Prescription drug companies spent more than $7 billion on television campaigns alone last year. Two of the most advertised drugs — Tremfya and Skyrizi — treat moderate to severe plaque psoriasis and other inflammatory diseases, and can cost anywhere from $19,000 to $30,000 per dose without insurance.

Ads for weight-loss medications like Zepbound and Wegovy, which can cost up to $600 for a month’s allotment of four pre-filled pens, also pervaded the airwaves, particularly on streaming services.

The most heavily advertised drugs aren't necessarily the most expensive drugs, says Geoffrey Joyce, chair of the department of pharmaceutical and health economics at the University of Southern California. To make television advertising worthwhile, a drug generally needs to be branded, still under patent and used to treat a condition that impacts a large number of people.

That explains why drugs for conditions such as plaque psoriasis and diabetes get so much airplay. Claritin, an over-the-counter allergy medication, was a top-advertised drug on YouTube last April and May. Why? Allergy season.

The ads can make medications look like magic bullets, and research shows that the colorful reels with catchy jingles get patients to ask for them at the doctor's office — and physicians are more likely to prescribe the brand-name drug if requested. But buyer beware, as Medicare Part D plans may not cover brand medications, so make sure to check your plan's list of approved medications — known as a formulary — as well as the plan comparison at Medicare's comparison website.

Some plans require patients to try cheaper alternatives first, which could be beneficial as research found that most of the new drugs advertised may not benefit patients more than older drugs.

What the commercials don't mention is the cost. The price can vary widely depending on insurance coverage, deductibles, formularies, rebates — and even the location where the prescription is filled.

Merith Basey, executive director of Patients for Affordable Drugs, a bipartisan patient organization, says Americans pay the highest prescription drug prices in the world. That's in part because — unlike other countries — pharmaceutical companies set the prices of drugs when they come to market in the U.S.

Other countries with national healthcare have stronger negotiating positions with pharmaceutical companies because those governments control what's allowed on the national formulary — the list of recommended and covered drugs.

Experts say that while pharma ads may raise awareness and get patients in the door for a conversation with their doctor, consumers should be wary, as brand-name drugs and brand-new options aren't always the best choices for your health or your wallet.

So here are 10 suggestions to consider before asking your doctor for a prescription "as seen on TV."

1. Compare costs locally and don't forget Costco

Joyce says that consumers often assume a prescription has a fixed price no matter where it’s filled. But that’s not true. In a 2017 study, shoppers visited more than 500 pharmacies with identical prescriptions and found wide price differences for the exact same medications. They were also less expensive in low-income areas. One antibiotic was as much as $52 less within one zip code, he said.

Don't forget to check in at Costco's pharmacy as well, as one study found that Costco beat Medicare’s prices for generic medicines nearly 50% of the time.

2. Ask for generic or biosimilar options

Most prescriptions in the United States are filled with generic drugs and Joyce says that, generally speaking, a generic equivalent is expected to provide similar quality and effectiveness. Ditto with "biosimilar" drugs, which treat a range of chronic diseases. For example, Humira is a brand-name injection used to treat autoimmune diseases like rheumatoid arthritis, costing up to $10,000 for a month's treatment without insurance. But there are many "biosimilar" options that cost under $500.

You may also be able to opt for older versions of drugs. Basey says that drug companies can introduce modified versions of existing medications as patents approach expiration. Ask whether an older, less expensive version remains available.

3. Over-the-counter (OTC) drugs may be more expensive

Surprisingly, OTC drugs such as ibuprofen are sometimes covered by insurance. So talk to your doctor to see if there’s a prescription option. In one personal example, a consumer was able to get a three-month prescription from her doctor for 5% lidocaine patches, used for a back injury. The OTC cost for six 4% lidocaine Salonpas back patches is just over $10, but through insurance, she received 180 patches for $15.

4. Use online comparison tools

If insurance is not delivering the lowest price, experts suggest looking at other options, whether it’s GoodRx, SingleCare or Costco’s pharmacy. Some states are even getting in on the act — Pennsylvania has a prescription price comparison site. Joyce pointed to price-comparison services and newer pharmacy models that allow consumers to compare costs across pharmacies and purchasing options.

5. Check CostPlus

Mark Cuban's direct-to-consumer pharmacy model, CostPlus, cuts out the pharmacy altogether and offers many common prescriptions used to treat everything from acid reflux to women's health. For example, lansoprazole delayed-release (generic for Prevacid) is sold retail for $122.40, but is sold through CostPlus for home delivery for $10.75. Joyce says models like this have highlighted how inexpensive many generic drugs can be outside traditional insurance arrangements.

