on your Form 1040 tax return, plus tax-free interest from municipal bonds. Yes, even your tax-free bond interest can affect your MAGI. So, these bonds can affect your income when calculating IRMAA charges. This is why it is important to consult a qualified tax expert.

Here are six methods that I particularly like to recommend to reduce or eliminate MAGI when calculating the IRMAA:

1. Make qualified charitable distributions

If you have to take required minimum distributions from your traditional IRA, you can reduce that income by making qualified charitable distributions to non-profit charities, such as religious institutions, educational institutions and hospitals and groups that research new cures or treatments for conditions such as heart disease, cancer and so on.

To find out if an intended charity qualifies, use the Tax Exempt Organization Search Tool on the IRS website.

2. Invest in a qualified longevity annuity contract

Another way to reduce your current RMD is to invest part of your IRA into a qualified longevity annuity contract (QLAC). For 2026, you can invest up to $210,000 in a QLAC, which will provide a lifetime income from your IRA at a future date that is no later than the first month after you reach age 85.

Funds in a QLAC are not used in calculating your RMD.

3. Consider a non-qualified tax-deferred annuity

Rather than invest in tax-free municipal bonds, consider a non-qualified tax-deferred annuity. No earnings are reported on these unless you make a withdrawal. Withdrawals are treated as ordinary income first until all accumulated earnings are withdrawn, unless you annuitize or set up a fixed withdrawal period, for example 10 or 15 years.

Then the payments are prorated between interest and return of capital. Be aware that with variable annuities, even if you select equity portfolios, the income will be treated as ordinary income, not capital gains.

4. Invest in savings bonds or I-bonds

A simple investment choice is U.S. savings bonds. The current rate on EE bonds is 2.50% until April 2026. The Treasury also issues I-bonds, which adjust their rate with inflation.

These can be purchased online through a Treasury Direct account. You can only buy $10,000 of I-bonds per year per person, with one exception: You can purchase up to another $5,000 of I-bonds with a federal income tax refund.

5. Use tax-loss harvesting

If you have capital gains from the sale of securities or distributions from mutual funds, you can harvest capital losses. You can use capital losses to offset capital gains and also use losses in excess of gains to reduce your taxable gains.

Any net losses in excess of $3,000 can be carried forward to future years.

6. Consider a loan

Also remember that loans are not taxable income. If you are comfortable with borrowing against your investment portfolio or your life insurance or with taking out a reverse mortgage, the cash you receive won't be reported as taxable income.

As with annuities and investments or the other ideas discussed here, you should consult your financial adviser and/or a tax adviser like a CPA or enrolled agent.

Related Content

• 7 Ways to Plan Now to Save on Medicare IRMAA Surcharges Later
• 9 Things You Must Know About Medicare's Income-Related Monthly Adjustment Amount (IRMAA) Surcharges
• How One Extra Dollar of Income Can Cost You Thousands in Retirement
• How to Dodge the 'Medicare Tax' Before You Retire
• Over 65? Here's What the New $6K Senior Tax Deduction Means for Medicare IRMAA

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

While more than half of American seniors have traded original Medicare for the "perks" of private Medicare Advantage (MA) plans, Alaska remains the nation’s sole outlier. In 2026, it's the only state where individual MA plans are completely unavailable for general enrollment.

This isn't due to state law, but rather a unique clash of geography and economics: In a state with among the highest care costs in the U.S., private insurers have found it impossible to build the low-cost provider networks that make the Advantage model profitable.

There were attempts in 2022 and 2023 to introduce individual plans in certain ZIP codes, but they were withdrawn by 2024 due to low enrollment and limited networks.

Why are there no individual MA plans in Alaska?

The absence of these plans isn't a legal ban or necessarily a lack of interest; it’s a matter of provider economics. Medicare Advantage relies on private insurers negotiating lower rates with doctors and hospitals that form their provider networks.

Alaska has a highly fragmented health care landscape that increases service costs and can limit the ability to deliver care to residents.

Insurers have struggled to build "networks" because Alaskan doctors often refuse to accept the lower reimbursement rates offered by private MA plans compared with the standard federal Medicare rates. Why? Doctors and other medical professionals in Alaska face the high operational costs that are typical of "The Last Frontier." As a result, they opt out of Medicare at a higher rate (2.8%) than the national average of less than 2%, according to KFF.org.

Economically, the state faces significant pressure, ranking second nationally in per-capita health spending at $13,642 according to the North American Community Hub Statistics. For the past 15 years, Alaska's three biggest cities — Anchorage, Juneau and Fairbanks — have held the top three spots for urban health costs, noted state economist Samuel Tappen in a report from the Alaska Department of Labor and Workforce Development.

Patients frequently travel hundreds of miles to access specialized treatment, a logistical hurdle that complicates care coordination and inflates expenses. Advanced medical services are available; however, they remain heavily concentrated in urban centers such as Anchorage and Fairbanks.

Although the economics are challenging for insurers, the health outcomes for Alaskan seniors are more nuanced.

How Alaska ranks for senior health

Alaska is a land of extremes for those 65 and older. While the state ranks high in terms of "spirit" and activity, it faces significant challenges in access to clinical care. Does the lack of Medicare Advantage hurt the health of older adults in Alaska? Here are the stats:

Who has MA plans in Alaska?

While you can't buy one as an individual, approximately 2% of Alaskans are enrolled in Medicare Advantage. They fall into two distinct categories:

• Employer Group Waiver Plans (EGWPs): These are "Group Medicare Advantage" plans offered by large employers or unions to their retirees. For example, the State of Alaska (AlaskaCare) and some large unions use these group plans because they have the "bulk" power to negotiate specialized terms that individual plans can't match.
• Veterans and federal employees: Some retirees from the military or federal government might have specific managed-care options that resemble Advantage plans but aren't available to the general public.

The pros and cons for the Alaskan senior

Alaska is a true outlier, as it remains the only U.S. state where you can't use the "Medicare Marketplace" to buy an individual Medicare Advantage (MA) plan. While 54% of Medicare enrollees have moved to these private plans, Alaska’s seniors almost exclusively use original Medicare paired with Medigap, which can ultimately impact their costs and care options.

Pros:

• The travel loophole: Because Alaskans are often forced to travel to Seattle or other hubs for specialized care, having a plan that is "network-free" is a massive logistical win. Original Medicare with a Medigap plan allows for this.
• Active aging: Since 43% of Alaskan seniors report "Excellent" health, they benefit more from access to diverse specialists than they do from "coordinated care" management.
• Stability: Medigap benefits are standardized by the government and can't be changed year-to-year, whereas Advantage plans can drop doctors or change co-pays every January.

Cons:

• The "Perk" gap: Alaskans have to pay out-of-pocket for dental and vision care, which are often the most utilized services for those 65-plus.
• The fixed cost: For a senior on a tight fixed income, the $200-plus monthly Medigap premium can be a significant burden compared withthe $0 premium MA plans available in the Lower 48.
• Drug plan separation: Alaskans must shop for a standalone Part D drug plan, adding another layer of paperwork and a separate premium.

Older Alaskans are doing well

Despite the absence of managed care "wellness" programs typical of Advantage plans, Alaska’s seniors are holding their own. Ranking in the top half of the country for overall health status — with more than 43% of those 65-plus reporting excellent or very good health — Alaskans prove that "freedom of choice" might be the best medicine.

As the state continues to face a shortage of geriatric specialists, the reliance on original Medicare ensures that when an Alaskan senior does find a doctor or must travel to the lower 48, they don’t have to check a network map before booking an appointment.

Related Content

• What You Will Pay for Medicare in 2026
• Why Your Medicare Premiums Are $200 Higher Than They Should Be
• Medicare Advantage Customers Face Shrinking Pool of Insurers
• Feeling Frustrated With Your Medicare Advantage Plan? You’re Not Alone — Member Trust Is Falling

Question: We are early retirees at 59, with $5.3 million saved. We need $250,000 a year from savings right now to do everything we want. That number will drop significantly once Medicare and Social Security kick in. Is this withdrawal plan safe for a few years, or will we risk our retirement security for a few years of fun?

Answer: Once you reach a certain level of wealth, it's natural to want to retire and enjoy life without the constraints of a job. And if you're a 59-year-old couple with $5.3 million saved, you may be in a perfectly good position to stop working and start living it up.

But retiring at 59 poses some challenges. For one thing, you're too young for Medicare, so you'll need to bridge what could be a costly healthcare gap until you turn 65.

At 59, you're also too young for Social Security. And if you want your benefits without a reduction, you'll need to sit tight until age 67, which is your full retirement age. That means you may be fully reliant on your portfolio for eight years until those monthly checks begin.

In a situation like this, it's important to manage your spending carefully early on in retirement. But those early years are also when your health may be strongest. And if so, you may want to use that time to travel and do other things that are on the more expensive side.

You may be wondering if a $250,000 annual budget is safe for you, keeping in mind that your spending may drop at 65 once you can switch over to Medicare and you won't have to tap your portfolio as much once Social Security begins. The answer is, it may be a safe plan in theory, but you need some guardrails in place.

The plan generally works

You'd think pulling $250,000 a year from a $5.3 million portfolio would seem reasonable. But it's important to be mindful of your withdrawal rate.

"A $250,000 withdrawal on a $5.3 million portfolio comes out to just under 5%, which is relatively high for a long-term retirement plan, especially when taking in consideration inflation and taxation," says Osman Minkara, Founder and Managing Director of CIG Capital Advisors.

However, Minkara calls that rate "reasonable" due to it being temporary.

"What makes this situation different is that spending is expected to drop once Social Security and Medicare begin," he says. "If that reduction is meaningful and predictable, the portfolio is not being asked to sustain a 5% withdrawal rate indefinitely, which improves the outlook."

The average monthly Social Security benefit for retired workers today is $2,076.41, which amounts to roughly $25,000 a year. For a couple where both spouses worked, that translates to about $50,000 annually.

Given that you've managed to save $5.3 million by age 59, you may be eligible for even larger Social Security benefits, which could reduce portfolio strain significantly. But even $50,000 a year in Social Security means you only need $200,000 annually from portfolio withdrawals if you maintain that $250,000 annual budget. That's about a 3.8% withdrawal rate, which is much safer over the long term.

An early market downturn is the biggest risk

It's not uncommon to want to spend freely early in retirement. But Minkara warns that a market downturn early in your retirement could quickly derail your plans.

"The biggest risk here is not the withdrawal rate itself, but what happens if markets decline in the first few years," he explains. "High withdrawals combined with early losses can create lasting damage to the portfolio, even if markets recover later.”

Minkara says a good way to mitigate that risk, called "sequence of returns risk," is to separate short-term spending from long-term investments. He suggests setting aside a few years' worth of cash or diversifying with low-risk assets to avoid locking in major portfolio losses.

"This allows the rest of the portfolio to stay invested and recover through market cycles instead of being drawn down at the wrong time,” he explains.

Be mindful of taxes

If you and your spouse managed to accumulate $5.3 million, it means you may have been higher earners who are accustomed to a certain lifestyle. And if so, a $250,000 yearly budget may be necessary to help you maintain what you're used to.

But Evan Drury, Financial Advisor at Gateway Financial Partners, says the big question is whether your $250,000 budget is gross or net of taxes. And if $250,000 is what you need after taxes, the numbers don't work nearly as well.

"Assuming no other income is earned in the years you use this strategy, then you'd likely have to take out an additional 20% to cover the taxes you would pay for these distributions," Drury says.

All told, you may actually be looking at $300,000 in annual distributions, which is around a 5.6% withdrawal rate. In Drury's mind, that's "higher than any sustainable withdrawal rate."

Of course, you may have considered taxes in your plan. If your $250,000 budget accounts for taxes (meaning, you'll pay your share out of those $250,000 withdrawals), you're in better shape. Or, it may be that you have a Roth IRA or Roth 401(k) and therefore don't have to worry about paying taxes on withdrawals.

But all told, Drury says it's important to factor taxes into your annual budget. If you're withdrawing from a taxable account, he says, you may also be looking at capital gains taxes.

His advice? "Make a financial plan that considers all of this so you can see real assumptions with inflation and taxes built in, and then how your life looks under each scenario."

It's all about planning

Ultimately, Minkara says, "This strategy works if done for a specified period." But it's important to be mindful of market conditions even once your withdrawal rate drops as Social Security kicks in.

If you put the right guardrails in place early on and are willing to be flexible with spending as needed, there's a good chance your portfolio won't run out on you, even if you're tapping it somewhat aggressively for a good number of years.

Read More

• We're 67 With $3.1 Million. My Husband Loves His Part-Time Work, but It's Holding Us Back From Traveling in Retirement.
• We've Reached Our $5 Million Retirement Savings Goal, but at 66, My Husband Still Doesn't Feel Ready.
• We Retired at 62 With $6.1 Million. My Wife Wants to Make Large Donations, but I Want to Travel and Buy a Lake House.

For many retirees, the realization that "tax-free" doesn't always mean "cost-free" comes as a shock when their Medicare premiums arrive. The Income-Related Monthly Adjustment Amount (IRMAA) is a surcharge that can significantly increase your health care costs based on how you manage your wealth.

Because Medicare uses a specific calculation — Modified Adjusted Gross Income (MAGI) — certain common financial moves, like selling a home or collecting municipal bond interest, can unexpectedly push you into a higher bracket. This 10-question quiz is designed to help you navigate these nuances, ensuring your legacy and lifestyle aren't sidelined by avoidable surcharges.

And don't worry if you miss an answer; you can use the links below the quiz to brush up on the IRMAA rules.

More from the Kip

• 7 Ways to Plan Now to Save on Medicare IRMAA Surcharges Later
• Want to Avoid the IRMAA? Consider a Roth Conversion
• What You Will Pay for Medicare in 2026
• Medicare Premiums 2026: IRMAA Brackets and Surcharges for Parts B and D
• 9 Things You Must Know About Medicare's Income-Related Monthly Adjustment Amount (IRMAA) Surcharges
• How to Appeal the IRMAA for Medicare Parts B and D

The promise of Medicare Advantage has always been "more for less" — extra benefits like vision and dental at a lower cost to the government. But according to the latest Joint Economic Committee report, the math is heading in the opposite direction. By exploiting "coding intensity" and risk-adjustment loopholes, private Medicare Advantage (MA) plans are now costing the taxpayer 20% more than original Medicare for the same level of care.

This fiscal gap doesn't just impact the federal deficit; the alleged overpayments trigger a mandatory "premium pass-through" that forces those in original Medicare to subsidize the gym memberships and dental perks of their neighbors in MA plans.

The cost of the overpayments to beneficiaries

A new JEC study, "The Part B Premium Pass-Through," examines how the higher cost of Medicare Advantage is being passed on to all Medicare enrollees. The report, based on data from the Medicare Payment Advisory Commission (MedPAC), finds that because MA plans cost the government roughly one-fifth more per person than original Medicare, the resulting "overpayments" are triggering higher Part B premiums across the board.

According to the JEC, MA overpayments in 2025 increased individual Part B premiums by an average of $212 per enrollee and added $13.4 billion in additional premiums.

Basic Part B premiums cover roughly 25% of the program's total expected costs; that means that any increase in spending, including overpayments to MA plans, results in a premium hike for all beneficiaries, regardless of whether they are in MA or original Medicare. Since most seniors have their Part B premiums deducted directly from their Social Security checks, these overpayments effectively shrink monthly take-home benefits.

Without a course change, the JEC warns that this "pass-through" is set to more than double. Projections suggest that by 2035, roughly $450 of a senior's annual Part B premium could be attributed solely to MA overpayments. To safeguard the program’s long-term health and protect Social Security benefits, the committee recommends a "fiscally sustainable" shift: bringing private plan payments back in line with original Medicare costs.

Why are the plans overpaid?

The central finding of the recent report from the Joint Economic Committee (JEC) was that overpayments to MA plans — estimated to be roughly 20% higher than the cost of covering the same individual in original Medicare — are directly driving up the Part B premiums paid by every beneficiary.

The committee identified two health-insurer practices as the primary drivers, including:

• Coding intensity: Plans often record extra or more severe diagnoses for members to trigger higher risk-adjusted payments from the government often referred to as "upcoding."
• Favorable selection: MA plans tend to attract healthier enrollees who cost less to care for, but payment benchmarks are often based on the higher average costs of original Medicare.

The Justice Department is actively tracking upcoding and "code intensity" issues. In January 2026, Kaiser Permanente affiliates agreed to a $556 million settlement to resolve allegations that they violated the False Claims Act from 2009 to 2018. The settlement involved six whistleblower cases. The DOJ alleged that Kaiser inflated Medicare Advantage reimbursements by submitting invalid diagnosis codes, by pressuring physicians to retroactively add diagnoses via medical record “addenda." Kaiser settled, but did not acknowledge wrongdoing.

The impact can also be seen through a regional lens

The geographic variation is primarily driven by two factors: Medicare Advantage plan penetration rates, the percentage of eligible seniors in an area who choose private MA plans, and local income distributions.

In high-penetration states such as Florida (56%), Alabama (59%), and Michigan (62%), where more than 50% of Medicare beneficiaries are enrolled in MA, the total dollar amount of overpayments is significantly higher. However, because the Part B premium is a national standard, the cost per person ($212) remains consistent regardless of where you live — but the "redistribution" of funds is more pronounced in these areas.

The report notes a distinct regional transfer of wealth. Residents in states with lower MA enrollment, such as Wyoming (18%), Vermont (32%), or Alaska (3%), are effectively subsidizing the extra benefits and perks enjoyed by MA enrollees in high-enrollment states.

Overpayments drive up costs for all taxpayers

As the gap between Medicare Advantage costs and original Medicare spending continues to widen, the pressure on the Part B premium will only intensify. The JEC projects that without significant reform to how private plans are compensated, the annual "overpayment surcharge" could more than double to $450 by 2035. Let's not forget that Part B premiums went up almost 10% from 2025 to 2026. The 2025 Trustee's report projected that this premium could reach $347.50 by 2034.

For retirees living on a fixed income, protecting the integrity of their Social Security check may soon depend on a fundamental realignment of how we pay for private MA coverage within the Medicare system. Overpayments can also hurt the Supplemental Medical Insurance trust fund that pays Part B premiums and is financed by general revenues and the premiums enrollees pay. In reality, if you pay income taxes, you are also paying more to offset the overpayments, not just those who currently pay Medicare Part B premiums.

Related Content

• Your Medicare Costs Are Set to Soar: What to Expect Over the Next Decade
• Feeling Frustrated With Your Medicare Advantage Plan? You’re Not Alone — Member Trust Is Falling
• Medicare Premiums 2026: IRMAA Brackets and Surcharges for Parts B and D
• What You Will Pay for Medicare in 2026

For many retirees, the decision to drop a trusted Medigap policy for a lower-premium Medicare Advantage plan feels like a high-stakes gamble. What if your favorite specialist is out-of-network, or the copays for a sudden illness stack up? If you’ve made this switch for the first time, the federal government provides a vital safety valve known as Medigap Trial Right #2. This 'undo' button gives you 12 months to test-drive a private plan with the legal guarantee that you can return to your previous Medigap coverage if it doesn't fit.

However, once that 12-month clock expires, the path back to original Medicare becomes significantly more treacherous in most states, turning a simple coverage change into a potential "Medigap Trap".

Safety net 1: Trial right #2 — "the buyer's remorse" reversal

This applies to people who had a original Medicare and a Medigap policy, dropped it to try Medicare Advantage, and then regretted it. This trial right is different than the trial right for those new to Medicare. Pay attention to the different rules; you don't want to make decisions based on rights you may not have. The Advantage Plan has an effective date of January 1st, and the trial right period will end on December 31 of that year.

This right gives you a legal "undo" button. If you decide you don't like the MA plan within that first year, you get the right to return to original Medicare. You can disenroll from your MA plan and go back to the "red, white, and blue" card.

You also have some guaranteed issue for Medigap; this is the big one. You have a legal right to buy a Medigap policy without a health screening (no medical underwriting). The insurance company cannot deny you or charge you more because of your health.

Since most Medicare Advantage plans include drug coverage and Medigap plans do not, leaving your MA plan would leave you without drug coverage. Trial Right #2 also grants you a Special Enrollment Period (SEP) to join a standalone Medicare Part D plan so you don't face a late-enrollment penalty.

• Who is Eligible: You dropped a Medigap policy to join a Medicare Advantage plan for the first time, and you have been in that MA plan for less than 12 months.  
• The Right: You can disenroll from the MA plan and return to original Medicare.  
• The Amount/Benefit: You have the right to get your old Medigap policy back from the same insurance company, if they still sell it. 

Which Medigap Plan Can You Get?

• Your old plan: You have the right to get your exact same Medigap policy back from the same insurance company you had before, provided they still sell it.
• A "designated" alternative: If your old company no longer sells that specific plan, you have a guaranteed right to buy Plans A, B, D, G, K, or L from any company in your state. (If you were eligible for Medicare before 2020, you can also choose Plans C or F).

Key rules to remember when exercising your "trial rights"

• The 12-month clock: Both rights expire exactly 12 months after your Medicare Advantage coverage began.
• The application window: 
  • Earliest: You can apply for your Medigap policy as early as 60 days before your Medicare Advantage coverage ends.
  • Latest: You must apply no later than 63 days after your Medicare Advantage coverage ends.  
• Drug coverage: If you leave an MA plan that included drug coverage, you also get a Special Enrollment Period to join a standalone Medicare Part D prescription drug plan.

Safety Net 2: The Medicare Advantage open enrollment period — January 1 – March 31

Since we are currently in March, you are in the final weeks of the Medicare Advantage Open Enrollment Period (MA OEP). This window, which closes on March 31, allows anyone currently enrolled in an Advantage plan to leave it and return to original Medicare.

What you can do: You can leave your MA plan and return to original Medicare.

The Catch: While you can easily return to original Medicare and add a Part D drug plan, getting a Medigap plan is trickier if you are outside your first-year trial right. In most states, if you've been in an MA plan for more than a year, a Medigap insurer can put you through "medical underwriting" and potentially deny you coverage or charge you more due to preexisting conditions.

Exceptions: Only four states — Connecticut, Massachusetts, Maine and New York — prohibit insurers from denying a Medigap policy to eligible applicants, including people with pre-existing conditions.

How to make the switch

Step 1: Secure the Medigap policy

Before touching the MA plan, the reader must apply for a Medigap policy.

Using trial rights: If you are using Trial Right #2, you should inform the insurer of your "Guaranteed Issue Rights" status. You may need to provide proof, such as a letter showing when you first joined the MA plan.

No trial rights: If you are past the 12-month mark (and not in a protected state like NY), you are subject to medical underwriting and must wait for the Medigap insurer to approve your application before moving to Step 2.

Step 2: Choose a stand-alone Part D plan

Since Medigap does not cover prescription drugs, and original Medicare only covers Part A and B, you will need a separate Part D plan.

Using trial rights: Federal law provides a Special Enrollment Period specifically for this "trial" scenario. This allows you to join a standalone Part D plan even if it’s not the standard open enrollment season. When applying for the new Part D plan, you simply check the box stating you are "enrolling because you are using a trial right to leave a Medicare Advantage plan."

Because this is an official SEP, you will not be charged a Part D late-enrollment penalty for the time you spent in the Medicare Advantage plan.

No trial rights: Simply enrolling in a standalone Part D plan during the MA Open Enrollment Period (January 1 – March 31) will automatically trigger a disenrollment from their Medicare Advantage plan. This is often the "cleanest" way to switch.

Step 3: Formal disenrollment (if needed)

If you aren't joining a Part D plan (because you have drug coverage through a former employer or the VA), you must manually disenroll from your MA plan. You can do this by:

Calling 1-800-MEDICARE: This is the most direct method. When an agent answers, state that you wish to disenroll from a Medicare Advantage plan. Once the Medicare systems confirm the disenrollment, which should take approximately 1 week, a confirmation letter will be mailed to you.

Sending a written request: They can mail or fax a signed disenrollment notice directly to the private insurance company.

Step 4: The effective date

Timing is everything. Coverage in original Medicare begins the first day of the month after the request is made.

Make the switch before your trial right or enrollment period expires

If you are currently in the midst of the Medicare Advantage Open Enrollment Period (January 1 – March 31) and weighing a return to original Medicare, timing is everything. For those within their first year, Trial Right #2 is your golden ticket back to guaranteed coverage.

For everyone else, the move requires a 'look before you leap' approach: contact Medigap insurers first to see if they will accept you and at what price. Whether you are protected by federal trial rights or navigating the medical underwriting process, securing your Medigap and Part D drug coverage before disenrolling from your current plan is the only way to ensure your health — and your retirement savings — remain protected.

Read More

• We're Retired With $4.6 Million. My Wife Chose Our Medicare Advantage Plan for the $0 Premium, But I Want Original Medicare’s Freedom. Is It Too Late?
• Quiz: Do You Know How to Avoid the 'Medigap Trap?'
• The Average Retirement Withdrawal Rate by Age

Question: We are retired with $4.6 million and are comfortable, but health care is still complicated and expensive.

My wife signed us up for a Medicare Advantage plan. I know the $0 premium and the dental perks were the big draw. But looking at our plans for the rest of the year — especially our travel — I’m getting a bit nervous.

If we're on a trip and I need to see a specialist, we’d likely have to pay out-of-network rates, which are huge.

I have recently learned that original Medicare with a Medigap plan is essentially "borderless." We could go to any doctor in the country who takes Medicare, with no networks or referrals to worry about.

I think we should switch back to original Medicare, if that's even possible, but my wife worries we will fall into the "Medigap Trap." Who is right?

Answer: Choosing a Medicare plan is often a team sport, but sometimes the "team" picks a strategy that doesn't ultimately work. If you reluctantly followed your spouse into a Medicare Advantage plan because of the dental or vision perks, only to find that your favorite doctors are now "out of bounds," you're likely experiencing a case of Medicare Advantage regret. There are specific federal protections designed for new enrollees to help you "undo" a plan choice that isn't a fit for your lifestyle.

Since this is the first time you've ever joined a Medicare Advantage plan, you are protected by a federal "Trial Right." The Medicare Advantage (MA) trial right is essentially a "get out of jail free" card. It allows you to test-drive an MA plan for up to 12 months and still return to original Medicare with guaranteed issue rights for Medigap, regardless of your health status.

Without these rights, if you try to buy a Medigap policy later, insurance companies can use "medical underwriting" to charge you more or deny you coverage entirely based on pre-existing conditions. That is what is meant by the "medigap trap."

Trial rights: The 'New to Medicare' reset

The opportunity for a reset applies to people who choose Medicare Advantage the very first moment they become eligible for Medicare. The federal government offers new beneficiaries a "do-over" window. If you decide the plan isn’t for you within the first year, you have a legal trial right to switch to original Medicare.

In your case, if traveling is a priority, original Medicare can offer greater flexibility. Why? Because when you have a Medicare Advantage plan, you have to pay steep out-of-network fees to see a specialist or fill a prescription, once you leave the geographic area of your network.

The most critical part of this right is the "Guaranteed Issue Rights". Normally, if you try to buy a Medigap or supplemental plan after being in an MA plan, companies can look at your medical history and deny you coverage or charge you more due to preexisting conditions. However, under the trial right, they must sell you a policy at the best available rate, regardless of your health.

I recommend not canceling your MA plan until you have a Medigap policy lined up. After all, if you have the trial right, you are guaranteed to get one.

• Who is eligible: You joined a Medicare Advantage plan when you first became eligible for Medicare (your initial enrollment period), Part A at age 65.  
• The right: If you decide the plan isn’t for you within the first 12 months, you can switch to original Medicare.  
• The amount/benefit: You have a guaranteed issue right to buy any Medigap policy sold in your state by any insurance company. You are treated as if you were back in your initial enrollment period — no health questions asked.

Key rules to remember when exercising your trial rights

• The 12-month clock: Your trial rights expire exactly 12 months after your Medicare Advantage coverage began.
• The application window: You can apply for your Medigap policy as early as 60 days before your MA coverage ends, but no later than 63 days after it ends.  
• Drug coverage: If you leave an MA plan that included drug coverage, you also get a Special Enrollment Period to join a standalone Medicare Part D prescription drug plan. Even if your medication needs are modest, sign up for a plan to avoid late enrollment penalties later on when your needs change.

The spousal Medicare reset conversation

Switching to original Medicare can feel like admitting a mistake, but it’s about aligning your coverage with your lifestyle. Remind your partner that while $0 premiums are nice, they aren't a bargain if you can’t see the doctors you trust or travel with peace of mind.

Original Medicare, combined with certain Medigap plans, offers a level of freedom that "perk-heavy" plans simply can't match:

• No networks: You can see any doctor in the U.S. who accepts Medicare (about 93% of doctors).
• No referrals: You don’t need a "gatekeeper" to see a specialist. (Except for a limited prior authorization trial currently running in six states on a limited slate of equipment/services.)
• Travel security: Your coverage is seamless across all 50 states, and certain Medigap plans offer emergency coverage for international travel.

Original Medicare plus Medigap: Why it’s the traveler’s choice

If you and your spouse love to travel, the combination of original Medicare and a Medigap plan (such as Plan G) is generally the gold standard. Here's why:

No networks: You can see any doctor in the U.S. that accepts Medicare. No referrals, no "in-network" stress.

Foreign travel emergency: Most popular Medigap plans (Plans C, D, F, G, M and N) provide 80% coverage for foreign travel emergency care (up to a $50,000 lifetime limit).

Predictable costs: You pay a monthly premium, but your out-of-pocket costs at the doctor or hospital are near zero (depending on the plan).

How to fix this together

Sit down with your spouse and look at the map — not the insurance network map, but the map of where you want to spend your time this year. If your current plan can’t get you there, it’s time to consider making the switch.

Transitioning back might mean saying goodbye to the free toothbrush and the gym pass, but it means saying hello to 90% of doctors nationwide and the ability to travel fully insured without network restrictions.

Call 1-800-MEDICARE (1-800-633-4227) to see if your trial right is still active and tell them you want to exercise your trial right to return to original Medicare. Make the move now, and get back to enjoying your retirement on your own terms.

If you want to talk this over with an expert, call your local SHIPS (State Health Insurance Assistance Programs) office for free, unbiased advice. You can find the phone number for your local SHIP in the directory, or call 1-877-839-2675 to be connected to an operator.

Related Content

• What Medicare Covers When You Travel in the US and Abroad
• Feeling Frustrated With Your Medicare Advantage Plan? You’re Not Alone — Member Trust Is Falling
• International Travel with Medications: Know Before You Go
• What’s the Best Medigap Plan?
• How Medigap Insurance Is Affected by Preexisting Conditions

Each week in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter editor, answers questions on topics submitted by readers. This week she's looking at five questions on monthly Medicare premiums, IRMAA and tax-deductible medical expenses. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1. How do I calculate MAGI?

Question: How do I calculate modified adjusted gross income (MAGI) to determine whether I owe an income-related monthly adjustment amount (IRMAA) on top of my basic monthly Medicare Part B and D premiums? Is the untaxed portion of Social Security benefits added back in for this purpose?

Joy Taylor: True to the complexity of the federal tax code, the definition of MAGI often differs, depending on what it is used for. MAGI for purposes of determining IRMAA for Medicare purposes is your adjusted gross income shown on line 11 of your Form 1040 or 1040-SR, plus any tax-exempt interest income. As a result, the untaxed portion of your Social Security benefits is not included in MAGI.

2. What tax return year is used for determining MAGI?

Question: I am confused about the calculation of MAGI for determining monthly Medicare premiums. What year's tax return do the Centers for Medicare and Medicaid Services (CMS) and the Social Security Administration (SSA) look to for figuring out the amount of my 2026 IRMAA?

Joy Taylor: For determining MAGI for purposes of whether a Medicare recipient must pay IRMAA, CMS and the SSA generally look at the most recently filed federal income tax return. MAGI from the 2024 tax returns was used for determining whether a Medicare recipient owes IRMAA for his or her 2026 monthly Medicare Parts B and D premiums. That's because most people filed the 2024 return in 2025, and Medicare released its 2026 premiums in late 2025.

MAGI on your 2025 federal tax return will determine whether your are subject to IRMAA in 2027. MAGI on your 2026 federal tax return will determine whether you are subject to IRMAA in 2028. And so forth.

3. What if my MAGI has gone down?

Question: I have Medicare and pay monthly premiums for Parts B and D. For many years, I have been subject to IRMAA, so my monthly Medicare premiums are high. My husband just retired this year, so we will be reporting much less income on our tax returns for 2026 and later years than we had in prior years. Can I get a waiver from IRMAA for next year's monthly Medicare premiums?

Joy Taylor: Possibly. Your 2026 IRMAA premium surcharges are based on MAGI from your 2024 Form 1040. And your 2027 IRMAA premium surcharges will be based on MAGI from your 2025 Form 1040. But since your income is lower because of your husband's retirement, the SSA may give you a waiver from IRMAA if you request it.

The SSA provides for a Medicare Part B and D premium-surcharge waiver. People whose financial circumstances have changed because of divorce, retirement, death of a spouse or other major life-changing event may apply for relief to lower their IRMAA payments. You can request this easing by filing Form SSA-44 with the SSA. I think you might also be able to request the relief through your online Social Security account, if you have one.

4. Are Medicare premiums tax-deductible medical expenses?

Question: My spouse and I each pay monthly premiums for our Medicare coverage. Are the premiums we pay deductible medical expenses?

Joy Taylor: Yes, but you must itemize and not claim the standard deduction. Taxpayers who itemize on Schedule A of Form 1040 can deduct qualifying medical expenses to the extent that the total amount exceeds 7.5% of adjusted gross income. You can claim medical expenses that are not reimbursed by insurance for yourself, your spouse and your dependents.

To qualify as a deduction, the expense must be incurred primarily to alleviate or prevent a physical or mental disability or illness. The broad list of eligible expenses includes out-of-pocket payments for medical services rendered by doctors, dentists, optometrists and other medical practitioners; mental health services; health insurance premiums (including Medicare Parts B and D); annual physicals; amounts paid for in vitro fertilization; prescription drugs and insulin (but not over-the-counter drugs); hearing aids; transportation to and from the doctor’s office; the unreimbursed costs of long-term care; and many home improvements to accommodate a disability or illness.

For more information about what qualifies, see IRS Publication 502, “Medical and Dental Expenses.”

5. Can a self-employed person deduct Medicare premiums without itemizing on Schedule A?

Question: I am self-employed and single. I recently enrolled in Medicare and am now paying monthly Medicare premiums. I heard that self-employed individuals can deduct their monthly Medicare premiums without having to itemize on Schedule A. Is this correct?

Answer: Yes. Although most people must itemize on Schedule A to deduct their medical expenses, there is an important exception for self-employed individuals who pay health insurance premiums (including monthly Medicare premiums). They can deduct the health insurance premiums they pay on line 17 of Schedule 1 of the Form 1040. And the 7.5%-of-AGI haircut doesn't apply.

About Ask the Editor, Tax Edition

Subscribers of The Kiplinger Tax Letter, The Kiplinger Letter and The Kiplinger Retirement Report can ask Joy questions about tax topics. You'll find full details of how to submit questions in each publication. Subscribe to The Kiplinger Tax Letter, The Kiplinger Letter or The Kiplinger Retirement Report.

We have already received many questions from readers on topics related to tax changes in the One Big Beautiful Bill, retirement accounts and more. We will continue to answer these in future Ask the Editor roundups. So keep those questions coming!

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our editors and experts, in this Q&A series, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not and is not intended to, constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial or tax advisor regarding any questions you may have in relation to the matters discussed in this article.

More Reader Questions Answered

• All Ask the Editor Q&As
• Ask the Editor: Tax Breaks for Caregivers
• Ask the Editor: Modified Adjusted Gross Income
• Ask the Editor: QCDs and Tax-Planning
• Ask the Editor: Tax Questions on Roth IRA Conversions
• Ask the Editor: What Medical Expenses are Deductible?
• Ask the Editor: Questions on Inherited IRAs

Planning for the future is one of the greatest gifts you can give your loved ones, but the legal language involved can often feel like a barrier. Whether you are drafting your first will or updating an existing trust, understanding the vocabulary is the first step toward confidence. This quiz breaks down 10 essential terms to help you move from confused to capable. Let’s see how well you know the language of legacy.

And don't worry if you miss an answer; you can use the links below the quiz to brush up on estate planning terms.

More on Estate Planning, from the Kiplinger retirement team:

• 15 Estate Planning Terms You Need to Know
• Estate Planning for Millionaires
• Six Reasons to Disinherit Someone and How to Do It
• Revocable vs Irrevocable Trusts: It Comes Down to Control vs Protection
• Estate Planning Checklist: 13 Smart Moves
• Estate Planning for Women: Married, Single or Divorced

Medicare Advantage plans, formally Part C of Medicare, offer Medicare beneficiaries an alternative to original Medicare and have been successful in signing up Medicare-eligible Americans. However, 2025 was tough for Medicare Advantage plans and their customers. Policy changes during the past year have impacted deductibles, out-of-pocket costs, provider networks and prior authorization determinations.

The changes "have contributed to increased confusion, lower member satisfaction and a widespread lack of trust among Medicare Advantage plan members," according to J.D. Power's 2025 U.S. Medicare Advantage Study.

Among its findings, the study showed a 29-point drop in overall customer satisfaction with Medicare Advantage plans, led by a decline (39 points) in members' overall level of trust in their Medicare Advantage plan.

Not all Medicare Advantage programs are alike, however. Plans that provide new digital tools, broader networks and social support services. are more likely to win over subscribers, according to the J.D. Power Study.

Medicare Advantage (MA) enrollment has surged from just 19% of the eligible population in 2007 to 54% in 2025. This majority share represents 35 million out of the 62.8 million beneficiaries with both Medicare Parts A and B. While MA enrollment grew at a robust 9% annually between 2007 and 2024, that momentum is beginning to shift; since February 2025, plans added 1.1 million subscribers, marking a more modest 4% increase. Notably, the bulk of recent growth (83%) is driven by Special Needs Plans (SNPs), which are tailored specifically for individuals with chronic conditions, complex healthcare needs, or dual eligibility for Medicaid.

What Medicare Advantage plans offer

Unlike original Medicare, which is government-run insurance, Medicare Advantage plans are administered by private insurance companies. These plans cover the same benefits of original Medicare and typically include extra coverage such as out-of-pocket maximums and funds to cover dental or hearing exams and fitness benefits. Most Medicare Advantage plans also include prescription drug coverage at no additional cost to the beneficiary.

In 2026, the out-of-pocket limit for Medicare Advantage plans cannot exceed $9,250 for in-network services and $13,900 for in-network and out-of-network services combined. While traditional Medicare has no out-of-pocket cap on spending, Medicare Advantage plans have limited provider networks and apply cost management tools such as prior authorization, which traditional Medicare generally does not. In 2026, Medicare began testing out an AI-powered prior authorization plan in six states.

What Medicare Advantage enrollees like about their plans

The 2025 U.S. Medicare Advantage study by J.D. Power measured the customer satisfaction of Medicare Advantage enrollees and the most important factors driving customer satisfaction. This year, the study reflected how Medicare Advantage insurers and polices were impacted by policy changes that impacted many facets of member care and costs. The overall satisfaction rates have dropped, primarily as a result of a loss of trust.

“With so much rumbling in the marketplace right now about increased government oversight, policy changes, and profitability challenges confronting Medicare Advantage plans, it can be misleading for plans to conclude that the significant decline in member satisfaction is a byproduct of changes that are outside their control,” said Christopher Lis, managing director of global healthcare intelligence at J.D. Power.

Key findings of the 2025 study:

• The factors that drive customer satisfaction: Respondents gave Medicare Advantage plans an overall customer satisfaction score of 623 (on a 1,000-point scale). This is a 29-point drop from last year's score of 652. The top drivers of customer satisfaction for top plans are new digital tools, broader networks and social support services.
• Lack of trust drives satisfaction decline: A 39-point drop in members' overall level of trust in their Medicare Advantage plan was the primary cause of the decline in customer satisfaction. Factors such as product/coverage offerings meeting needs and the ease of doing business also saw significant declines in this year’s study.
• Plans that deliver "digital satisfaction" score higher overall: The ability to engage with members through digital channels resulted in higher satisfaction. Digital satisfaction was, on average, 98 points higher among members of the high-performing plans. More of these members (52%) "find the features or tools offered on their plan’s website very easy to use" as opposed to lower-performing plans (40%). That's probably why only 76% of members of low-performing plans have used their member portal vs 85% of high-performing plans.

Overall customer satisfaction index ratings for Medicare Advantage plans in surveyed states

Medicare Advantage subscribers in Pennsylvania (653), Michigan (647) and Ohio (649) give the highest satisfaction to the Advantage plans in their states, with survey respondents giving plans in Pennsylvania the highest marks among the 10 states surveyed. Georgia (622), Texas (607) and New York (600) had the lowest overall customer satisfaction scores and New York had the lowest of all states in the study.