6. Ask your doctor and pharmacist for advice

Medical practitioners may not know what patients will pay at the pharmacy, because every patient has different insurance with different co-pays and coverage. But they may be aware of generic options, older versions with equal benefits or even if cash payment lowers the bottom line. So it's important to ask if there's a less expensive option. Doctor's offices might be able to check if a medication falls under a particular insurance before you walk out the door.

7. Contact the manufacturer

Basey says some pharmaceutical companies and nonprofit organizations provide grants or assistance programs, although eligibility may vary. Manufacturers often offer patient-assistance programs or foundations that provide reduced-cost or no-cost medications, particularly for expensive treatments. For example, Tremfya has a rebate offer online. Search for "patient assistance" programs on their site or call the customer service number.

8. Consider compounding pharmacies carefully

Compounding pharmacies prepare medications on-site and may offer lower-cost options, especially during shortages or when insurance does not cover a medication, says Joyce. They have become particularly popular for GLP-1 medications, which are often unavailable. But there are safety concerns, including some fatalities due to patient error. The Alliance for Pharmacy Compounding suggests that consumers make sure that the pharmacy is licensed and that it requires a prescription.

9. Combination vs single ingredients

Fixed-dose combination drugs are a pharmaceutical development in which multiple drugs typically taken together are packaged into a single product. For example, Symbicort is an asthma medication that combines budesonide (a corticosteroid) with formoterol (a long-acting bronchodilator). Tylenol PM (acetaminophen-diphenhydramine) would be another. Joyce said consumers often pay more for those combinations than they would if the ingredients were prescribed separately. As long as taken together, as recommended, they work the same way.

10. Be cautious of overseas options

There's no question that Americans pay more for prescriptions, even routine medications. One comparison found that the price of Humira (a heavily advertised anti-inflammatory drug) is 423% higher in the U.S. than in the United Kingdom and 186% higher than in Germany. Another example is Eliquis, which costs $550 out of pocket for 60 5-mg tablets in the U.S., vs $150 in Canada, which offers a generic version. Both Florida and Colorado have been approved by the FDA to import drugs from Canada to lower prices, but concerns about supply have blocked progress. And officials warn about online pharmacy scams. So unless you have a doctor willing to send a script and you’re willing to make the drive, ordering from another country may not be the best option.

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.

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Retirement should simplify your life, but managing post-career income streams often adds unexpected tax complexity.

Once you retire, you lose the safety net of routine employer withholdings, making it easier to slip up under a new set of tax rules. For instance, a single misplaced IRA distribution or part-time coaching gig might inadvertently trigger steep Medicare surcharges — or cause the IRS to tax your Social Security benefits.

Here are five hidden tax traps that catch new retirees off guard, and how to adjust your withdrawal strategy to stay ahead of them.

Note: This article covers federal income taxes and municipal property taxes. State income tax provisions may differ. Consult a qualified tax professional when necessary.

1. The Social Security earnings test isn't permanent

After retiring, you can claim Social Security benefits as early as age 62, or wait until full retirement age (or "FRA," typically ages 66 to 67, depending on when you were born).

Most retirees know that claiming early permanently reduces their monthly benefit by 25% to 30% compared to what they would receive at their FRA. However, that rule changes if you're still working part-time while receiving early benefits.

The "gotcha": For 2026, if you are under FRA for the entire year and earn more than $24,480, Social Security withholds $1 for every $2 earned above that limit. Many retirees mistakenly believe this money is lost forever or that part-time work permanently destroys their benefits.

The reality: It's a temporary withholding, not a penalty. Once you reach your FRA, Social Security recalculates your monthly benefit upward to account for the amounts withheld earlier, returning those funds over time in higher monthly checks. (How much you recover ultimately relies on longevity, though.)

2. Medicare surcharges are for two years later

Many retirees don't realize their Medicare Part B and Part D premiums are calculated well before they even enroll.

That's because the government uses a two-year lookback period on your tax returns to determine if you owe an income-related monthly adjustment amount (IRMAA).

The "gotcha": If your income was high during your final working years — due to a peak salary, a home sale, or a large IRA withdrawal, for instance — Medicare applies a monthly surcharge to your premiums based on that amount two years later.

The reality: You don't have to pay a surcharge based on a salary you no longer make. If your income drops significantly due to a qualifying life event, like retirement ("work stoppage," as the Social Security Administration calls it), you can file Form SSA-44 with the SSA. This document requests an immediate premium recalculation based on your current, lower income.