Blue Cross Blue Shield plans topped the overall satisfaction rating for five states (Illinois, Michigan, New York, Ohio, and Texas). UnitedHealthcare was a distant second with top ratings from only two states (Georgia and North Carolina). Humana finished last in three states (Michigan, North Carolina, Ohio) and was second from the bottom in four states (California, Georgia, Pennsylvania and Texas).

How the study was conducted:

The 11th annual U.S. Medicare Advantage Study is based on eight factors (in order of importance): level of trust; able to get health services how/when I want; helping to save me time or money; product/coverage offerings meet my needs; ease of doing business; people — representatives, call center agents; resolving problems or complaints; and digital channels.

The 2025 U.S. Medicare Advantage Study is based on the responses of 10,888 members of Medicare Advantage plans in 10 market-based U.S. regions: California, Florida, Georgia, Illinois, Michigan, New York, North Carolina, Ohio, Pennsylvania and Texas. It was fielded from January through June 2025.

Related Content

• Medicare Advantage Customers Face Shrinking Pool of Insurers
• Is a Medicare Advantage Plan Right for You?
• Medicare Basics: 11 Things You Need to Know

Question: We're 64 with $4.3 million saved. I want to retire now and use some savings to tide us over until Medicare kicks in. My wife says we should work 10 more months so we don't have to bridge that gap. Who's right?

Answer: There's a reason many older Americans wait until 65 to retire. Medicare eligibility generally begins at age 65, and since so many people get health insurance through their jobs, waiting until then can set the stage for a less stressful transition, financially speaking.

But if you've saved a lot of money for retirement, you might want to wrap up your career before you become eligible for Medicare. While having to cover the cost of health insurance for many years could make a pretty large dent in your nest egg, a shorter gap might be manageable.

If you're 64 with $4.3 saved, you're clearly in a strong position to retire. It's not unreasonable to want to dip into your nest egg to pay for health insurance premiums so you can retire on the spot.

On the other hand, if you're only 10 months from being eligible for Medicare, your wife might think it's more prudent to keep plugging away and retire once you're 65. That logic makes sense, too.

Resolving this debate might come down to understanding your costs and recognizing the value of an earlier workforce exit.

Know what costs you're looking at before making a decision

The idea of having to pay for health insurance for 10 months can seem daunting. That's why Jim Davis, CFP and senior wealth adviser with Aspen Wealth Management, says it's important to have an idea of what that cost looks like before making a decision.

"For couples with $4.3 million saved, the Medicare gap at 64 typically isn’t a financial constraint. It’s a confidence hurdle," he says.

Davis suggests that for a couple in their mid-60s, a realistic estimate to bridge 10 months is roughly $16,000 to $20,000 total.

"In our planning work, we budget $800 to $1,000 per month, per person for solid pre-Medicare coverage," he says.

Review your health coverage options carefully

You might be surprised (in a good way) by the different options you have for bridging your 10-month gap until Medicare becomes available, Davis says. One option you shouldn't write off is COBRA.

"COBRA is often the cleanest bridge because it preserves the same plan and provider network," he says. "Once the employer subsidy disappears, however, premiums commonly run $1,800 to $2,500 per month, sometimes more. Marketplace coverage can be more economical, particularly if taxable income is managed deliberately in that final working year."

Phillip Battin, president and CEO of Ambassador Wealth Management, says it's important to carefully explore all your options.

"At first glance, COBRA or private insurance may seem more affordable because ACA premiums for quality family coverage can range from $1,400 to $2,200 per month. However, many older workers considering early retirement underestimate how critical income and tax planning are in this situation."

As Battin explains, ACA premium tax credits are based on income, not assets, which means the way your accounts are structured before retirement can significantly affect your eligibility for subsidies.

"If most of your $4.3 million is held in retirement accounts or non-income-producing assets, you may be able to qualify for ACA subsidies," he says.

If you know you're looking to retire ahead of Medicare eligibility and will have a 10-month gap, Battin says it's important to do some strategic income planning. Part of that involves assessing your spending needs.

"If you expect to travel extensively or incur spending that pushes your income above subsidy thresholds, COBRA or private insurance may be the more practical option," he says.

Recognize the value of retiring sooner

There's a clear cost to paying for health coverage for 10 months. But there's also a huge benefit to leaving the workforce now vs 10 months from now.

"Using a conservative 4% to 5% withdrawal framework," Davis says, "a $4.3 million portfolio can reasonably support $172,000 to $215,000 annually before tax. A $20,000 bridge represents a small fraction of one year’s sustainable spending and well under 1% of total assets, especially if it’s for such a defined, short window."

Davis says that from a purely financial standpoint, retiring now and paying for 10 months of health insurance is easily doable. The question becomes whether you're mentally ready to retire and what you have to lose by waiting.

"Ten additional months of work at 64 is 10 months of healthy, active retirement they do not get back," he says. "When the plan already accounts for health care inflation, longevity, and contingencies, the question shifts from 'Can we afford this?' to 'Are we comfortable stepping away from the safety net of employer benefits?' "

Consider a middle-ground strategy

In such a situation, feeling hesitant about retirement might not just be about having to pay for health insurance. It could also boil down to not feeling ready to stop working completely.

Davis suggests exploring what he calls a "step-down retirement," which involves transitioning to reduced hours with the same employer or taking part-time work that also includes health benefits.

"For many driven professionals, this glide path is far more manageable psychologically than going from a full career identity to fully retired overnight," he says.

Another option might be to stagger retirement so one spouse maintains employer coverage temporarily. In this case, if it's your wife who thinks working 10 more months is the best bet, perhaps she could continue to do so while you wrap up your career a bit sooner.

But all told, Davis says, once the cost of insurance during a bridge period is modeled within the full retirement plan, the Medicare gap tends to lose much of its emotional weight.

"The regret we hear most often is not about paying for temporary coverage," he says. "It's about postponing retirement longer than necessary out of fear."

Read More

• My Wife Wants Us To Retire at 65 To Get Medicare, but I Want To Retire Now at 62 so We Can Start Enjoying Life. Who Is Right?
• We Retired at 70 With $4.3 Million. My Wife Won't Spend 'Our Grandkids' Inheritance,' but I Want to Travel.
• I Waited Until 75 to Retire With $1.4 Million. Do I Have to Follow the 4% Rule, or Can I Take Larger Withdrawals?
• Want to Retire With $100K a Year? Here's How Much to Save

Medicare Advantage, the private insurance system that supplants traditional Medicare, continues to set off alarms for triggering massive overpayments costing taxpayers billions.

The latest comes from the nonpartisan Committee for a Responsible Federal Budget, which projects $1.2 trillion in overpayments over the next decade, based on an estimate from the Medicare Payment Advisory Commission (MedPAC), an independent agency that provides Congress with analysis and policy advice on the Medicare program.

Medicare Advantage plans will be overpaid by roughly $76 billion in 2026. “If continued, we estimate this would translate to $1.2 trillion of overpayments through 2035,” the budget committee says.

Unlike traditional Medicare, in which providers are reimbursed for each procedure they perform, Medicare Advantage plans are paid a monthly amount per enrollee — with the size of that reimbursement adjusted based on the health of each beneficiary. More than half of all Medicare beneficiaries are enrolled in the alternative private plans, which tend to offer individuals more benefits while relying on government subsidies.

Critics say Medicare Advantage’s private insurers are incentivized to find billing codes that support higher payments, regardless of whether they are supported by the beneficiaries’ actual health.

One method for doing this is known as upcoding — where insurers increase the number of diagnoses for patients to make them appear sicker or at higher risk. To compensate for this, the government reduces MA payments by 5.9%, but MedPAC estimates that MA plans overall cost 14% more than traditional Medicare. But evidence suggests MA enrollees are generally healthier than those who use traditional Medicare, meaning the MA patients’ costs are lower.

MA overpayments could drain trust fund coffers

The committee also estimates $520 billion in overpayments will come from the Medicare Hospital Insurance Trust Fund. Absent these overpayments, the trust fund would be solvent for the next decade and beyond. Instead, the trust fund is projected to run out of reserves in 2032. Additionally, MA overpayments also increase base premiums by $230 billion over a decade.

Potential fixes for MA 'upcoding'

What are the prospects of fixing the situation? That’s anybody’s guess. On the positive side are several bipartisan proposals, including the No UPCODE Act, introduced by Sens. Bill Cassidy (R-La.) and Jeff Merkley (D-Ore.). The act would eliminate the use of health risk assessments to boost coding intensity and utilize two years of data to more accurately depict the health status of MA patients. This could save $150 billion or more.

Examples of MA overpayment

■ United Healthcare claims. Add Senate Republicans to the long list of those accusing United Healthcare of gaming the Medicare Advantage payment system to increase its profits without helping beneficiaries. Last year, the Alliance of Community Health Plans, an organization of nonprofit health insurers, released a report saying that United Healthcare, the largest national MA insurer, “collected up to $785 more per beneficiary than local, nonprofit plans in 2023 alone. That difference cost Medicare more than $6 billion.” The alliance said the companies are manipulating a system that pays MA insurers more for covering people with more serious diagnoses.

Now, Sen. Chuck Grassley (R-Iowa) has released a majority staff report with similar allegations. “Bloated federal spending to UnitedHealth Group is not only hurting the Medicare Advantage program, it’s harming the American taxpayer,” Grassley says. “My investigation has shown UnitedHealth Group appears to be gaming the system and abusing the risk adjustment process to turn a steep profit. Taxpayers and patients deserve accurate, clear-cut and fair risk adjustment processes.”

The analyses echo previous investigations by the Health and Human Services inspector general and the Government Accountability Office.

According to Reuters, United Healthcare denies the latest allegations, saying in an email, “Our programs comply with applicable (government regulatory) requirements and have, through government audits, demonstrated sustained adherence to regulatory standards.”

■ Kaiser Permanente settles fraud claims. Affiliates of Kaiser Permanente have agreed to pay $556 million to resolve allegations that they violated the federal False Claims Act by submitting invalid diagnosis codes (a.k.a. “upcoding”) for their Medicare Advantage enrollees in order to receive higher payments from the government, according to the Department of Justice.

The government alleged that Kaiser engaged in a scheme in California and Colorado to improperly increase its risk adjustment payments by pressuring physicians to alter medical records after patient visits to add diagnoses that the physicians had not considered or addressed at those visits.

“More than half of our nation’s Medicare beneficiaries are enrolled in Medicare Advantage plans, and the government expects those who participate in the program to provide truthful and accurate information,” says Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. This settlement “sends the clear message that the United States holds health care providers and plans accountable when they knowingly submit or cause to be submitted false information… to obtain inflated Medicare payments.”

Note: This item first appeared in Kiplinger Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that’s right on the money.

Read More

• Medicare Advantage Open Enrollment Ends March 31
• Should You Ditch Your Medicare Advantage Plan? Most People Do
• 12 FAQs About Medicare: Your Medicare Questions Answered

As a retiree, any extra income probably feels welcome. But unfortunately for some, a seemingly minor increase in reported income can ripple through your finances, affecting not just your tax return but also your Medicare premiums.

If you're on Medicare, the Income Related Monthly Adjustment Amount (IRMAA) means that crossing an income threshold by even one dollar can trigger higher Medicare Part B and Part D premiums.

Understanding how IRMAA works is essential — especially when a single dollar can make a difference. Here's more of what you need to know about structuring retirement income to avoid unnecessary costs and taxes.

The IRMAA impact on Medicare premiums

IRMAA increases Medicare Part B and Part D premiums once your modified adjusted gross income (MAGI) exceeds specific thresholds. For IRMAA purposes, MAGI generally includes adjusted gross income (AGI) plus tax-exempt interest.

The key detail is how the thresholds operate. They are fixed tiers. If income exceeds a threshold by even one dollar, the higher premium applies.

Consider a married couple whose income exceeds an IRMAA threshold by one dollar. Crossing that line moves them into the next premium tier. That single dollar can increase Medicare Part B and D premiums by roughly $ 1,000 per person annually, even though ordinary income tax rates apply only to the additional dollar itself.

For the 2025 tax year (returns you're filing now this 2026 tax season), retirees who cross the first IRMAA threshold pay an additional $74 per month for Medicare Part B and $13.70 per month for Part D coverage, according to the Centers for Medicare & Medicaid Services (CMS).

That totals approximately $1,052 per person annually, or roughly $2,105 for married couples.

Note: These surcharges apply in addition to ordinary income tax on the same income. IRMAA income thresholds are adjusted annually for inflation, and CMS publishes updated brackets each year.

The two-year IRMMA lookback rule

Here’s the catch: IRMAA doesn’t look at what you’re earning now. The amount is based on your income from two years earlier. That means the income reported on your 2024 tax return determines what you’ll pay for Medicare premiums in 2026.

The rule is spelled out in the Social Security Administration’s IRMAA guidance, but it’s easy to overlook how small income changes from one year to the next can affect future premiums.

For example, because of the lookback delay, a Roth conversion, capital gain, or larger withdrawal might not affect premiums until two years later. By the time the increase appears, the income decision that caused it might feel disconnected from the result.

IRMAA determinations are reassessed each year using the most recent tax return available, which makes income forecasting a critical part of retirement planning.

The compounding tax impact of higher retirement income

As retirement income fluctuates, several tax calculations can shift in tandem.

• Ordinary income tax might increase. As retirement income changes, retirees might find themselves in a higher federal income tax bracket, which could result in a greater percentage of their income being subject to ordinary income tax.
• A larger portion of Social Security benefits might become taxable. With rising income levels, a larger portion of Social Security benefits can become taxable. As Kiplinger has reported, the IRS uses a "combined income formula," which can lead to up to 85% of Social Security benefits being subject to federal income tax if total income exceeds certain thresholds.
• Required minimum distributions. RMDs are required beginning at age 73 under the SECURE 2.0 Act. These distributions are fully taxable and impact adjusted gross income.

Even a modest income increase can trigger concurrent increases in taxes on Social Security benefits and Medicare premiums.

Crossing IRMAA threshold one dollar: Practical examples

Consider a retiree whose income, based on 2025 IRMAA thresholds, ends up just one dollar above the first income threshold with a MAGI of $106,001. At a 22% federal tax rate, that single dollar starts a chain reaction:

• Medicare Part B premiums increase from $185 per month to $259 per month, an additional $74 per month, or $888 per year.
• Medicare Part D IRMAA surcharges increase by $13.70 per month, totaling $164.40 per year.
• The dollar itself is taxed at 22%, adding 22 cents in federal income tax.
• Taxes on Social Security benefits may increase depending on the retiree’s provisional income calculation.

The total damage? Approximately $1,052.40 for the year, all because of one extra dollar of income.

Now consider a retiree whose income, based on 2026 IRMAA brackets, ends up just one dollar above the first income threshold with a MAGI of $109,001. At a 22% federal tax rate, that single dollar starts a chain reaction:

• Medicare Part B premiums increase from $202.90 per month to $284.10 per month, an additional $81.20 per month, or $974.40 per year.
• Medicare Part D IRMAA surcharges increase by $14.50 per month, totaling $174 per year.
• The dollar itself is taxed at 22%, adding 22 cents in federal income tax.
• The amount of Social Security benefits subject to tax might increase, depending on provisional income positioning.

The total damage? Approximately $1,148.40 for the year, all because of one extra dollar of income.

In each scenario, you can see how the retiree pays more in taxes and Medicare premiums than the extra income generated. That's the effect of a hard income threshold.

Note: IRMAA isn't a tax, but it can function like a stealth one. When income increases, both federal taxes and Medicare premiums, the true marginal cost of that extra dollar can be higher than expected.

Managing taxable Income to avoid higher Medicare premiums

Retirees are often vulnerable to surcharges because the IRMAA trigger is highly sensitive to small income changes. However, the objective isn't to eliminate income but rather to manage its timing.

Because IRMAA responds to shifts rather than just steady increases, maintaining a modest buffer below thresholds can reduce the risk of unexpectedly crossing into a higher tier.

Required minimum distributions (RMDs): Once you turn 73, retirement account withdrawals count toward your MAGI, which can push you above the IRMAA threshold. Projecting these distributions early can help you anticipate how future income will shape your taxes and IRMAA exposure.

The occasional Roth conversion: Converting from a traditional IRA to a Roth IRA can lead to a MAGI spike for that year. However, if completed before Medicare enrollment, these conversions can help reduce future exposure to higher premium tiers. Spreading or "staggering" conversions across multiple years can further reduce sharp increases in adjusted gross income.

Dividends and capital gains: Even if you don’t sell, fund payouts quietly increase income. Similarly, large one-time events, such as the sale of a business or investment property, can affect premiums. Staggering capital gains rather than realizing them in a single year can help control these income spikes.

Medicare IRMAA: Bottom line

When income crosses an IRMAA threshold by even one dollar, Medicare premiums can increase.

But as you might already have experienced, retirement income doesn't operate in a vacuum. It flows through the tax code and into Medicare premiums. Comprehensive planning can help you navigate those interactions thoughtfully and keep more of your earnings.

Review your specific financial circumstances with a qualified tax professional. They can help clarify potential tax exposure beforehand rather than after the fact.

Read More

• How the IRS Taxes Retirement Income
• 3 Retirement Changes to Watch in 2026: Tax Edition
• How the New $6K Senior Tax Deduction Impacts IRMAA Costs
• The 40-Year Retirement Rule: How to Prepare Your Taxes for a Longer Life

Question: I’m 62, married, and have spent my entire career diligently saving. Between maxing out my 401(k) and consistently funding my Health Savings Account (HSA), I’m confident we’ve hit our "number." My kids are independent, and I’m ready to reclaim my time.

However, my wife is hesitant; she wants me to wait until 65 for the health care safety net of Medicare. She’s terrified that an unexpected medical crisis or the cost of private insurance will drain our life savings.

Since we are still healthy, I want to retire now to travel and enjoy ourselves, but my wife feels the financial risk is too high. How can I make her see it's OK to retire before Medicare kicks in, or should I suck it up and work three more years for my employer's health insurance?

Answer: Understandably, your wife may be concerned about self-funding health care before Medicare kicks in. Health insurance is a significant expense, and costs are only projected to rise.

For 2026, the average monthly premium for a Silver-tier Affordable Care Act (ACA) "benchmark" plan — which balances monthly premiums with out-of-pocket costs — is $1,598 for a 60-year-old. For a 64-year-old, that figure climbs to $1,766. COBRA, another common bridge, offers little relief; you typically pay the full cost of your employer’s plan without the company subsidy.

Don't let life pass you by

Despite these price tags, financial advisers suggest that the wait for Medicare shouldn't necessarily dictate your retirement timeline, provided your savings are robust.

"If you are just waiting to retire purely because of a particular cost or benefit, it's probably not aligning with your life or the way you want to enjoy it," says Jamie Hopkins, CEO of Bryn Mawr Trust Advisors. "If you want to retire at 62 to enjoy your life and have enough money, you should do that."

While many plan to retire at 65 for Medicare, or at 67 for full Social Security benefits, reality often interferes. According to MassMutual, the average retirement age in America is 62, with many forced out of the workforce early due to layoffs, illness or caregiving responsibilities.

This typically happens about four years sooner than planned. That’s why Derrick Longo, a wealth advisor at Exencial Wealth Advisors, says it’s not worth delaying retirement if you’ve run the numbers and can afford to cover your health care in the interim.

"You don't know how long you are going to live waiting for the go-go years," says Longo. "You might not want to wait. It comes down to how much it costs to get private insurance, and does that mess up your financial plan? If you can't afford it… then you should wait until you reach Medicare age." But if you can, nothing should hold you back.

How to fund the health care gap

Before addressing how to get your wife on board, let's explore how to self-fund health care before Medicare coverage begins. If you’ve contributed to an HSA, using those funds is a tax-smart way to bridge the gap, as withdrawals for qualifying medical expenses are tax-free.

Alternatively, you can purchase a plan through the marketplace or opt for COBRA if your employer offers it. The one thing you should never do is forgo coverage and hope for the best.

"Health care costs can bankrupt you very quickly. It's the number one driver of bankruptcies for individuals," says Hopkins. "Health care events can range into the millions of dollars without any health insurance coverage. It's a really big liability."

Show her the money

To take a page from the late '90s rom-com, Jerry Maguire: show her the money. The best way to get your wife on board is to put her fears to rest. If she can see exactly how much you have saved, what health care will cost during the gap years, and how you’ll pay for it, retiring at 62 becomes much easier to accept, says Longo.

After all, the fear of outliving retirement savings is valid, especially with a thirty-year retirement — or longer — being a distinct possibility. "It's simply showing her you can or cannot afford it. The financial plan dictates everything," says Longo.

The Verdict: To wait or not to wait?

At the end of the day, you don’t have to "suck it up" and work three more years if the math supports retiring at 62, but that doesn't mean you should dismiss your wife's need for security either.

If the projected monthly cost of health care is going to make a significant dent in your long-term plan, then working a bit longer — or finding a "bridge" job with benefits — could be a fair compromise.

If, on the other hand, you can afford those bridge years without throwing a wrench in your long-term goals, then the hurdle is emotional. Showing her that your plan remains intact and that health care is a pre-funded expense, rather than a potential albatross, can help you both move into this next chapter with confidence.

Related Content

• Five Smart Moves for Retirement Health Care: Maximize Your HSA and Medigap Savings
• 9 Medicare Changes to Watch in 2026
• Will Soaring Health Care Premiums Tank Your Early Retirement?
• Why Picking a Retirement Age Feels Impossible (and How to Finally Decide)

If you're in or nearing retirement, you're probably familiar with Medicare, the U.S. government's health care program for those age 65 and older.

More than 66 million Americans get their health coverage from Medicare.

It's one of the most important pieces of retirement planning, yet also one of the most confusing. For many retirees, selecting Medicare coverage is a decision that can significantly impact their income, taxes and overall financial security.

Why is Medicare such a hot-button topic?

Starting January 1, 2026, a new six-year pilot program from the Centers for Medicare and Medicaid Services (CMS) aims to improve efficiency, reduce fraud and help patients receive the right care more quickly.

However, some worry that it could create more confusion and red tape for patients in the six experimental states, including Texas, as they try to understand how their care will be handled.

In the past, there has been limited pre-approval for beneficiaries seeking services for original Medicare. Now, through the Wasteful and Inappropriate Service Reduction (WISeR) model, beneficiaries will undergo a review process that uses artificial intelligence in conjunction with human review before certain medical services, procedures and devices are covered.

According to the National Library of Medicine, waste in health care represents 25% of all health care spending in the United States. So, while patients may have to wait longer when it comes to getting procedures approved and completed, it could help them and providers avoid unnecessary or inappropriate care and keep costs down.

These and other changes have made Medicare a hot-button topic. Many people are surprised by how complex the system really is. That's why it's so important to understand all of your options, both for your health and your wallet.

Know the cost of Medicare

When people think about Medicare, they often focus on health care — what's covered and what isn't. But what they fail to consider is the financial side.

Medicare premiums are directly tied to your income, so one of the challenges is determining the best time to enroll. Your timing and financial setup can have lasting effects on your premium costs.

For example, if you're still working and plan to retire soon, your Medicare premiums may initially be based on your highest earning years.

If you won't be making what you have made over the past couple of years, there's a form you can file to have your premiums adjusted once your income drops, but many people don't know that and end up overpaying.

Take a look at your Social Security benefits, 401(k) and other retirement account withdrawals, and any other income sources to understand how each will affect your premiums and tax situation.

Know when to enroll

It's a really complex system, but the bottom line is to make sure you coordinate your Medicare enrollment with your retirement income plan.

People frequently get confused about when to enroll in Medicare, and failing to do so on time can have serious consequences on your health care and finances for years to come.

If you are about to turn 65, you can enroll anywhere from three months before to three months after your birth month. But don't miss the deadline. If you miss the initial enrollment period, you could end up paying more expensive premiums for the rest of your life.

Don't assume Medicare covers everything

One of the biggest misconceptions about Medicare is that it will cover all your health care needs. Traditional Medicare (Parts A and B) can come with high out-of-pocket costs, including deductibles and coinsurance. It also doesn't cover dental care, vision, hearing aids and other long-term care needs.

If people are seeking more coverage, a Medicare Advantage plan can help cover some of those out-of-pocket expenses.

A health savings account (HSA) can also be used to help supplement the costs. However, this is also an area where retirees can get into trouble. Once you enroll in Medicare, you are no longer allowed to contribute to your HSA, and you must stop contributing up to six months before applying for Medicare. Missing this deadline can result in penalties or having to pay back any excess contributions.

Medicare also doesn't cover long-term care, such as assisted living or nursing homes. If you require an extended stay at one of these facilities, you will need to come up with the funds to help fill the coverage gap.

It's important to have a long-term care strategy, whether that's through an annuity or traditional insurance. A typical long-term care insurance policy can help cover the costs of adult day care, respite care, stays in Alzheimer's special care facilities, assisted living facilities, nursing homes and hospices.

Understanding and planning for coverage gaps early can help retirees protect their hard-earned savings and ensure they're prepared for any future health challenges.

Reevaluate prescription coverage every year

Medicare is not a set-and-forget plan. Just as your health needs change, so do plan costs, provider networks, drug coverage and benefits.

Once you're enrolled, you should be reviewing your plan every year and use the open enrollment period to make adjustments.

Prescription drug coverage can be one of the most expensive parts of healthcare in retirement. If you choose original Medicare, you need to enroll separately in Part D, which helps pay for brand-name and generic drugs.

Even if you don't need prescription drugs now, it's recommended to get coverage upfront to avoid paying a late enrollment penalty if you join later.

Reviewing your plan options every year can help you find better benefits, lower premiums or a more comprehensive coverage for your medical needs. This is also a good time to meet with your financial professional, who can help you enroll in the right plan for you.

Your health is valuable: Consult a professional

Medicare decisions should never be made on a whim — these are lifelong decisions that could affect your entire financial plan, and changing them can be costly or next to impossible. That's why working with a financial professional who understands your individual situation is so valuable.

The late stages of your career and into retirement are not the time to take chances with the money you've worked your whole life to earn.

Get informed, review your plan and make sure you're set up for success in the years to come. Because when it comes to your health care and financial future, informed decisions are the best medicine.

Related Content

• Medicare Basics: 12 Things You Need to Know
• What You Will Pay for Medicare in 2026
• 9 Medicare Changes to Watch in 2026
• How to Appeal the IRMAA for Medicare Parts B and D
• 11 Costly Medicare Mistakes You Should Avoid Making

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Turning 65 is a major milestone, but it often comes with a mountain of paperwork and confusing jargon. Among the most stressful aspects of Medicare are the hidden 'late enrollment penalties' that can catch retirees off guard.

Fortunately, these costs are entirely avoidable if you know the rules. In this article, we’ll break down exactly what these penalties are and how you can protect your retirement budget from unnecessary lifelong fees.

Whether you're still working or plan to retire this year, understanding the 2026 penalty structures for Parts A, B and D is essential for your financial health.

Here's what you need to know to stay penalty-free.

How to avoid the penalties

The best defense is a good timeline. By either enrolling when you first become eligible during your initial enrollment period (IEP) or confirming you have credible coverage from an employer group health plan, you will avoid all late penalties.

The IEP is a 7-month window centered around the month you turn 65. It includes: the 3 months before the month you turn 65, the month you turn 65 and the 3 months after the month you turn 65.

If you claimed Social Security benefits before age 65, you will be enrolled in Parts A and B automatically.

Here are the three main ways to avoid extra costs:

• Enroll during your Initial Enrollment Period (IEP): This is the 7-month window around your 65th birthday (3 months before, your birth month, and 3 months after).
• Have "Creditable Coverage": If you're still working and have health insurance through an employer (yours or your spouse's), you can often delay Part B and Part D without penalty. 
• Use a Special Enrollment Period (SEP): If you are still working, you have an eight-month window to sign up for Part B and a 63-day window for Part D after your employer coverage ends.

What counts as creditable coverage?

Not all employer-provided health care is considered creditable coverage. However, what qualifies as creditable coverage is straightforward. To avoid penalties while working past 65 due to having "creditable coverage" in 2026, your policy must be:

1. Group health insurance from an employer with 20 or more employees.

2. A plan that includes drug coverage that is expected to pay at least as much as Medicare’s standard Part D plan.

Notice of Creditable Coverage. Employers and unions that provide prescription drug coverage to Medicare-eligible employees must notify these employees as to whether the drug coverage they have is creditable or noncreditable.

If you're notified that your coverage will be "noncreditable," you need to start shopping for a Part D plan and enroll before you're liable for penalties.

Note: COBRA and retiree health plans are not considered creditable coverage for Part B, because you're no longer employed and/or covered by an employer-provided policy.

Read The 7-Month Deadline That Determines Your Lifetime Medicare Premiums to learn about enrolling in Medicare for the first time and the role/impact of employer-provided health care in greater detail.

Medicare Part A penalty: An extra 10% monthly

While most people get Part A for free, those who have to buy it face a 10% penalty if they sign up late.

• The penalty: An extra 10% added to your monthly premium.
• Duration: Unlike Parts B and D, this one isn't for life. You pay it for twice the number of years you were late. In other words, you must pay this for twice the number of years you were eligible but didn't sign up. For example, if you enrolled one year late, you pay the penalty for two years.
• 2026 costs: For those who don't qualify for premium-free Part A, the full premium is $565 per month. The penalty would add about $56.50 to that monthly bill.

Medicare Part B penalty: A lifetime surcharge

This is the "expensive" penalty because for most people, it never goes away.

• The penalty: An extra 10% for each full 12-month period you could have had Part B but didn't.
• Duration: Permanent. You pay this for as long as you have Medicare Part B.
• 2026 costs: The standard premium in 2026 is $202.90/month. If you wait two years to sign up, your penalty would be 20%, adding $40.60 to your monthly premium forever.

Part D: A 'ghost' penalty

Even if you don't take any medications now, Medicare requires you to have "creditable" drug coverage. The Part D penalty is harder to estimate because it's calculated using a "National Base Beneficiary Premium," which changes yearly. This is because Part D premiums vary by insurer and the extent of coverage. It would be too onerous to calculate penalties individually.

• The penalty: 1% of the "national base beneficiary premium" for every month you went without coverage.
• Duration: Permanent. You pay this for as long as you have Medicare Part D.
• 2026 costs: The base premium for 2026 is $38.99. If you went 24 months without coverage, your penalty would be 24% of that base ($38.99 times 0.24 equals $9.40 extra per month).

Set a reminder, save forever

While the threat of permanent penalties sounds intimidating, they're easily avoided with a bit of organization. The bottom line? Medicare rewards those who plan ahead.

As long as you have creditable coverage or sign up when you first become eligible during your IEP, these extra costs will never touch your bank account. Don't leave your retirement savings to chance — mark your calendar today and consult with a Medicare specialist if you’re unsure about your status.

Related Content

• Turning 65 in 2026? Here Is Exactly How to Sign Up for Medicare
• The 7-Month Deadline That Determines Your Lifetime Medicare Premiums
• What You Will Pay for Medicare in 2026
• Medicare Premiums 2026: IRMAA Brackets and Surcharges for Parts B and D

Death and taxes are life's two certainties, but what if you could have more control of the latter in retirement? That’s the goal of the "Take That, Uncle Sam" rule of retirement spending.

With this approach, money is withdrawn strategically to limit your tax exposure. The less you pay Uncle Sam, the more you have to spend or leave to your heirs.

It’s a strategy any retiree can use, but timing is everything. Those who spend more early in retirement must structure their plans differently from those who wait until later.

Either way, the goal remains the same: Keep as much of your hard-earned savings as possible without running afoul of the law.

"It makes a big difference if you've got all these taxes like IRMAA and RMDs hitting you at different times," said Steve Parrish, professor of Practice, Retirement Planning at The American College of Financial Services.

What taxes are the 'Take That, Uncle Sam' rule worried about?

When it comes to the taxes that the "Take That, Uncle Sam" strategy aims to limit, they include the following:

Ordinary income: Most withdrawals from traditional IRAs and 401(k)s in retirement are taxed as ordinary income, just like a paycheck.

IRMAA surcharge: If your annual income exceeded $109,000 (for single filers) or $218,000 (for joint filers) in 2024, you're on the hook for an IRMAA surcharge on your Medicare premiums in 2026. (There is a two-year look-back period for determining whether you must pay the surcharge.)

Required minimum distributions (RMDs): Once you reach age 73 (or age 75 if you were born after 1959), you're required to take annual withdrawals from your traditional IRA. These RMDs can easily push you into a higher income tax bracket.

Keep in mind that tax planning and retirement spending can get complicated quickly, depending on your assets, account types, income streams and how you want to spend your money.

That's why it might be in your best interest to work with a tax professional or a financial adviser — or at least, a trusted friend, family member or an online financial planning tool.

"I don't recommend anyone DIY this unless they know taxes," said Julie Williams, wealth adviser at Wealthspire. "Taxes layer on themselves."

Breaking down the 'Take That, Uncle Sam' rule

Now that you understand some of the tax levers at work, here's the "Take That, Uncle Sam" rule in action, whether you want to spend money in the go-go or slow-go years.

Spending during the go-go years

If you plan to spend a lot in the early years of retirement and your withdrawals will push you into a higher income bracket that creates a big tax event, the "Take That, Uncle Sam" approach could be for you.

Parrish says in that case, you withdraw from your Roth IRA first to avoid paying taxes. After that, you tap your brokerage account and IRA. Once your spending slows down, you stop withdrawing from your Roth.

The reason to tap your Roth IRA? Withdrawals are tax-free. The downside: You're giving up future tax-free growth. It means heirs won't receive as big a tax-free inheritance. Nonetheless, Parrish said it could be worth it if you faced a big tax bill.

Keep in mind that this approach won't reduce your RMD exposure, since you aren't touching your traditional IRA. Your RMDs could be larger if your balance continues to grow.

To get around that, try a hybrid approach in which you wi,thdraw just enough from your traditional IRA to stay in your existing tax bracket and take the rest from your Roth. You can lower your RMDs, but you'll have to pay some income tax.

Spending during the slow-go years

If you expect to withdraw more money later in retirement and want to avoid a big tax hit, do the reverse: Withdraw from your traditional IRA up to the top of your tax bracket, and if you need more, take it from your brokerage account, said Parrish.

The reason to tap your traditional IRA first? Typically, you're in a lower tax bracket in retirement, so the tax hit is minimal. It also gives you a chance to reduce your RMDs. The downside: You must pay some taxes on withdrawals.

Do that year after year, then move to your Roth. When it comes time to make large withdrawals later, the money will be tax-free.

"The nice part is you burn up some of your IRA when it comes time to take your RMDs," said Parrish.

It isn't an exact science

At the end of the day, tax planning for retirees isn't about avoidance; it's about minimizing the amount you owe. It's about making those tax-smart moves, particularly when you begin withdrawing the money you worked so hard to save.

"It’s about what you can do today to keep more money in your pocket for your entire family, the next generation and your lifetime," said Williams.

Related Content

• Got $5 Million Saved for Retirement? Here Are the Huge RMDs the IRS Makes You Take at Ages 73, 75, 80 and 85
• The New Retirement Math: How an Active Lifestyle Can Lower Your 2026 Taxes
• The $3,000 Retirement Mistake Millions Make Each Year (And How to Avoid It)
• 5 Assets You Should Hold Onto in Retirement (Even If You Need the Cash)

If you're turning 65 in 2026, you have a critical seven-month window to sign up for Medicare — and missing it can be an expensive mistake.

While some people are enrolled automatically, millions of others must take proactive steps to avoid gaps in their health coverage.

With new 2026 changes now in effect — including a $2,100 out-of-pocket cap on prescription drugs and lower negotiated prices for high-cost medications — there has never been a more important time to get your enrollment right. Here is exactly how to sign up, what documents you need and the deadlines you can't afford to miss.

This article will focus on those who become eligible for Medicare upon turning 65. There are people under age 65 who qualify for Medicare due to disability or a limited slate of diagnoses. This article doesn't address those circumstances.

Automatic enrollment for (most) people already receiving benefits

You'll generally be automatically enrolled in both Medicare Part A and Part B if you are already receiving Social Security (SS) benefits at least four months before you turn 65.

There are two groups of 65 year-olds that need to sign-up on their own: Those who haven't signed up for Social Security and those who must pay a premium for Part A.

Here's what happens when you're automatically enrolled :

• You'll receive your Medicare card in the mail approximately three months before your 65th birthday
• Your coverage will start automatically

What to do if you don't want Medicare- If you're automatically enrolled but choose to decline Part B, usually because you have coverage through a current employer, you must follow the instructions on your welcome package/card to opt out.

You can't disenroll from Part A. This would only be a problem if you're employed and want to continue to contribute to a health savings account (HSA). Otherwise, most people sign up for Part A because it's free for most enrollees and can serve as secondary hospital insurance that might pick up costs not covered by your employer-provided health insurance.

Enrollment if you're NOT receiving benefits

If you're not yet collecting Social Security when you become eligible for Medicare at age 65, you must sign up yourself. You have three primary ways to enroll in Part A and Part B through the Social Security Administration (SSA):

Signing up for Medicare Advantage and Part D drug plans

Once you're enrolled in Medicare, you can choose to enroll in a Medicare Advantage plan or top up your original Medicare coverage with a Part D drug plan and/or Medigap insurance.

If you do nothing other than enroll, you'll be enrolled in Original Medicare by default. Those in original Medicare should consider adding a Part D plan to defray prescription drug costs and avoid late-enrollment penalties. Even if you don't have many prescriptions now, your needs will change over time.

Failing to add this policy when you first join Medicare could be a costly mistake. A Medigap policy helps to cover co-payments, co-insurance and other expenses not covered by original Medicare.

Trial rights: The 'New to Medicare' reset

The federal government offers new beneficiaries a "do-over" window. If you decide the plan isn’t for you within the first year, you have a legal "trial right" to switch to original Medicare. The reset opportunity applies to people who choose Medicare Advantage the first moment they become eligible for Medicare.

The most critical part of this right is the "Guaranteed Issue Rights". Normally, if you try to buy a Medigap or supplemental plan after being in an MA plan, companies can look at your medical history and deny you coverage or charge you more due to pre-existing conditions. However, under the trial right, they must sell you a policy at the best available rate, regardless of your health.

I recommend not canceling your MA plan until you have a Medigap policy lined up.

Key enrollment periods

Regardless of how you sign up, you must do so during a valid enrollment period to avoid potential late enrollment penalties.

Although most people become eligible for Medicare when they turn 65, not everyone decides to enroll at that point. If you have employer-provided coverage through yourself or your spouse, you can delay enrolling until that coverage ends.

As long as you have credible coverage, you won't pay late enrollment penalties when you do switch to Medicare.

You're near the finish line

Whether you choose to apply online via SSA.gov, by phone, or through an in-person appointment at your local SSA office, the key is to be proactive. Starting your preparation at least three months before your 65th birthday ensures a seamless transition without gaps in your health care.

Ultimately, while the technical steps are your gateway into the system, the peace of mind that comes with secure, lifelong health coverage is the real reward. Once your enrollment is confirmed, your next step is to look forward to your "Welcome to Medicare" visit, at which you can partner with your doctor to build a personalized health care prevention plan for the years ahead.

Related Content

• The 7-Month Deadline That Determines Your Lifetime Medicare Premiums
• What You Will Pay for Medicare in 2026
• Medicare Premiums 2026: IRMAA Brackets and Surcharges for Parts B and D
• We're Retired With $4.6 Million. My Wife Chose Our Medicare Advantage Plan for the $0 Premium, But I Want Original Medicare’s Freedom. Is It Too Late?

Business and finance in the U.S. — and the world — have long been dominated by men, so when Forbes released its most recent ranking of the "400 Richest People in America," it wasn't surprising to see that only 62 women made the list.

Alice Walton, the only daughter of Walmart co-founder Sam Walton, ranked highest on the list at No. 15.

But times are changing and faster than you might think. According to McKinsey & Co., by 2030, assets controlled by women in the U.S. are projected to reach nearly $34 trillion, or about 38% of total U.S. assets.

That number is staggering, but there's more to the story. This isn't just about money shifting from one set of hands to another; it's about women stepping into a new level of financial influence as decision-makers for their families, businesses and communities and the causes they care about.

Why the shift matters

For decades, the financial world has been built around men's work and life patterns. A woman's reality, however, can often look quite different:

Women have traditionally been the primary caregivers for their families. We often take career breaks to raise children or care for loved ones, which can shrink our income and lifetime savings and also result in lower pension and Social Security benefits.

Nearly every woman will be solely responsible for her finances at some point in her life — as a widow or divorcee or because she doesn't marry. Yet, according to a recent Bank of America study, many women say they don't always feel comfortable talking about money — especially when it comes to investing and making long-term financial decisions.

Women generally live longer and face higher health and long-term care costs. Women in the U.S. live nearly six years longer than men and spend $15.4 billion more than men in out-of-pocket health care costs each year.

A woman's wealth will often show up later in life — after a parent or a spouse passes away or if she gets divorced. That's when decisions can feel the most burdensome, and mistakes can be the most painful. What should feel empowering might instead feel overwhelming.