3. Tax withholding percentages aren't customized

When folks retire, most roll over their 401(k) or other employer-provided retirement plan into an IRA; this often defers taxes until distributions are made.

But when you withdraw traditional IRA funds, most (if not all) of the withdrawal is treated as ordinary income and taxed at federal and state rates.

And unlike during your working years (when an employer might've withheld income taxes for you), you'll need to handle tax withholding on your retirement distributions yourself.

The "gotcha": IRA plan custodians generally default to a flat 10% federal withholding rate on distributions — and often withhold nothing for state taxes — unless you explicitly request otherwise. Withdrawing money without adjusting these defaults can lead to an unexpected bill and underpayment penalties in tax season.

The reality: Whenever you set up a one-time or recurring IRA distribution, you can specify your exact withholding percentages. For example, if your effective federal tax rate is 22% and your state rate is 6%, you can direct your custodian to withhold those exact percentages, or choose to make quarterly estimated tax payments instead.

4. More counts toward MAGI and combined income than you think

Modified adjusted gross income (MAGI) governs several key retirement tax thresholds, including Medicare IRMAA surcharges, traditional IRA deductibility, and net investment income tax (NIIT).

Meanwhile, the IRS uses a separate metric — "combined income" — to decide how much of your Social Security benefit gets taxed.

The "gotcha": Even non-taxable income can lead to higher federal income tax bills. For instance, tax-exempt municipal bond interest and tax-free Social Security benefits are added back to combined income. Once that figure crosses just $25,000 for single filers or $32,000 for joint filers, up to 50% to 85% of your Social Security benefits become federally taxable. MAGI also includes tax-exempt municipal bond interest, foreign earned income, and dividends.

The reality: Retirees can use a multi-tiered withdrawal strategy to keep both MAGI and combined income under key thresholds. For example, qualified distributions from a Roth IRA or Roth 401(k) are tax-free and don't count toward either metric, so you can access spending money without pushing yourself into higher tax tiers.

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

5. Property taxes and utilities often don't match COLA

Eliminating a mortgage is a milestone worth celebrating. But even though your principal and interest payments are gone, property tax, home insurance, and utility bills unfortunately continue indefinitely.

Some retirees might think that annual cost-of-living adjustments (COLAs) for Social Security will help cover some of these costs. However, that's not always the case.

The "gotcha": Social Security COLAs are tied to the Consumer Price Index for urban wage earners and clerical workers (CPI-W). This index reflects working-age household spending rather than older adult budgets, which lean more toward housing and healthcare. As a result, property tax hikes and utility rate increases frequently outpace annual COLA bumps.

The reality: Many states and municipalities offer older adult-specific tax relief programs, like homestead exemptions, property tax freezes, or tax rebates. If your area lacks these programs, you can also try building a liquid cash cushion in a high-yield savings account or Roth IRA. This safety net lets you absorb sudden tax or utility spikes without drawing additional traditional IRA funds that might bump you into a higher tax bracket.

See also: Social Security Tax Limit Rises for 2027: Who Will Pay More?

More Secret Tax Tips

• 5 Little-Known Senior Property Tax Breaks in 2026
• 5 Little-Known Senior Tax Deductions in 2026
• Most-Overlooked Tax Breaks for Retirees and People Over 65
• The Boots Rule of Retirement Tax Planning

I talk to a lot of 65-year-olds, and one of the biggest fears they have is making a mistake with Medicare. It's hard not to be afraid when you keep hearing well-intentioned, but conflicting advice such as:

• "You have to sign up for Medicare at 65."
• "You don't have to sign up for Medicare at 65."
• "You can change your Medicare insurance every year."

During my 20-plus years as a retirement-focused financial adviser, I've just about heard it all — some true, some false and just about all of it leaving near-65-year-olds wondering how they can figure it out in time.

Below are the five most common mistakes retirees make with Medicare and what you can do to try to avoid them.

What makes Medicare so different

Your health insurance choices used to be easy. Your work gave you two or three options and you chose the one that fit your family best.

Then you turn 64 and you get bombarded with advertisements in the mail touting how great a particular Medicare insurance plan is.

When I checked Medicare.gov's Plan Comparison Tool in September 2026, there were 81 different options near me in Wisconsin: 39 Medicare Advantage plans, 10 prescription drug plans and 32 supplement insurance (Medigap) options.

The number and types of plans available to you will depend on where you live.

With so much information and so many different plans, it's no wonder Americans keep making these five common mistakes.