Take action to move forward with confidence

Whether you're a billionaire, a millionaire or still building your wealth, it's essential to make informed financial choices.

Here are 10 strategies to help women increase financial confidence and work toward their goals:

1. Build and maintain your own financial identity.

Financial independence creates freedom in life. Even in a happy, long-term marriage, it's smart to ensure that your name is on important documents and accounts and you have access to credit in your own name.

This makes dealing with the financial aspect of difficult life transitions (such as death or divorce) significantly less daunting.

2. Make financial planning a priority.

Although financial professionals usually encourage couples to attend meetings together, this doesn't always happen. Women, especially older ones, still tend to leave long-term planning and investing to their spouses.

Make sure you're included in every decision and that your voice is heard.

3. Close the confidence gap.

Many women lack confidence when it comes to investing, even though they're fully capable. If you're feeling uncertain, consider joining a financial workshop or online class or booking a discussion every year.

Knowledge compounds, just like money.

4. Clarify your vision.

What do you want for your family and yourself? What causes are important to you? Write down what your ideal life looks like now and in retirement, and what you hope to accomplish.

This can help you create a customized roadmap that keeps you on track with your values and your goals.

5. Prioritize retirement income planning.

Investments matter, but real security in retirement comes from knowing where your money will reliably come from every month.

As you create your retirement plan, ask yourself how much of your income is guaranteed and how much depends on the market.

6. Plan for health care and longevity costs.

Many soon-to-be retirees are surprised to learn that Medicare won't cover every health-related expense as they age. Planning ahead can help you stay independent on your terms.

Prepare now for Medicare gaps and long-term care needs, before health issues become a problem.

7. Make taxes part of your planning.

Every dollar lost unnecessarily to taxes is a dollar you can't use for your family's wants and needs. Look into how a Roth conversion, charitable giving and/or tax-efficient withdrawal strategies could be used to help maximize your nest egg.

8. Have a backup plan.

Clarity before a crisis is empowering. If your life changed tomorrow — if you lost your spouse or if your health or income were to suddenly diminish — would you know what steps to take next? Build those what-ifs into your plan.

9. Get it in writing.

A box, bin or drawer full of financial paperwork isn't a strategy. A comprehensive written plan lays out your goals and income, tax, health care and legacy strategies in one place so you can see the full picture. No more winging it.

10. Treat your legacy as a living thing, not a leaving thing.

Don't wait until the end of your life to think about your legacy. Use your wealth now to create memories, support education or give to causes that matter. A legacy isn't just about what you leave behind; it's about how you live today.

Don't hesitate to ask for help

Someday, I expect, there will be just as many women as men on the list of the "Richest Americans." Maybe even more.

Won't that be cool?

However, women will always face unique challenges when it comes to securing their financial well-being.

If you don't have a financial adviser, think about finding someone who encourages your questions, values your opinion and understands your vision. If you aren't working with someone who makes you feel comfortable and confident, consider making a change.

Putting together a plan that's geared to your specific needs as a woman is a necessity — and asking for help is OK.

Kim Franke-Folstad contributed to this article.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

Related Content

• How Women of Wealth Are Creating a New Model of Giving Through Family Offices
• How Women Can Handle Their Growing Wealth Like a Pro
• I'm a Financial Planner: This Is How Smart Women Can Plan for Financial Freedom Despite Life's Curveballs
• A Financial Adviser's Health Journey Shows How the 'Pink Tax' Costs Women
• Financial Planning: Sisters Should Be Doin' It for Themselves

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

A successful career often includes risk-taking to master greater responsibilities, earn more income and substantially increase your savings for retirement.

But when you've reached the finish line of your working life, even if you've done a great job of putting money away, the risks aren't necessarily over.

Inflation, market volatility and health care costs are among the factors that can eat away at your nest egg, especially if you haven't planned how to combat them well before retiring.

Most people are aware of those risks: An Allianz Life study found that 64% of Americans worry more about running out of money than they do about dying. However, more than half do not have a plan in place for their retirement, according to another Allianz Life study.

Many have a clear idea about their retirement goals in terms of things like savings, vacations, family time, hobbies, charity and gift-giving. But failing to plan proactively to protect against risks could sabotage those goals. Let's take a look at some of the main retirement risks and how you can best prepare for them.

1. Income risks

Income is generally the top concern among pre-retirees and retirees. Therefore, it makes sense to start with a written income plan.

A retirement income strategy is a structured process that shifts your focus from accumulating savings to generating sustainable, long-term income.

Determine your retirement lifestyle. Visualize what you want retirement to look like. Your goals will significantly influence the amount of money you'll need.

Estimate your future expenses. Create a retirement budget that includes essential expenses (housing, monthly bills, health care, food, etc.) and discretionary costs (travel, entertainment, hobbies).

A common rule of thumb is to plan to replace 70% to 80% of your pre-retirement income to maintain your lifestyle, but this can vary widely.

Identify and evaluate your income sources. This includes Social Security, pensions, retirement accounts, annuities, rental income and stocks.

Build a smart withdrawal strategy. Plan how to withdraw from savings to ensure your money lasts. Common strategies include the "4% rule" (withdrawing 4% initially and adjusting for inflation each year afterward), the bucket strategy (dividing assets into time-based buckets) and dynamic withdrawals (adjusting withdrawal rates based on market performance).

A bucket approach can help you manage cash flow. Funds for immediate needs can go into a low-risk, liquid account, and longer-term funds can remain invested for growth.

Keep in mind that retirees can often spend far more than 4% of their retirement assets annually, especially in the early years of retirement when more income is needed.

That's because retirees are more likely to be healthier early on in retirement, enabling them to travel and be more active than when they reach their 80s.

2. Investment risks

Along with an income plan, it's important to have a comprehensive investment review to determine how much risk is enough risk.

Managing these risks requires a strategic shift from the aggressive growth strategies used during the accumulation phase of your working years.

Here are some ways to evaluate and balance your investment risks in retirement:

Diversify your investments. Does your current portfolio match your risk tolerance? How would your assets be impacted by a market crash? Diversifying with the right mix of stocks, bonds and other assets can help manage market volatility and inflation risks.

Balance risk and growth. As you near retirement, you may want to shift some of your portfolio to more conservative investments to help protect your capital.

But you'll also need some exposure to growth-oriented assets to combat inflation, including income-producing investments such as bond ladders, dividend-paying stocks and real estate investment trusts.

Cash, certificates of deposit (CDs) and other low-growth investments are particularly vulnerable to inflation.

Annuities can create a reliable stream of income that reduces the need to sell assets during market downturns.

Be aware of and mitigate sequence of returns risk. This is one of the most damaging risks for retirees and refers to the impact of the timing of investment gains and losses, especially early in retirement.

It's the danger that poor investment returns can have a devastating and lasting impact on a portfolio, even if average returns are good over the long term. This risk is due to retirees withdrawing money when the market is down, which locks in losses, leaves less capital for future gains and increases the chance of outliving savings.

Ways to mitigate sequence of returns risk include creating a cash reserve, implementing a bucket strategy and diversifying your portfolio.

Plan withdrawals carefully. Consider using a percentage-based withdrawal strategy rather than a fixed dollar amount. This approach can help limit withdrawals during a market downturn and preserve your capital.

3. Tax risks

Strategic tax planning can help preserve your savings. To organize the process and mitigate your taxes year to year, you can break those taxes down into three buckets.

That way, you can strategically choose which accounts to withdraw from each year to control your taxable income, possibly keeping you in a lower tax bracket.

Taxable income. This bucket includes any non-retirement investment accounts funded with after-tax dollars — standard brokerage accounts, savings accounts, CDs and bonds.

Each year, you will be taxed on any interest, dividends and capital gains that your investments earn. Long-term capital gains are often taxed at a lower rate than ordinary income.

You can draw from your taxable accounts first in retirement to allow your tax-deferred and tax-free accounts to continue growing.

Tax-deferred. Pretax retirement accounts are an effective way to build savings during your working life, but they are taxed as regular income when you withdraw that money in retirement.

Additionally, they must eventually be withdrawn, even if you don't need the money, and are subject to required minimum distributions (RMDs), which begin at age 73 for most people.

Those accounts include traditional 401(k)s and IRAs, SEP IRAs, SIMPLE IRAs, 403(b)s and governmental 457(b) plans.

These distributions will raise your taxable income, perhaps result in more of your Social Security being taxed in the process and also potentially increase your Medicare premiums.

Tax-free. This bucket has a Roth IRA or a Roth 401(k). Because of the RMDs, continuing to defer taxes throughout your career typically isn't the best strategy — all you're doing as your balance increases is upping your retirement taxes and possibly putting yourself in a higher tax bracket.

That's why converting some or most of those tax-deferred accounts to a Roth IRA or Roth 401(k) can make sense. Those accounts are not subject to RMDs.

And though you pay income tax on the amount you transfer in a given year, withdrawals are tax-free if you're at least age 59½ and have had the account for at least five years.

4. Health risks

The question to ask yourself regarding health risk is: "Can I cover the future costs associated with health care and long-term care (LTC)?"

Some people procrastinate or pretend that ill health won't affect them. But without a plan in place, you risk losing much of your savings, which also means less for your heirs.

You certainly don't want to put a burden on your children or leave your spouse in a difficult financial situation. Since Medicare does not cover all health care expenses or most LTC, proactive planning is essential.

Here are some ways to address health risks in retirement:

• LTC insurance. Premiums are generally lower if you purchase long-term care insurance when you are younger and healthier, typically in your 50s. Hybrid policies combine life insurance or an annuity with an LTC benefit. If you need LTC, you can use a portion of the death benefit. If you never use it, your beneficiaries receive a death benefit.
• Health savings account. HSA contributions are tax-deductible, investments grow tax-free, and qualified withdrawals are free. You can use HSA funds tax-free to pay for Medicare Parts B and D and Medicare Advantage premiums.
• Medigap insurance. These are private insurance policies that help cover costs not paid by Original Medicare, such as copayments and deductibles. You must have Original Medicare Parts A and B to purchase a Medigap policy.

5. Legacy risks

Building an estate or legacy plan involves more than just drafting a will; it's a comprehensive process to ensure your assets, wishes and values are protected and passed on.

Here are some key elements and considerations of an estate plan:

Create a comprehensive list, and gather relevant documents. Catalog all of your assets, including your accounts, real estate, investments, pension plans, life insurance policies, vehicles and personal belongings.

Document all debts to prevent financial burdens on your beneficiaries.

Maximize tax efficiency. A financial adviser can help you incorporate strategies such as charitable giving or using trusts to minimize estate taxes and preserve more of your wealth for your beneficiaries.

Converting a traditional IRA to a Roth IRA creates a tax-free inheritance for your heirs. A life insurance policy can provide a tax-free payout to your beneficiaries, and placing the policy inside an irrevocable life insurance trust can ensure the proceeds are excluded from your taxable estate.

Consider lifetime gifting. You can transfer wealth to your heirs during your lifetime by taking advantage of annual gift tax exclusions.

For 2025, you can gift up to $19,000 per person tax-free without it counting against your lifetime exemption.

Not all risks can be eliminated, but they can be greatly reduced if you engage in proactive and detailed planning — ideally, well before you retire.

You've earned the right to enjoy your retirement, so consult your financial planner to help confront the risks in advance and create more financial certainty for the long term.

Dan Dunkin contributed to this article.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

Related Content

• Retirement Reality Check: Four Risks You'll Want to Avoid at All Costs
• Why Playing It Safe in Retirement Is a Big Risk
• Risk vs Reward: Understanding This Intricate Investing Dance
• Running Out of Money in Retirement: Nine Steps to Help Reduce the Risk
• The 'Common Man' Rule of Retirement Spending

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Don't wait until January 1 to scramble for health resolutions that rarely last. As you enter a new year, the focus should shift from just "being healthy" to optimizing your longevity and vitality.

Maintaining physical health, preventing cognitive decline and building social resilience are paramount to a happy and active retirement.

Use this health and wellness checklist to leave the busy holiday season behind and step into the new year with a solid plan for your physical and mental well-being.

10-point wellness checklist

Our checklist is your end-of-year maintenance manual. This isn't just about scheduling checkups; it’s about making proactive, low-stress decisions — such as confirming your vaccination schedule, optimizing your sleep environment and taking advantage of the free Medicare annual wellness visit.

A strong finish now means a dramatically healthier, more energetic 2026.

1. Schedule your free Medicare annual wellness visit

Your annual wellness visit is covered 100% by Medicare Part B once every 12 months. This visit focuses on risk assessment, updating your personalized prevention plan, reviewing providers/medications and assessing cognitive function.

If an initial assessment suggests possible impairment, Medicare covers a separate follow-up visit for a more thorough cognitive evaluation. This exam allows your provider to screen for conditions such as dementia, depression, anxiety or delirium.

Be aware that a wellness visit is not a full physical exam. It does not include blood work, diagnosis of new conditions or treatment/discussion of existing illnesses. If your provider addresses a current medical problem, that part of the visit might be billed separately.

You might have to pay co-insurance, and the Part B deductible might apply if your health care provider performs additional tests or services during the same visit that Medicare doesn't cover under this preventive benefit.

2. Social determinants of health risk assessment (SDOH)

This is an optional service available during your Medicare annual wellness visit. A Social Determinants of Health (SDOH) risk assessment helps your provider understand your social needs to better treat you and refer you for appropriate services or supports.

If you get the risk assessment as part of another office or behavioral health visit, you'll have to pay 20% of the Medicare-approved amount after meeting your deductible. For 2026, the Part B deductible is $283, $26 more than the 2025 deductible of $257.

These non-medical factors include:

• Living environment
• Access to food
• Employment status
• Education
• Family circumstances

3. Schedule annual appointments

You can prevent health issues or catch them early by scheduling your next physical, eye exam, dental cleaning, and hearing exam for 2026.

These check-ups might come with a fee, but they can save you more down the line. For instance, good dental health can have a significant impact on the prevention of cardiovascular disease.

While general physicals, dental and eye exams are typically not covered by original Medicare, some Medicare Advantage plans might cover these services.

4. Get recommended vaccinations and preventive screenings

Consult your doctor about recommended vaccines, such as flu, Covid and pneumonia. Vaccinations are generally covered by Medicare.

Secure appointments for any overdue preventative cancer screenings. But always confirm coverage details for specific preventative screenings, such as frequency or risk factors. Medicare covers several preventative services for free:

• Colorectal screenings
• Cardiovascular screenings
• Depression screenings
• Annual mammograms
• Annual prostate cancer screenings
• Diabetes screenings
• Lung cancer screenings

5. Prioritize high-quality sleep

Consistent poor sleep significantly degrades mental and physical health. You should prioritize sleep as much as exercise. Aim for 7 to 9 hours of sleep daily.

Proper sleep can improve your health in myriad ways, including boosting the immune system, enhancing cognitive function, and facilitating weight management.

Put down your smartphone or other electronic devices at least an hour before you plan on going to sleep.

“The light from our screens can delay our transition to sleep, even if we are engaged in some soothing activity online,” says Joanna Cooper, a neurologist and sleep medicine specialist with Sutter Health.

6. Begin or refine your exercise plan

Start or upgrade an exercise routine now. Focus on the four types essential for aging: strength training, flexibility, balance and aerobic exercise to maintain independence and prevent falls.

Brisk walking can help ward off medical frailty, which is more than feeling weak. "[Medical] Frailty is when your body can’t get through and recover from illnesses and injuries on its own," as defined by the Cleveland Clinic.

Consistency trumps intensity. Aim for multiple short bursts of activity each week rather than one grueling workout.

7. Critically review your diet and nutrition

Nutrition is a major factor in preventing and managing chronic conditions, such as diabetes and heart disease. Focus on consuming a variety of whole foods and minimizing processed items. As you age, you need more of certain nutrients, including protein, dietary fiber, potassium, calcium and vitamins D and B12.

Did you know that with age, some lose their sense of thirst? A UCLA study estimates that up to 40% of 'elderly people' can be chronically dehydrated.

Staying hydrated is important. Dehydration can lead to health complications ranging from mild to life-threatening. A lack of hydration can cause urinary tract infections (UTIs), heat stroke, heart problems, kidney failure and blood clot complications.

Myplate.gov suggests turning meals into a social event. Whether you invite friends over for a potluck or share a meal at a community center, meals can be more enjoyable when in the company of others.

8. Strengthen social connection and purpose

Social isolation and loneliness can increase the risk of cognitive decline and depression. Retirees need to have a "purpose blueprint" to maintain cognitive health. There are ways to combat being retired and bored. Maybe learn a new language, or take up pickleball.

View social activity as essential preventive medicine. Join a club, volunteer or take a class. It's possible to find cheap or free college classes in all 50 states.

9. Address unhealthy habits

Use the turn of the year as a firm date to quit tobacco, reduce alcohol intake, and put down the junk food. These actions directly lower your risk for disease and can improve your quality of life immediately.

I think I can skip discussing the dangers of smoking. Drinking alcohol might help you fall asleep — but it won’t keep you there. It can disrupt your sleep cycle, lead to fragmented sleep and cause breathing problems, according to the National Council on Aging.

10. Establish a stress-reduction routine

Integrate stress management into your daily life. According to the American Institute of Stress, stress and inflammation are closely linked. Inflammation can exacerbate health problems. While chronic stress can reduce the effectiveness of certain vaccines in older adults.

Try breathwork, yoga or meditation with a mantra, which is shown to reduce stress hormones and lower blood pressure.

An activity such as tai chi offers numerous benefits. These benefits include bone strength, joint stability, cardiovascular health, immunity and emotional well-being. It also helps improve your balance and reduce falls up to 45%, says Peter Wayne, research director of the Osher Center for Integrative Medicine.

Make 2026 the beginning of a healthier life

The greatest investment you can make is in your health, and the end of the year offers a clear opportunity to reset that investment. Remember the goal isn't fleeting weight loss; it's maximizing your health span — the number of years you live well.

Focus on strengthening your social connections to boost mental health and adopting small, sustainable habits such as daily strength work to prevent falls and maintain independence. Leave behind the stress of the past year.

Related Content

• Vaccines Medicare Covers for Free
• 18 Things Medicare Gives You for Free
• What You Will Pay for Medicare in 2026
• What Medicare Covers When You Travel in the US and Abroad

Preparing for retirement isn't just about accumulating money; it's about helping make sure every aspect of your financial life is ready for that next chapter. Does your retirement plan cover all the bases?

The acronym IDEAL is a helpful way to remember the five key areas of retirement planning that, together, create a comprehensive plan:

• Income
• Distribution strategy
• Expenses
• Assets
• Legacy

Many people focus heavily on investments or assume that if they've saved enough, retirement will take care of itself.

In reality, an IDEAL plan addresses how you'll generate income, manage taxes and withdrawals, handle big expenses such as health care, allocate your assets and leave a legacy.

Here's a closer look at why each of the five pillars of an IDEAL retirement plan is important for your golden years.

Income

Income planning is the foundation of a comfortable retirement. After decades of receiving a regular paycheck, retirees must create a paycheck from various sources.

If this is where you're at, start by evaluating your guaranteed income streams, such as Social Security benefits and any pensions or annuities.

When should you claim Social Security to help maximize your benefit? Many retirees benefit from delaying Social Security to increase their monthly checks, but claiming early might make sense in some situations.

If you're lucky enough to have a pension, consider whether you'll take it as a lump sum or an annuity and whether there are survivor benefits for your spouse.

Next, determine how much additional income you'll need from your savings each month to cover expenses.

This is where your 401(k)s, IRAs and other investments come into play. A popular guideline is the 4% rule, which suggests withdrawing about 4% of your portfolio in the first year of retirement and adjusting for inflation thereafter.

The key is to design a withdrawal strategy that provides enough cash flow to cover your needs and some wants without running your nest egg dry too soon.

This might involve setting up systematic withdrawals, building a cash reserve for the first few years of retirement or using an annuity to cover essential expenses.

Clear income planning means you enter retirement with a clear answer to the question, "Where is my money going to come from each month?"

Distribution

Planning retirement income isn't just about how much you withdraw. It's also about the order and timing, and a thoughtful distribution strategy can help minimize taxes across your retirement years.

Many retirees start with taxable accounts to take advantage of lower capital gains rates, then move to tax-deferred accounts such as IRAs and 401(k)s before required minimum distributions (RMDs) force larger withdrawals.

Roth conversions can also play a role, in which you pay some tax now to help secure tax-free income later and potentially reduce future RMDs.

It's also important to factor in state taxes, relocation plans and penalties for early withdrawals before the age of 59½. By coordinating withdrawals carefully, you can potentially save a substantial amount in taxes and keep more of your income working for you.

Expenses

Retirement budgeting isn't just about travel and hobbies; it must also account for big expenses, especially health care. Medical costs typically increase with age and outpace inflation, so understanding Medicare is key.

At 65, you'll pay premiums for Part B, possibly Part D, and you might need a Medigap or Medicare Advantage plan.

Higher earners should also factor in IRMAA surcharges. Beyond routine care, nearly 70% of retirees will need long-term care, which Medicare doesn't cover.

Options include long-term care insurance, hybrid life insurance or earmarking savings. Don't forget irregular costs, including home and car repairs and family support.

Building a budget that separates essentials from discretionary spending helps ensure your retirement isn't derailed by unexpected expenses.

Assets

Managing your investments doesn't end at retirement — it simply shifts focus. The goal is to balance growth with preservation, keeping pace with inflation while helping protect against big losses that hurt when you're withdrawing funds.

Some retirees might adjust to a more conservative allocation, such as 50% to 60% in stocks and the rest in bonds and cash, although the right mix depends on income sources, risk tolerance and life expectancy.

Diversification across assets and sectors helps cushion volatility, and keeping a cash reserve for one to two years' worth of expenses can prevent selling at a loss during downturns.

Regular rebalancing helps keep your portfolio aligned with goals, and income-producing assets such as dividends, bonds or REITs (real estate investment trusts) can help provide steady cash flow — although it's wise to avoid chasing risky yields.

Don't forget to plan for RMDs, ensuring those funds are held in liquid, stable investments. With steady oversight, your portfolio can help support you through decades of retirement.

Legacy

An ideal retirement plan also contains your legacy, which includes what happens to your assets after you're gone. Estate planning isn't just for the wealthy; it's essential for anyone who has family, property or savings.

At least have a will, power of attorney, and health care directives in place, and keep beneficiary designations current on retirement accounts and insurance.

Depending on your situation, a trust can help avoid probate and provide more control of asset distribution. Larger estates might require tax strategies, while some people might simply want to support their family or charities or pass on a business.

Communication is equally important: Talking with heirs and ensuring your executor knows where to find key documents prevent confusion later.

Legacy planning can help provide peace of mind by ensuring your wishes are carried out and you care for your loved ones

Retirement planning can seem overwhelming, but breaking it down into these five IDEAL categories can help make it more manageable.

By reviewing Income, Distribution Strategy, Expenses, Assets and Legacy, you can spot areas that need attention.

Perhaps you realize that you need to tweak your investment mix, start planning for long-term care or update an old will.

Addressing these now, rather than later, will help ensure your retirement truly lives up to your dreams and is as ideal as possible.

Ezra Byer contributed to this article.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

Related Content

• Nine Things You Need for a Complete Retirement
• Five Easy Ways to Jumpstart Retirement Planning
• The 'Common Man' Rule of Retirement Spending
• The Retirement Bucket Rule: Your Guide to Fear-Free Spending
• I'm an Investment Adviser: This Is the Retirement Phase Nobody Talks About

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Turning 65 should be a milestone of freedom, not a source of financial stress. Yet, for millions of Americans, navigating the first step of Medicare — the Initial Enrollment Period (IEP) — becomes a confusing high-stakes gamble.

The IEP is a critical seven-month window centered on your 65th birthday, and missing it can trigger something far worse than a temporary inconvenience: lifetime late enrollment penalties added to your Part B and Part D premiums, along with costly gaps in coverage.

Whether you are ready to retire or plan to keep working, understanding this single, immutable deadline is the first and most important step to securing your health care future.

The Medicare Initial Enrollment Period (IEP)

The Initial Enrollment Period (IEP) is the first time you are eligible to sign up for Medicare Part A hospital insurance and Part B medical insurance.

The IEP is a 7-month window centered around the month you turn 65:

• 3 months before the month you turn 65
• The month you turn 65
• 3 months after the month you turn 65

Birthday Rule: If your birthday falls on the first day of the month, your Medicare eligibility is moved forward one month. Your IEP and coverage start one month earlier.

The penalties for missing the IEP

Medicare penalties are surcharges added to your monthly premiums for as long as you have that part of Medicare, except for Part A. These penalties are designed to encourage timely enrollment.

If you miss your IEP and do not qualify for a Special Enrollment Period (SEP) (usually due to having creditable employer coverage), you face two serious consequences:

How employer insurance factors in

Deciding when to enroll is highly dependent on your current or your spouse's employer-provided group health plan and the size of the employer. Before your IEP begins, you should always speak with your employer's Benefits Administrator or HR department and ask these two questions:

• "How many employees are currently on the payroll?" Why? This determines if Medicare your is primary or secondary insurance.
• "Is our employer-provided prescription drug coverage considered creditable coverage by Medicare?" Why? If not, you may need to enroll in Part D during your IEP to avoid a Part D penalty later.

Primary and secondary coverage

When you have Medicare and other health coverage, such as a group plan, retiree coverage, or Medicaid, each plan is called a payer. The payment process follows a specific sequence, known as "coordination of benefits."

• Primary payer: This plan pays the medical bill first, up to the limits of its coverage.
• Secondary payer: The remaining balance is then sent to this plan, which pays for services covered by its policy.
• Your responsibility: If the secondary payer doesn't cover the full remaining balance, you may be responsible for the rest of the costs.

Important reminder for those covered by a group or retiree plan: If your group health plan or retiree coverage is the secondary payer, you might be required to enroll in Medicare Part B before they will agree to pay their portion of the costs.

Employer-provided insurance

When working for a 'large employer' (20 or more employees): If you, or your spouse, are still working and covered by a group health plan from an employer with 20 or more employees, the employer's plan is considered the 'Primary Payer'. It can be used in place of Medicare Part B and you can generally delay enrollment in Part B without penalty.

Since Part A is usually premium-free, many people enroll in it at 65, even while working. It serves as secondary insurance in the case you are hospitalized.

A Special Enrollment Period (SEP) is available when employer coverage ends: When your current employment ends or your employer coverage ends (whichever comes first), you qualify for a penalty-free SEP to enroll in Part B. This SEP lasts for 8 months after the employment or coverage ends.

Caution: If you have a Health Savings Account (HSA), you cannot contribute to it once you enroll in any part of Medicare (even premium-free Part A). You must stop contributions at least six months before you plan to enroll in Part A.

Working for a 'small employer' (fewer than 20 employees): If you or your spouse is still working and covered by a group health plan from an employer with fewer than 20 employees, Medicare generally becomes the 'Primary Payer' at age 65.

In this circumstance, you must enroll in Medicare Part B during your IEP. Why? If you delay Part B, your employer's plan may only pay a small fraction of your medical bills (or nothing at all), resulting in massive out-of-pocket costs, and you will face the late enrollment penalty.

Retiree coverage and Medicare Part B: The critical difference between retiree coverage vs active coverage is whether your insurance is considered "creditable coverage based on current employment." Retiree coverage, insurance offered by a former employer, union or government entity, does not qualify you for a Special Enrollment Period (SEP) to delay enrollment in Medicare Part B. The only time you can delay Part B without penalty is if you (or your spouse) are actively working and covered by an employer group health plan (EGHP).

Most employer-sponsored retiree plans are designed to work with Medicare, not replace it. Once you turn 65, most retiree plans expect Medicare to pay first.

Before making any enrollment decisions, contact your former employer's benefits administrator/HR department and ask these crucial questions:

• "Am I required to enroll in Medicare Part A and Part B to keep my retiree health coverage?" (The answer is almost always yes.)
• "Is my retiree prescription drug coverage considered creditable coverage?"  If the answer is no, you must enroll in a Part D plan during your IEP.
• "If I enroll in a separate Medicare Part D plan, will I lose my entire retiree health plan?" (Some plans will terminate all your retiree benefits if you enroll in a separate Part D plan.)

Different rules for retiree coverage and Medicare Part D: The rules are slightly different for prescription drugs (Part D). You can delay enrollment in a Medicare Part D plan without penalty only if your retiree drug coverage is considered creditable coverage. Creditable means the plan is expected to pay, on average, at least as much as standard Medicare Part D coverage.

For prescription drug coverage, your former employer or union must send you a notice each year, before October 15, informing you whether your drug coverage is creditable. You must keep this notice as proof.

COBRA Coverage: COBRA is generally not considered "coverage based on current employment" because you (or your spouse) has been 'separated from service." This means an employee's ties with an employer have ended, due to retirement, resignation, termination or death.

You will qualify for a SEP when you lose your employer-provided insurance and have up to eight months after you stop working (or lose your health insurance, if that happens first) to sign up for Part B without a penalty, whether or not you choose COBRA. The end of COBRA coverage will not trigger a second SEP.

The process for enrolling in Medicare Part A and Part B

If you're 65 or older, you can enroll in Parts A and B, or Part A only. You can delay Part B if you're already covered through an employer group health plan. If you want to sign up for a Medicare Advantage or Part D drug plan, you have to enroll in Medicare first. You can make specific elections after enrollment.

You may be surprised to learn that enrollment for original Medicare (Part A and Part B) is handled by the Social Security Administration (SSA), not Medicare itself.

Automatic Enrollment: You will be automatically enrolled in Part A and Part B if you are already receiving Social Security retirement benefits or Railroad Retirement Board (RRB) benefits at least four months before you turn 65.

If you are automatically enrolled, you will receive your Medicare card in the mail approximately three months before your 65th birthday. You can choose to opt out of Part B if you have qualifying employer coverage. You can't disenroll from Medicare Part A. Since most people don't pay a premium for Part A, it can serve as secondary insurance if you are hospitalized.

Manual Enrollment: If you are not receiving Social Security benefits at age 65, you must sign up manually during your 7-month IEP.

Online: Applying through the official Social Security website. This is the fastest method, and you can apply for Medicare only if you are delaying Social Security retirement benefits.

If you want to sign up online, you must create or sign in to your personal my Social Security account.

• By phone: Call the SSA at 1-800-772-1213. Tell the representative you want to sign up for Medicare Parts A and B, or just Part A.
• In person: If you are more comfortable applying in person, then your best option is to visit your local Social Security office.

The process for signing-up for Medicare Advantage (Part C) and Part D drug plans

Medicare Advantage and Part D insurance coverage is managed by private insurance companies. If you want to enroll in either plan, you generally sign-up directly with the insurer after enrolling in Medicare.

Medicare Advantage Plans (Part C): You can enroll directly with a private insurance company after you have enrolled in both Part A and Part B. You can do this during your IEP.

Part D (drug plans): You can enroll through the Medicare Plan Finder tool on Medicare.gov, by contacting the specific insurance plan directly, or by calling 1-800-MEDICARE. You must sign up for this during your IEP to avoid penalties.

Knowing your IEP saves you money

Before your seven-month window closes, it is essential to calculate your start and end dates precisely. Don't forget about the impact of the Medicare birthday rule. If your birthday falls on the first day of the month, your Medicare eligibility is moved forward one month. Your IEP and coverage start one month earlier.

If you have employer coverage, confirm your company’s employee count and obtain proof of creditable coverage in writing. Don't rely on assumptions or general advice; rely on the specific rules of the IEP.

Taking these decisive actions now guarantees you avoid the painful late enrollment penalties, ensuring your retirement is defined by financial peace, not preventable premium surcharges.

Related Content

• What You Will Pay for Medicare in 2026
• Medicare Premiums 2026: IRMAA Brackets and Surcharges for Parts B and D
• 11 Costly Medicare Mistakes You Should Avoid Making
• 12 FAQs About Medicare: Your Medicare Questions Answered

The income-related monthly adjustment amount (IRMAA) is one of the most significant and stealthy retirement taxes, effectively raising the cost of Medicare Part B and Part D premiums for those with higher incomes. Since the penalty is based on your tax return from two years prior, effective IRMAA management requires a proactive, long-term strategy.

The IRMAA is one of the highest costs retirees face and is a crucial part of retirement income planning. IRMAA is an extra charge added to your standard monthly premiums for Medicare Part B medical insurance and Medicare Part D prescription drug coverage.

Liability for the IRMAA is based on your modified adjusted gross income (MAGI) from your tax return two years before the current Medicare year. The lookback is necessary as that is the most recent tax return available when the brackets and surcharges are set.

In 2026, the Part B surcharges will cost you anywhere from $81.20 to $487 monthly. Part D surcharges are lower and will range from $14.50 to $91 every month. This is in addition to the basic premiums. For 2026, the Part B premium is $202.90, and the Part D stand-alone premium is $34.50 on average.

The IRMAA is calculated on a sliding scale with five income brackets, topping out at $500,000 for individual filing and $750,000 for married, filing jointly. These figures, except for the top bracket, are inflation-adjusted annually. For 2026, these inflation-adjusted brackets range from $109,000 to $205,000 for single tax filers and $218,000 to $410,000 for joint filers.

The MAGI calculation for IRMAA purposes is generally your adjusted gross Income (AGI) plus any tax-exempt interest income. This includes nearly all sources of money that appear as taxable income on your Form 1040 (PDF).

Here's a breakdown of the types of income that trigger IRMAA and how to plan around them today to lock in lower health care costs in retirement.

Types of income that trigger IRMAA

Many savvy retirees believe they've optimized their situation by holding municipal bonds or delaying retirement withdrawals, only to be hit with the costly IRMAA surcharge on their Medicare premiums. This penalty is triggered by your MAGI, a measure that typically captures tax-favored income such as tax-exempt interest and, critically, every dollar withdrawn from a traditional IRA or 401(k).

Let's examine the specific income sources that push beneficiaries into higher IRMAA brackets and outline the essential strategies necessary to control your MAGI and protect your retirement budget.

The core of the IRMAA MAGI calculation

IRMAA MAGI equals AGI plus tax-exempt interest. In short, the IRMAA-specific MAGI is primarily your AGI (Form 1040, Line 11) plus your tax-exempt interest (Form 1040, Line 2a).

These are the specific types of tax-exempt interest and dividends that are generally added back:

• Interest from municipal bonds. This is the most common form of tax-exempt interest. The interest from state and local government obligations (municipal bonds) is typically exempt from federal income tax, but it must be added to your AGI to calculate your IRMAA MAGI.
• Tax-exempt dividends. If you hold a mutual fund or exchange-traded fund (ETF) that invests in municipal bonds, the dividends they pay you might be classified as tax-exempt. These dividends, to the extent they're derived from tax-exempt interest, are also included.
• Interest from U.S. savings bonds. Interest from certain U.S. savings bonds (Series EE or I) that's excluded from your taxable income because it was used for qualified higher education expenses is also added back.

7 planning strategies to manage or avoid IRMAA, worth up to almost $14,000

This is a crucial area of retirement planning. In 2026, the maximum IRMAA surcharge can increase your Medicare expenses by $6,936 annually. For couples, that amount doubles to $13,872. Those figures include $5,844/$11,688 for Part B and $1,092/$2.184 for Part D for individuals and couples, respectively.

The goal is to manage your taxable income in the Medicare look-back years, typically ages 63 and 64, for a Medicare Part B start at 65.

Here are seven income-planning tactics to manage your MAGI and mitigate IRMAA:

1. Maximize tax-free income sources. This is the most powerful strategy because this income doesn't count toward your MAGI.

Qualified withdrawals from Roth accounts are tax-free and don't increase your MAGI. Health Savings Account (HSA) withdrawals used for qualified medical expenses, including Medicare premiums, are tax-free and do not increase your MAGI.

2. Strategic Roth conversions. The Goal: Convert pretax money, which counts toward MAGI, to Roth money, which doesn't, during low-income years. Those are the years before RMDs start and before taking Social Security.

You can choose to make a single big conversion or use a partial conversion schedule. Partial conversions only convert enough each year to stay below the first IRMAA threshold (or any subsequent threshold), limit current income taxes and don't drain your cash reserves. This is a multiyear strategy.

3. Optimize your retirement account withdrawals: the 'Roth Strategy'

Since withdrawals from Traditional IRAs, 401(k)s, and RMDs are generally included in MAGI, while qualified Roth withdrawals are not, strategic use of Roth accounts is the most powerful tool retirees and soon-to-be retirees have at their disposal.

4. Utilize a qualified charitable distributions (QCDs)

This is a powerful tool for charitable retirees age 70½ and older. In 2025, a qualified charitable distribution (QCD) allows you to distribute up to $108,000 for individuals or $216,000 for married couples that file jointly, directly from your traditional IRA to an eligible charity. The limits rise to $111,000 and $222,000, respectively, in 2026.

IRMAA impact, The QCD is excluded from your MAGI, helping to reduce your taxable income. Since the RMD is satisfied without the money being included in your taxable income (MAGI), it directly reduces the income that is used to calculate the IRMAA.

Planning reminder, A standard cash charitable deduction doesn't reduce your MAGI for IRMAA purposes.

5. Manage investment income

Investment activities can create unexpected income spikes that trigger IRMAA. While selling an asset might sometimes be necessary, there are ways to minimize the spike and reduce your exposure to IRMAA.

Avoid large capital gains spikes. Be strategic about selling highly appreciated assets. Realizing a large capital gain, such as selling a large block of stock or a piece of property, can easily push your MAGI above an IRMAA threshold for two years.

Tax-loss harvesting. Sell underperforming investments to offset capital gains you've realized. Net capital losses of up to $3,000 (or $1,500 if married, filing separately) can offset other ordinary income, thereby reducing your MAGI.

Asset location. Place investments that generate significant taxable income (such as actively managed mutual funds, corporate bonds or high-dividend stocks) inside tax-deferred accounts (401(k), traditional IRA) to shield the income from the MAGI calculation.

6. Time and structure your income

Defer or accelerate income, known as the "Income Lumping" Strategy

Lump income in one year. If you know you're going to jump into a higher IRMAA bracket anyway (due to a large bonus, final year of work or a necessary home sale), you might choose to accelerate other taxable income, such as a partial Roth conversion or cashing in savings bonds, into that same high-income year.

Why it works. This allows you to "take the IRMAA hit" for only one two-year period, instead of spreading a slightly smaller income over multiple years and potentially paying the surcharge for four or six years.

7. File an appeal

If your income suddenly drops due to a "life-changing event," you don't have to wait two years for an adjustment to your IRMAA. You can file an appeal with the Social Security Administration (SSA) using Form SSA-44 (PDF) (Medicare Income-Related Monthly Adjustment Amount — Life-Changing Event).

If you have questions or need help, call the SSA (1-800-772-1213) and be sure to tell the representative you want to lower your Medicare IRMAA due to a life-changing event.

Qualifying life-changing events include:

• Work stoppage or reduction; you or your spouse retired or reduced work hours
• Marriage, divorce or death of a spouse
• Loss of income-producing property
• Loss or reduction of certain pension income

Planning is the only way to fight the IRMAA surcharges

For most retirees, the monthly Medicare premium is a fixed cost, but for a growing number of high-income beneficiaries, a steep penalty known as the IRMAA dramatically increases that bill.

This surcharge is triggered not just by earnings from work, but by a specific measure of income from two years ago — a measure that includes everything from traditional retirement account withdrawals to municipal bond interest.

The core strategy for avoiding or reducing IRMAA is to lower your modified adjusted gross income (MAGI) in the relevant year, which is typically two years prior to the year you pay the premium.

Understanding exactly which income sources comprise your MAGI is an essential step toward strategically planning your withdrawals to avoid the IRMAA altogether or being pushed into the next, more expensive IRMAA tier.

Remember, it only takes earning $1 above the threshold to trigger the surcharge.

Related Content

• What You Will Pay for Medicare in 2026
• Medicare Premiums 2026: IRMAA Brackets and Surcharges for Parts B and D
• Projected 2027 IRMAA Brackets and Surcharges for Medicare Part B and D
• How to Appeal the IRMAA for Medicare Parts B and D
• 9 Things You Must Know About Medicare's Income-Related Monthly Adjustment Amount (IRMAA) Surcharges

When retirees map out income in retirement, most think about their tax bracket, investment returns and required minimum distributions (RMDs).

What often gets overlooked is how Medicare premiums can rise dramatically if income crosses certain thresholds — a penalty known as the income-related monthly adjustment amount (IRMAA).

For higher-income retirees, IRMAA can quietly erode thousands of dollars a year. Worse, it can be triggered by financial moves that seemed smart at the time, like a Roth conversion or capital gains harvest.

This is what some advisers call the Medicare "tax torpedo" — an unexpected hit to your retirement budget that lurks beneath the surface. Like any hidden threat, you don't always see it until it's too late.

Here's what you need to know and how to sidestep it.

What is IRMAA?

Medicare Part B and Part D premiums are based on modified adjusted gross income, typically from your tax return two years prior. In 2025, for example, Medicare will look at your 2023 tax return.

For 2025, the base premium for Part B is $185 per month. But if your income in 2023 rose above $106,000 (single) or $212,000 (married filing jointly), surcharges kick in.

These surcharges can push Part B premiums as high as $628.90 per person, per month, not including the extra cost for Part D coverage.

Over a couple's lifetime, these hidden costs can easily run into the six figures.

How the 'tax torpedo' strikes

The danger is that IRMAA thresholds are cliffs, not gradual phase-ins. Even one dollar over the line moves you into a higher premium bracket. This means a one-time event — selling property, a Roth conversion, taking a large IRA distribution — can inflate Medicare premiums for an entire year.

Consider this example:

• To determine a couple's 2024 Medicare premiums, let's look use their income from two years before. Their modified adjusted gross income (MAGI) was $205,000 in 2022, just under the threshold for that year of $206,000. So, their Medicare premiums for 2024 stay at the base level of $174.70/month each.
• The next year, they sell some stock, pushing their 2023 MAGI to $213,000. They're only $1,000 over the limit, but now their 2025 premiums jump to $259/month each, an increase of $74/month over the base premium of $185.
• That "extra" $1,000 in income cost them nearly $900 in higher premiums for the year each. And that's only for Medicare Part A. Add in the IRMAA surcharge for Medicare Part D, and each person would pay a little over $1,050 per year in higher premiums — for a grand total for the couple of over $2,100.

They don't call it the Medicare torpedo for nothing. One dollar over the limit, and — boom — you're hit with a penalty that feels wildly out of proportion.

Strategies to avoid the hit

Fortunately, careful planning can help retirees stay clear of the Medicare torpedo:

1. Time Roth conversions carefully. Roth conversions can be powerful for long-term tax efficiency, but if done too aggressively, they can spike MAGI and trigger IRMAA.

In my practice, I've seen retirees save tens of thousands over their lifetime simply by timing Roth conversions before age 65.

2. Manage RMDs with QCDs. Once RMDs begin at age 73, those withdrawals count toward MAGI.

A qualified charitable distribution (QCD) allows individuals to give up to $108,000 per year for 2025 (or $216,000 for a married couple) directly from an IRA to a qualified charity, satisfying their RMD without increasing income. In 2026, those figures rise to $115,000 for individuals and $230,000 for couples.

3. Harvest gains strategically. If you need to sell appreciated assets, spread the sales across multiple years or pair them with deductions to keep MAGI under the threshold.

4. Use tax-efficient withdrawal sequencing. Coordinate withdrawals from taxable, tax-deferred and Roth accounts to smooth income over time, rather than creating spikes.

5. Appeal when life changes lower your income. Medicare allows appeals for IRMAA if income has dropped due to events like retirement, divorce or the death of a spouse. Many retirees overlook this opportunity.

Why this matters

Too often, retirees think of tax planning and Medicare planning as separate issues. In reality, they are deeply intertwined. The same strategies that save you on taxes can backfire if they push you over an IRMAA threshold.

The good news is that IRMAA is a planning risk — not an unavoidable fate. By anticipating how income decisions affect Medicare premiums, you can preserve more of your wealth and keep retirement costs under control.

Final thought

People always joke about hindsight being 20/20, but what no one talks about is how to use foresight to look ahead and insight to make meaningful adjustments today — so the hindsight we have later is something we're truly satisfied with.

Like a ship avoiding a torpedo beneath the surface, even a 1-degree course adjustment now can create a dramatically better outcome down the line.

Related Content

• Your Medicare Costs Are Set to Soar: What to Expect Over the Next Decade
• This Is What You Really Need to Know About Medicare, From a Financial Expert
• Medicare Open Enrollment: 10 Things to Know
• Seven Medicare Changes Coming in 2026
• 11 Costly Medicare Mistakes You Should Avoid Making

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Choosing the right Medicare path is one of the most critical financial decisions you will make regarding your health care in retirement. The debate boils down to two fundamentally different approaches: original Medicare (Parts A and B, plus Medigap insurance), which prioritizes flexibility and eliminating out-of-pocket costs, versus Medicare Advantage (Part C), which bundles benefits and minimizes monthly premiums.

Understanding which plan aligns with your wallet and risk tolerance is essential. Take this quick quiz to discover your "Medicare Personality Type" and learn whether you are better suited for the high-premium, low-copay freedom of a Traditionalist, or the low-premium, high-cap security of a Bundler.

You can find more information about Medicare and Medicare Advantage in the linked articles below.

More on Medicare and Medicare Advantage, from the Kiplinger retirement team:

• 12 FAQs About Medicare: Your Medicare Questions Answered
• 11 Costly Medicare Mistakes You Should Avoid Making
• Can You Sign Up for Medicare While Still on an Employer Health Plan?
• Medicare Open Enrollment Occurs Annually from October to December — Here's What You Need to Know
• Medicare Advantage Open Enrollment Runs from January 1 to March 31

On November 25, 2025, the Centers for Medicare & Medicaid Services (CMS) announced significant price reductions for 15 high-cost prescription drugs used by millions of Medicare beneficiaries. That's a major win for older Americans.

The negotiated "maximum fair prices," made possible by the 2022 Inflation Reduction Act, promise to save the program $12 billion annually compared with last year's Medicare spending on 15 widely used drugs to treat cancer and other serious chronic conditions that hit older adults hardest.

Previously, the Biden administration reached deals to lower the costs of 10 prescription drugs, including several for heart disease and diabetes, which are set to take effect in 2026. This latest round of price negotiations will go into effect in 2027, with seniors expected to see an estimated $685 million in out-of-pocket relief.

Historically, prescription drug costs have wreaked havoc on many seniors' budgets, with some rationing doses or skipping their meds altogether due to high costs, according to a survey by research group KFF.

For the roughly 5.3 million Medicare beneficiaries who take these 15 medications, and the new $2,100 annual out-of-pocket cap in Medicare Part D, starting in 2026, 2027 can’t come soon enough.

For decades, Medicare was prohibited by law from negotiating drug prices directly with manufacturers, resulting in older Americans paying two to four times what patients in Europe or Canada paid for the same medicines.

Seniors like 72-year-old retiree Ryan Whitworth of Florida, who relies on Xtandl for prostate cancer, could see his monthly copays halved. “Finally, I won’t have to choose between meds and groceries,” he told Kiplinger. 

Below is the full list of the 15 drugs and their new Medicare maximum fair prices compared with the 2024 list prices. All figures are for a typical 30-day supply. The numbers are rounded to the nearest dollar where applicable.

The “2024 List Price” column shows the gross Wholesale Acquisition Cost (WAC) that Medicare Part D plans were charged in 2024 for a 30-day supply, before any rebates or discounts.

The “2027 Medicare Price” column is the Maximum Fair Price (MFP) manufacturers must offer Medicare starting January 1, 2027, for a 30-day supply.

Sources: CMS, November 2025 (pdf); Medicare prescription drug affordability fact sheet; Medicare Drug Price Negotiation Program: Negotiated Prices for Initial Price Applicability, Year 2027 (pdf)

List prices reflect typical Part D gross costs before rebates.

Related content

• 16 Strategies to Save Money on Prescription Drugs
• Here Are the 10 Medicare Negotiated Drug Prices
• Medicare to Cover Obesity Drugs Under Trump Deal for as Little as $50. What You Need to Know
• Seven Medicare Changes Coming in 2026
• Brace for Higher Health Costs in 2026: A Look at Projected Medicare Premiums

Medicare premiums and deductibles increased in 2026 from 2025 levels, with Part B premiums rising by about 9.7%. The Part A deductible increase was smaller at 3.7%.

To get the most from your plan, it’s important to understand your premiums, deductibles and out-of-pocket costs, which will vary depending on your plan and income.

In addition to your regular premiums, you could also owe a monthly surcharge on your Medicare Part B and Part D premiums based on an income-related monthly adjustment amount (IRMAA). High earners will pay an additional Part B surcharge, ranging from $81.20 to $487. The Part D surcharge can be as small as $14.50 and tops out at $91.

Medicare open enrollment runs from October 15 to December 7 annually. During this period, you can switch from original Medicare to a Medicare Advantage plan, or vice versa. You can also choose a new Advantage plan or Medicare Part D prescription drug coverage.

Medicare Part A deductible  

The Part A deductible for hospital admissions increased to $1,736 in 2026. That's an increase of $60, up from $1,676 in 2025. The Part A inpatient hospital deductible covers beneficiaries’ share of costs for the first 60 days of Medicare-covered inpatient hospital care in a benefit period.

There’s no limit to the number of benefit periods you can have in a year. This means you might pay the deductible more than once in a year.

For patients hospitalized for more than 60 days, the co-insurance amount in 2026 is $434 per day (up $15 from $419 in 2025) for the 61st through the 90th day of hospitalization. The co-insurance payment rises to $868 a day, up $30 from $838 in 2025, starting on the 91st day of hospitalization.

For beneficiaries in skilled nursing facilities, the daily co-insurance for days 21 through 100 of extended care services in a benefit period is $217, up $7.50 from $209.50 in 2025.

Reminder: Part A doesn't cover long-term care. It also doesn't cover most nonmedical personal expenses, such as custodial care that helps with daily activities, such as eating and bathing.

Medicare Part B monthly premium

In 2026, the standard monthly premium (PDF) is $202.90, up $17.90 from $185 in 2025. That's an increase of almost 10%. The annual deductible for all Medicare Part B beneficiaries is $283 in 2026, $26 more than the 2025 deductible of $257.

Part B covers doctor visits, outpatient services, home health care, durable medical equipment and many preventive services. You usually pay 20% of the Medicare-approved amount for Part B-covered services after you meet your deductible. This amount is called your co-insurance.

High earners will pay more. The income-related monthly adjustment amount (IRMAA) is a surcharge for people with income above a certain amount that must be paid in addition to their Medicare Part B and Part D premiums.

The IRMAA is calculated every year. That means if your income is higher or lower year after year, your IRMAA status can change. If the Social Security Administration (SSA) determines you must pay an IRMAA, you’ll receive a notice with the new premium amount and the reason for the determination.

This surcharge shifts costs back to the beneficiary. If you're a higher-income beneficiary, you'll pay a larger percentage of the total cost of Part B based on income reported on your annual tax return. You'll pay monthly Part B premiums equal to 35%, 50%, 65%, 80%, or 85% of the total cost, depending on your income and subsequent surcharge amount.

In 2026, if your 2024 AGI is above $109,000 if you are single or $218,000 if you’re married and file jointly, you’ll pay an extra amount in addition to your plan premium. That surcharge ranges from $81.10 to $486.50.

Medicare Part D prescription drug plan

The average premium for a Part D standalone plan, which covers drug costs, is expected to be $34.50 in 2026, down $3.81 from $38.31 in 2025. If you have a Medicare Advantage plan that charges a Part D total premium, that cost is projected to decrease to $11.50 in 2026 from $13.32 in 2025, down $1.82. These rates aren't set by Medicare, but vary according to the plan you select.

The maximum Part D deductible is set at $615 for 2026, an increase of $25 from the 2025 deductible of $590. The cap on Part D out-of-pocket costs is $2,100, up $100 from 2025.

The cap on out-of-pocket expenses applies only to medications covered by your Part D plan and doesn't apply to spending on Medicare Part B drugs. Part B drugs are usually vaccinations or injections that a doctor administers, and some outpatient prescription drugs.

However, some vaccines are covered at no cost, including flu shots and COVID boosters. The list of free vaccinations is updated annually.

Optional payment plan. Part D enrollees can spread out their out-of-pocket costs over the year rather than face high out-of-pocket costs in any given month. To do this, you'd pay a capped monthly installment over the course of the calendar year instead of all at once at the pharmacy. Here's how that would work:

If you opt into the Medicare prescription payment plan (PDF) through your Part D sponsor, you won't be charged at the pharmacy; your plan is automatically notified. Instead, your plan will send you a monthly bill showing the amount owed for your prescriptions and payment instructions.

Your regular monthly plan premium (if applicable) will be billed separately. You can directly opt in to the Medicare Prescription Payment Plan through your Part D plan sponsor.

IRMAA. A surcharge for high earners also applies to your Medicare Part D drug coverage. In 2026, if your 2024 AGI is above $109,000 if you're single or $218,000 if you’re married and file jointly, you’ll pay an extra amount in addition to your plan premium. That surcharge ranges from $14.50 to $91. You’ll be liable for this surcharge if your Medicare Advantage Plan includes Part D drug coverage

Tip: Medicare recommends beneficiaries consider getting a drug plan even if you don’t take many drugs now or your current out-of-pocket drug costs are low. If you enroll in a plan with a low monthly premium, you can avoid the late enrollment penalty. Since all plans must cover a wide range of drugs that people with Medicare take, it will come in handy if your needs change.

Medigap

Medicare doesn’t cover everything; there is a coverage gap when it comes to co-insurance, copays and deductibles. Part A inpatient hospital has a $1,736 deductible per benefit period and Part B pays for only 80% of doctors’ visits and other outpatient services. In addition, Medicare doesn’t cover supplemental services such as basic dental care, eye appointments or hearing aids.

You have two options for handling your uncovered expenses. You can purchase Medigap insurance to complement your original Medicare insurance or enroll in a Medicare Advantage plan.

Private insurers, not Medicare or the government, offer Medicare supplemental insurance or Medigap policies that cover deductibles and copayments. The policies are categorized by letters A through N.

All plans offer the same basic benefits, no matter where you live or from which insurance company you buy the policy. Every policy that goes by the same letter must offer the same basic benefits; the only difference is usually the cost.

Due to the phasing out of the popular Medigap Plan F, Plan G is now the plan of choice for many. The glaring difference between F and G is that Plan G doesn't cover the Part B deductible.

Plan G also covers “excess charges” that doctors who don’t accept the Medicare-approved amount as full payment can charge you, up to 15% above the Medicare-approved amount for services and procedures. Anyone enrolled in Medicare before 2020 can still enroll in plans F and C.

If you choose a high-deductible F or G plan, you can expect to pay a deductible of $2,950 before your policy pays anything, including co-insurance, copayments, and deductibles. This is an increase of $80 above the 2025 deductible of $2,870.

Medicare Supplement Plan K and Plan L are cheaper than other Medigap policies and have an out-of-pocket limit. These two plans have lower monthly premiums, since you’ll also share the co-insurance costs for your Plan K (50%) and Plan L (25%) up to your annual maximum limit.

Read What’s the Best Medigap Plan? to find out more about the 10 different Medigap plans you can choose from.

Medicare Advantage plans

A Medicare Advantage plan is an alternative to original Medicare, making Medigap coverage unnecessary. Medicare Advantage Plans are sometimes called “Part C” or “MA Plans." If you join a Medicare Advantage Plan, you’ll still have Medicare, but you’ll get your Part A and Part B coverage from your Medicare Advantage Plan. You're prohibited from buying a Medigap plan while enrolled in an MA plan.

These plans provide medical and prescription drug coverage through private insurance companies. Depending on the plan you choose, you might pay a monthly MA premium, in addition to the Medicare Part B premium. The average monthly premium is expected to decrease to $14 in 2026, down $2.40 from $16.40 in 2025.

Advantage policies charge lower premiums than Medigap plans but might have higher deductibles and copayments, and your choice of providers might be more limited than with original Medicare. Some enrollees might need to find new coverage, as some major insurers have reduced the number of plans they're offering in 2026. Check your Annual Notice of Change to see if the plan reductions impact you.

Unlike original Medicare, Medicare Advantage plans have a maximum out-of-pocket limit. In 2026, your maximum expenses are $9,250 for in-network services and $13,900 for out-of-network services. This is a decrease from $9,350 and $14,000, respectively, in 2025.

However, plans might set lower limits that apply only to Parts A and B and do not include Part D costs.

Related Content

• Medicare Premiums 2026: IRMAA Brackets and Surcharges for Parts B and D
• Projected 2027 IRMAA Brackets and Surcharges for Medicare Part B and D
• Medicare 2027 Projections: Here's How Much Your Monthly Premiums Are Estimated to Rise
• Cash In on Your Medicare Advantage Flex Card Perks Before They Disappear
• 10 Medicare Changes to Watch in 2026

What if the most important part of retirement planning happens in a window most people overlook?

Most people think of retirement in two stages: accumulation, when you save and invest, and distribution, when you start spending. But there's a crucial middle phase that rarely gets the attention it deserves — the Critical 15.

These five years before you stop working and the first 10 after often determine how confident and comfortable you'll feel for the rest of your life.

It's the transition period in which paychecks end, withdrawals begin, and every decision carries extra weight.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

Many retirees enter this phase unprepared, caught off guard by unexpected tax bills, Medicare surcharges or market downturns that hit just as they start drawing income.

How do you turn awareness into action? The first step in navigating the Critical 15 is creating a plan for a steady income so you can have control, flexibility and peace of mind no matter what the markets do.

Income planning during the Critical 15

The first step is learning how to create your own "retirement paycheck". Separate essentials (housing, health care, food) from discretionary expenses (travel, hobbies, gifts).

Your budget should work like a dashboard, giving you a clear view of your spending and helping you make adjustments, not a diet that makes you feel restricted.

Once you understand what you'll need to spend, the next step is deciding where that money should come from and when. The timing and source of your withdrawals can make a major difference in how long your savings last and how much you pay in taxes.

Social Security timing. The right time to claim isn't just about the biggest check, it's about how your benefits interact with taxes and investment withdrawals. In some cases, filing earlier can help preserve investments during a market downturn by reducing the need to sell assets at low prices.

Account sequencing. The order you draw from pretax, Roth or brokerage accounts directly affects how long your savings last. Instead of spending down one type of account first, it can be smart to blend withdrawals to help keep your taxable income consistent over time.

For example, you might pull from Roth accounts in high-income years or during market downturns and use taxable funds when gains can be realized at lower rates. The goal is to smooth your tax bill over the years rather than face costly surprises later.

Spending guardrails. Instead of sticking to a rigid 4% rule, build flexibility into your plan. Set spending thresholds that tell you when to adjust. If markets rise and your portfolio grows, you can safely increase withdrawals.

If markets drop, scale back slightly to give your investments time to recover. This approach keeps your plan sustainable without forcing unnecessary sacrifice when times are good or panic when they're not.

Retirement tax planning during the Critical 15

Income planning doesn't stop once you've figured out where the money will come from — it's just the start.

The real opportunity lies in how you manage taxes on that income, especially during the Critical 15 when small decisions compound over time. For most retirees, this is the last and best window to shape your lifetime tax bill.

Several moving parts make this period especially complex:

Social Security and taxes. Up to 85% of your benefits can be taxable, depending on how much other income you earn. Coordinating withdrawals and benefit timing helps you avoid unnecessary tax on your Social Security.

Medicare premiums. Higher income can trigger IRMAA surcharges, which are based on your tax return from two years earlier. Managing income levels in your early retirement years can prevent these surprise costs.

Account mix. Many retirees have most of their savings in pre-tax accounts, which can backfire when required minimum distributions (RMDs) begin. Building tax diversification early — across taxable, pre-tax and Roth accounts — gives you more control of your tax bracket later.

Heirs' taxes. A surviving spouse often ends up in a higher tax bracket filing as a single taxpayer, and non-spouse heirs must now empty inherited IRAs within 10 years. Thoughtful planning can reduce that future burden.

The most effective moves in this phase often include Roth conversions, in which you gradually shift money from pretax to Roth accounts to create tax-free income later, and tax diversification, blending withdrawals across account types to keep your effective tax rate steady over time.

Looking for expert tips to grow and preserve your wealth? Sign up for Adviser Intel (formerly known as Building Wealth), our free, twice-weekly newsletter.

These steps might not make a big splash in a single year, but over a 20- or 30-year retirement, they can save hundreds of thousands in taxes and add years of longevity to your portfolio.

Investment planning during the Critical 15

The Critical 15 also brings one of retirement's biggest risks: sequence of returns — poor market performance early on that permanently damages your portfolio. Selling during downturns locks in losses and can derail even strong savers.

To protect yourself:

• Build a "war chest." Hold three to five years of essential expenses in stable assets such as Treasuries or short-term bonds.
• Match risk to timeline. Keep near-term funds conservative, but let long-term money keep growing.
• Stick to your plan. Reacting to headlines often hurts more than it helps. Let your strategy (not emotion) drive decisions.

Key steps to take during the Critical 15

After you've looked at income, taxes and investments, it's time to bring the pieces together. A checklist highlights the most important actions to take and revisit to stay organized and on track through this critical transition.

• Start early. Begin at least three years before your Critical 15 phase is due to begin. This will allow time to align your investments, taxes and income strategy.
• Build a flexible income plan. Design a spending approach that adjusts for markets, health costs or lifestyle shifts — think dashboard, not diet.
• Be proactive with taxes. Use Roth conversions, smart withdrawal sequencing and charitable giving to reduce your lifetime tax bill.
• Create a safety reserve. Keep several years of spending in low-volatility assets to weather market declines without panic selling.
• Plan for health care. Understand how income affects Medicare premiums and explore options such as health savings accounts (HSAs) or supplemental insurance.
• Revisit regularly. Update your withdrawal plan, tax projections and investment mix at least once a year — or sooner if life changes.

The Critical 15 isn't just another planning concept — it's the phase in which everything you've built finally comes together.

By coordinating income, taxes, investments and health care during this window, you gain flexibility and confidence for the years ahead.

Related Content

• A 10-Year Retirement Planning Checklist
• The 'Rule of 25' for Retirement Planning
• Retirement Income Strategies for the Long Haul
• I'm a Financial Planner: Here Are Five Phases of Retirement Planning You Have to Get Right
• How to Create Retirement Income That's Driven by Cash Flow

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

If you have Medicare Part B and/or Medicare Part D prescription drug coverage, you could owe a monthly surcharge based on an income-related monthly adjustment amount (IRMAA). This surcharge is paid by Medicare beneficiaries for Parts B and D Medicare, in addition to the standard premiums, if their taxable income exceeds certain thresholds. For 2026, the IRMAA income brackets and surcharges increased by approximately 3% and 9%, respectively.

The Medicare surcharge in 2026 applies to beneficiaries with income exceeding $109,000 (for single filers and married filing separately) or $218,000 (for joint filers). For these beneficiaries, total monthly Part B premiums range from $284.10 to $689.90. Part D surcharges range from $14.50 to $91.00.

The IRMAA is calculated on a sliding scale with five income brackets, topping out at $500,000 for individual filing and $750,000 for married, filing jointly. These figures, except for the top bracket, are inflation-adjusted annually. For 2026, these inflation-adjusted brackets range from $109,000 to $205,000 for single tax filers and $218,000 to $410,000 for joint filers.

IRMAA calculations have a two-year lag. Whether you pay an IRMAA in a given year depends on your tax returns from two years ago. That means that your liability for the surcharge next year, in 2027, will be based on your 2025 tax return.

The IRMAA applies to all Medicare and Medicare Advantage beneficiaries whose earnings are high enough to make them eligible. This is a cliff surcharge: just $1 over the limit will trigger surcharges for both Parts B and D. Income planning in the years leading up to Medicare eligibility can help beneficiaries avoid the surcharge.

Here's a look at the IRMAA and what it costs in 2026:

The IRMAA for 2026 

IRMAA is a surcharge that some Medicare enrollees must pay in addition to regular Medicare Part B and Part D premiums. The surcharge is based on your Modified Adjusted Gross Income (MAGI) from two years ago. In other words, your 2026 IRMAA liability is based on your MAGI from 2024.

The SSA determines who pays an IRMAA based on the income reported two years prior. In other words, the SSA looks at your 2024 tax returns to see if you must pay an IRMAA in 2026.

Medicare determines the 2026 IRMAA charge in the 4th quarter of 2025. That is why your IRMAA determination is based on 2024 filing status and income — it's the latest data point the Social Security Administration (SSA) can obtain from the IRS to determine your 2026 IRMAA liability.

You can easily determine your 2026 Part B and Part D total premiums by adding the income-related monthly adjustment amount to the 2026 premium costs. For 2026, the Part B premium is $202.90, and the Part D standalone premium is, on average, $34.50.

The 2026 IRMAA surcharge amounts for Part B range from $81.20 to $487.00. Medicare Part D surcharges range from $14.50 to $91.00.

The income brackets and inflation adjustments. The first four brackets of the IRMAA are indexed for inflation annually. However, the 5th bracket is currently frozen and is eligible to be indexed for inflation beginning in 2028.

The indexing is determined by how much the average CPI-U over the 12 months ending in the most recent August has increased compared to the average CPI-U for the previous 12-month period.

Couples that are liable for the IRMAA will pay a higher surcharge when filing separately. Why? The range of brackets and surcharges for married couples that file separately are narrower:

Types of income that trigger the IRMAA

The modified adjusted gross income (MAGI) used to determine IRMAA is generally calculated by taking your Adjusted Gross Income (AGI) and adding back specific types of income that were excluded from AGI. In simple terms, for most people, the MAGI for IRMAA is the sum of their Adjusted Gross Income (AGI) from their tax return plus any tax-exempt interest income.

Adjusted Gross Income (AGI): This encompasses most sources of taxable income, such as:

• Wages and salaries
• Taxable portion of Social Security benefits
• Distributions from traditional IRAs, 401(k)s, and other tax-deferred retirement accounts (including Roth conversions)
• Interest (taxable) and dividends
• Capital gains
• Pension and annuity income
• Rental and royalty income
• Business income

Tax-exempt interest income. The IRMAA-specific MAGI is primarily your:

Adjusted Gross Income (Form 1040, Line 11) + your tax-exempt interest (Form 1040, Line 2a). That tax-exempt interest includes: municipal bonds, tax-exempt dividends and U.S. Savings Bonds used for qualified higher education expenses, all of which would be added back to your AGI. This is a key "add-back" that often pushes retirees over an IRMAA threshold.

Income planning the best way to avoid the IRMAA

That is a crucial area of retirement planning. The core strategy for avoiding or reducing IRMAA is to lower your Modified Adjusted Gross Income (MAGI) in the relevant year, which is typically two years before the year you pay the premium.

Here are the most robust income planning tactics to manage your MAGI and mitigate IRMAA:

• Optimize your retirement account withdrawals (The "Roth Strategy") — Since withdrawals from traditional IRAs, 401(k)s, and RMDs (Required Minimum Distributions) are generally included in MAGI, while Qualified Roth withdrawals are not, strategic use of Roth accounts is the most powerful tool you have to reduce your MAGI and limit your exposure to the IRMAA.

Here are three other ways to reduce your MAGI:

• Utilize Qualified Charitable Distributions (QCDs) to reduce the impact of RMDs.
• Manage investment income to avoid large capital gains spikes and harvest tax losses.
• Time and structure your income, by accelerating or deferring income, to limit unavoidable IRMAA liability, "take the IRMAA hit" for only one two-year period.

How to pay your IRMAA

Your monthly Medicare Part B and D IRMAA charges are deducted automatically from your Social Security check, with two exceptions: if you have opted to defer your Social Security benefits and do not receive a Social Security check, or if the amount of your Social Security check is not large enough to cover your IRMAA. In that case, you will receive a bill for the unpaid IRMAA balance from the Centers for Medicare & Medicaid Services (CMS).

IRMAA surcharges for Part B and Part D are paid separately. Part B IRMAA is automatically added to your monthly premium bill. The Part D IRMAA must be paid directly to Medicare, not your plan or employer.

It’s your responsibility to pay it even if your employer or a third party (e.g., retirement system) pays your Part D plan premiums. You’ll get a bill each month from Medicare for your Part D IRMAA, and you can pay it the same way you pay your Part B premiums.

You have three ways to pay your Medicare IRMAAs online — you can use your MyMedicare account, your bank’s bill pay service or you can automate the process by using Medicare Easy Pay. I recommend using a MyMedicare account. It is safe, secure, and there is no fee to make a payment. You’ll need to know your Medicare number and your Medicare Part A start date to create your account. You can find both on your Medicare card.

Lastly, you can send your payment by mail to: Medicare Premium Collection Center, PO Box 790355, St. Louis, MO 63179-0355.

Plan to avoid the IRMAA

Be mindful of the risk of a one-time spike in income that could trigger the IRMAA, such as proceeds from a home sale or converting your traditional IRA to a Roth IRA. To avoid this risk, properly time a Roth conversion; you can then avoid the IRMAA when you take tax-free distributions. Learn more about strategies, such as how to lower taxes on required minimum distributions that could otherwise trigger the surcharge.

If your income suddenly dropped due to a major life event or change of circumstances, you do not have to wait two years for the IRMAA to adjust. You can appeal the surcharge with SSA using Form SSA-44 (Medicare Income-Related Monthly Adjustment Amount - Life-Changing Event).

Related Content

• Projected 2027 IRMAA Brackets and Surcharges for Medicare Part B and D
• Medicare 2027 Projections: Here's How Much Your Monthly Premiums Are Estimated to Rise
• What You Will Pay for Medicare in 2026
• 7 Ways to Plan Now to Save on Medicare IRMAA Surcharges Later
• How to Appeal the IRMAA for Medicare Parts B and D

The White House recently announced a landmark deal with pharmaceutical companies Eli Lilly and Nordisk that will impact Medicare beneficiaries and others in the coming months. The agreement cuts prices for GLP-1 receptor agonists, such as Ozempic and Wegovy, while expanding Medicare coverage for these weight-loss medications. The news is a turnaround from a Trump administration announcement earlier this year blocking Medicare from covering obesity drugs.

With the new deal, Medicare will no longer only cover these drugs for diabetes or heart issues, but for obesity itself, potentially saving beneficiaries hundreds of dollars each month.

Why it matters: In the U.S., over 30% of adults age 65 or older are considered obese — having a body mass index (BMI) of 30.0 or higher — according to America's Health Rankings. The Centers for Disease Control and Prevention (CDC) estimates the prevalence of obesity among all American adults to be 40%.

Before the deal, these injectables cost $1,000 or more per month, making it difficult for many retirees to afford. Trump’s deal promises lower government pricing and copays, which is considered a game-changer for the 65 million people currently on Medicare.

With the new deal, people buying GLP-1 medications directly from the manufacturers (or through a new portal called TrumpRx) will pay an average of $350 per month to start, with the companies having committed to lowering the price to roughly $250 over the next two years.

The price of Ozempic ($1,000 per month) and Wegovy ($1,350 per month) will decrease to $350 per month when purchased through TrumpRx or directly through the manufacturers. The prices of Zepbound and Orforglipron (if approved) will fall from $1,086 per month to an average of $346 per month, per the White House.

If the FDA later approves the oral version of Wegovy, or similar GLP-1 pill-form drugs in each company's portfolio, TrumpRx will price the initial monthly dose at $150.

Medicare beneficiaries will have access to some GLP-1 drugs approved for both obesity and diabetes for a $50 copay. The manufacturers have agreed to cut the price Medicare pays to $245, to help cover the costs of increased coverage of weight-loss drugs.

The agreements also call for Novo Nordisk to commit $10 billion and Eli Lilly to commit $27 billion to boost their U.S. manufacturing, effectively securing a reprieve from potential tariffs.

Trump promoted the deal as "the biggest price cut in history," but the rollout is slow. TrumpRx is expected by December 2025, with full integration by Medicare in mid-2026.

To understand the savings to Medicare and Medicaid recipients, here's a quick comparison:

Additionally, the deal also provides reduced costs on other Eli Lilly and Novo Nordisk medicines.

For example:

• Emgality, a treatment for migraines, will cost $299 per pen, a discount of $443 off of the list price.
• Trulicity, a commonly used diabetes medicine, will cost $389 per month, a discount of $598 off of the list price.
• Widely-used insulin products, including NovoLog and Tresiba, will cost $35 per month in supply.

Key facts:

• Drugs involved: Ozempic and Wegovy, Mounjaro and Zepbound. Down the line, oral versions like Orforglipron may be included.
• Price cuts: Medicare will pay $245 per month, down from list prices of about $1,000 to $1,350. Beneficiaries pay a maximum copay of $50. Direct-to-consumer via TrumpRx or the manufacturers: $350/month now, $250 in two years, with oral starters at $149.
• Expansion of coverage: Obesity and weight loss will be included for the first time under Medicare coverage if tied to comorbidities, such as heart or kidney disease, or severe obesity. This will affect about 10% of Medicare enrollees. Medicaid states it will see the same rates.
• Rollout: TrumpRx by year-end 2025. Medicare mid-2026

What does this mean for Medicare beneficiaries?

For a Medicare beneficiary who is diabetic, obese, and living on a fixed income, the deal could mean the availability of proven GLP-1s without breaking the bank. The deal could also open doors for those with heart or kidney issues, and address obesity's $173 billion annual Medicare tab.

Besides the good news, access hinges on the plan's adoption. Will it become voluntary for Part D? And, copays, although capped, can add up over the long term. Early adopters via TrumpRx will get relief now, but most will wait until summer 2026.

Deal seeks to balance targeted relief and tariffs on big pharma

The United States has less than 5% of the world’s population, yet roughly 75% of all global pharmaceutical profits come from American taxpayers. As it stands now, Trump's GLP-1 deal is attracting both praise and skepticism, as it strikes a balance between imposing tariffs on the pharmaceutical industry and targeted relief to aid Medicare's most vulnerable.

If all goes as planned, the deal would transform access, slash monthly costs for injectables and lift the burden for low-income Medicare retirees. According to David Certner, a former AARP staff member, "This levels the playing field for seniors who've been priced out."

Will you benefit? Check eligibility at medicare.gov or trumpRx.gov.

Related content

• Medicare Premiums 2026: IRMAA Brackets and Surcharges for Parts B and D
• Dental Cost Advice for New Retirees, From a New Retiree
• Seven Medicare Changes Coming in 2026
• Brace for Higher Health Costs in 2026: A Look at Projected Medicare Premiums
• Prior Authorization Coming to Traditional Medicare Starting in 2026

A critical deadline is approaching for millions of Americans enrolled in Medicare Advantage plans — not open enrollment — I'm talking about expiring prepaid benefit cards.

Many Medicare Advantage (MA) enrollees are issued flex cards — preloaded debit cards that can be used for certain health- and wellness-related expenses that MA plans might not cover outright. These expenses can include over-the-counter (OTC) medicines and supplies, hearing, dental and vision services and more.

If your Medicare Advantage plan includes a flex card allowance, you have until the end of 2025 to use the funds. These cards operate on a "use-it-or-lose-it" basis, and any balance remaining on the card when the clock strikes midnight on December 31 will be forfeited.

Don't miss your final opportunity to cash in on benefits you've already paid for, ensuring you maximize every dollar intended for your health and wellness.

What are Medicare Advantage flex cards?

A flex card is a prepaid debit card offered by some private insurance companies through their Medicare Advantage (Part C) plans. Flex Cards are a supplemental benefit offered by private insurers, not by the federal government or original Medicare.

The card is preloaded with a specific dollar amount (an allowance), which can be added monthly, quarterly or annually, depending on your specific plan. Allowances typically range from a few hundred dollars to over a thousand annually.

Use of the card is restricted. The card can only be used for a list of approved, health-related expenses designated by your plan.

The card only works at participating retailers, such as pharmacies, grocery stores, dentists or eye doctors that accept the card's network. If you try to buy an ineligible item or shop at a nonparticipating store, the card will be declined.

Most Flex Card allowances don't roll over. Funds usually expire at the end of the calendar year (December 31), or, in some cases, at the end of the quarter or month they were issued.

Covered expenses vary by plan

Although most MA enrollees are in plans that offer dental (98%), vision (100%), hearing (96%), and OTC medication (88%) benefits, according to the Commonwealth Fund, findings show that many of these enrollees do not report using them.

Medicare Advantage plans were supposed to begin sending plan participants midyear reminders, “Mid-Year Enrollee Notification of Unused Supplemental Benefits,” this past July. However, this rule has been paused by the Centers for Medicare and Medicaid due to industry concerns and requests for guidance.

Don't let the opportunity to access additional resources go unused. Use some of our suggestions, or use the list as a jumping-off point to find goods or services that would better suit your needs.

What to buy before the end of the year

Since most flex card allowances operate on a strict "use-it-or-lose-it" basis by December 31, it's essential to spend any remaining balance before the deadline.

Beneficiaries should focus on buying non-perishable health essentials that they know they will use in the first few months of the new year or services not otherwise covered by their Medicare Advantage plans.

One easy way to exhaust your remaining flex card benefit is to stock up on non-perishable over-the-counter (OTC) items:

• Vitamins/supplements: Purchase common daily vitamins such as vitamin D, C, multivitamins or fish oil
• Over-the-counter medications: Stock up on pain relievers, cold/flu medication, allergy meds, antacids and laxatives
• First aid supplies: What's running low or missing from your kit? See if you need bandages, gauze, antiseptic wipes, antibiotic ointments, heating pads or cold packs.
• Personal care supplies: Replenish your supply of toothpaste, toothbrushes, denture cream and contact lens solution.

If you have a large remaining balance, consider buying more expensive medical equipment that's durable, such as a walker or cane. You might also want to purchase a shower chair or grab bars for bathroom safety.

Other options could include a new blood pressure monitor, glucose monitor or replacement batteries for hearing aids. If your plan covers it, consider getting a low-cost fitness tracker or some light exercise equipment.

Check with your Medicare Advantage plan for the details

Don't let this benefit go to waste. I've given you the general outlines of how flex cards work; you should investigate to find out the details of how your particular benefit works. Contact your Medicare Advantage plan or check their website for help. Information you need to fully understand your benefit:

1- Check the expiration date: Call your Medicare Advantage plan or check your member portal immediately to confirm the exact expiration date of your remaining balance.

2- Verify your balance: Find your current exact balance. Don't rely on memory.

3- Review the approved list: Re-read your plan's benefit guide or check the list of approved retailers and goods to ensure your final purchases will be covered at the store you plan to visit

Related Content

• Medicare Premiums Projected to Jump in 2026
• Seven Medicare Changes Coming in 2026
• Medicare Premiums 2026: Projected IRMAA Brackets and Surcharges for Parts B and D
• Your Medicare Costs Are Set to Soar: What to Expect Over the Next Decade

I recently received a shock when I went to the dentist for my six-month checkup. Not because I had a mouthful of cavities or needed another root canal. (I floss!) The unpleasant surprise occurred when it came time to pay the bill. This was my first appointment since I retired and lost my employer-provided health insurance, and I was on the hook for the entire cost.

As I mentioned in an earlier column, I opted for original Medicare and a Medigap plan when I retired. I made this decision because with a Medicare Advantage plan, I would have been limited to using in-network doctors and other providers. Likewise, while many Medicare Advantage plans include dental care, the coverage is usually restricted to providers in their network.

In addition, Medicare Advantage plans often impose waiting periods of six months to two years before they pay for expensive procedures, such as crowns and dentures. Preventive care is usually covered immediately, but you'll typically face an annual cap on coverage — an average of $1,300, according to a 2021 survey by health-policy research organization KFF.

In my case, signing up for Medicare Advantage would have required me to switch to an in-network dentist to get coverage, something I'm reluctant to do because I've been a patient of the same practice for more than 20 years. I'm pretty sure I'm putting my dentist's children through college, but I still have most of my teeth, so I consider that a fair trade-off. (Due to bad youthful habits and some congenital issues, there are more bridges and canals in my mouth than there are in Venice).

Ways retirees can lower dental costs

For retirees like me, there are other ways to lower dental costs, although all of them have limitations. One option is a stand-alone dental insurance plan, which many major providers offer. Premiums range from $20 to $80 a month, depending on the services covered and annual caps.

But before you sign up for one of these plans, scrutinize the fine print. Most plans will cover only a portion of the cost of certain procedures, such as fillings and root canals, and limit annual payouts; in some cases, the cap is as low as $1,000. Some have waiting periods of 12 months or more before they'll cover some procedures.

And to use the coverage, you'll probably have to visit a dentist within the plan's network. When I plugged my zip code into the search engine for a well-known dental insurance plan, I discovered that there weren't any participating dentists within 30 miles of my home.

A discount plan is another possibility. These plans aren't insurance — they simply offer members a discount ranging from about 15% to 50%, depending on the dentist and procedure. If your dentist participates in one of these programs, or you don't mind switching to one who does, this could save you some money. I was offered access to a discount plan through my Medigap policy at no cost.

In other cases, participants may pay a membership fee. (You'll have to estimate whether your savings from the discount will surpass the fee.) For example, a dental practice in my neighborhood offers discounts of 20% to 30% for a one-time membership fee of $199.

Unfortunately, my dentist doesn't participate in one of these programs, either, so I'm planning to use money I accumulated in my health savings account to pay for my dental work. Although you can't contribute to an HSA after you enroll in Medicare, you can use the funds tax-free to pay for a variety of health-related out-of-pocket costs.

I'm also going to talk to my dentist about other ways to save money, such as spreading out X-rays and fluoride treatments. And I'll continue to floss. Now that I'm paying the entire tab, it's more important than ever.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

Related Content

• Protect Your Heart: The Surprising Power of this Simple Treatment
• The '100% Overwhelming' Decision: What Do You Do About Medigap?
• Medicare or Medicare Advantage: Which Is Right for You?