Mistake No. 1: Assuming Medicare is automatic

Medicare feels automatic since many people enroll or get signed up for it at 65, but that feeling of "automatic" often turns into "I don't have to think about it" — and that's a big mistake.

Medicare enrollment generally is automatic if you've already been receiving Social Security retirement benefits for at least the four months before age 65. A few months before your 65th birthday, you'll get your Medicare card in the mail showing that you're enrolled for Part A and B.

If you have current employer-provided health insurance from a company with 20-plus employees, you may be able to delay starting Part B. Before you do, check with your employer to find out how your health coverage coordinates with Medicare.

If you're signed up for Part A and B automatically, that doesn't mean you automatically get signed up for other private Medicare insurance to pay for the gap between what Medicare covers and what Medicare pays.

You should still evaluate whether you're better off with Medicare Advantage or original Medicare with Medigap (supplemental) insurance — and you'll have to proactively sign up to get those coverages.

Mistake No. 2: Misunderstanding what counts as 'employer coverage'

Many people turning 65 think, "I don't need to sign up for Medicare. I already have insurance through my employer." It turns out they actually have retiree coverage, COBRA or even TRICARE from prior military service.

Retiree health insurance and COBRA plans are not coverage from your current employer. And TRICARE states that you need Part A and B to get TRICARE For Life.

If you have employer-provided health insurance based on your or your spouse's current employment with a company of 20-plus employees, you may be able to delay signing up for Medicare. That's true, and yet there's so much confusion around that.

Your "employer coverage" must be from active, current employment.

Retiree healthcare doesn't count as current employer coverage that could allow you to delay Part B. COBRA generally doesn't count either.

TRICARE states, "If you're eligible for both TRICARE and Medicare Part A, then in most cases, you must have Medicare Part B to keep TRICARE." (Emphasis added.)

Mistake No. 3: Confusing the different Medicare parts and choices

Medicare lists four different parts of Medicare, along with optional Medigap insurance, and points out the differences between Medicare and Medicaid. With similar names and so many parts, no wonder it's confusing.

Medicare Part A (hospital insurance) covers inpatient care in hospitals, skilled nursing facility care, hospice care and home healthcare.

Most people get Part A with no premium cost because they, or their spouse, qualified by working and paying Medicare payroll taxes for "40 quarters" — basically 10 years. Premium-free doesn't mean cost-free though. You can still have deductibles, copays and other out-of-pocket costs.

Medicare Part B (medical insurance) helps pay for doctor visits, outpatient care and preventive care, such as screenings, shots or vaccines, and yearly "wellness" visits.

Part B costs $202.90 a month, which is often a surprise to many retirees who think it's free. It can cost even more if you have a high enough income and must pay Income-Related Monthly Adjustment Amount (IRMAA) surcharges.

Medicare Part D helps cover the cost of prescription drugs.

Drug coverage is often part of a Medicare Advantage plan. But if you choose a Medicare Supplemental Insurance (Medigap) plan, you'll generally buy part D drug coverage separately, unless you have other creditable drug coverage.

Medicare Supplement Insurance (Medigap) helps you pay your share of the costs of original Medicare.

People often ask me, "What does Medicare Supplement cover?"

My answer is, "Medicare Supplement generally covers what Medicare covers, but it generally pays for many of the costs that Medicare makes you responsible for."

Medicare Part A has deductibles, coinsurance and copays that you are responsible for.

Medicare Part B has a deductible, after which you generally pay for 20% of the cost of the Medicare-approved amount for services Medicare covers.

That's where Medicare Supplement (Medigap) comes in, to help pay the costs of your healthcare that Medicare covers but doesn't fully pay. You could also choose a different route, called Medicare Advantage.

Medicare Advantage (also known as Part C) is an alternative to original Medicare. You get a "bundled" plan through a private insurance company that is Medicare approved and essentially brings your Part A, Part B and usually Part D coverages all together.

Many Medicare Advantage plans have low or even $0 monthly plan premiums, while Medigap policies generally charge a separate monthly premium.

However, those on Medicare Advantage generally must continue paying their Part B premium, along with deductibles, copayments and specific provider networks.

Mistake No. 4: Ignoring the potential extra costs of Medicare through IRMAA

Many people are surprised that Medicare Part B has a monthly premium. They expect the taxes they paid throughout their career to cover their Medicare in retirement.

What's even more surprising is when your income from two years ago causes you to pay extra for Medicare through the IRMAA.

I met a client recently who was upset that his Medicare premiums were higher this year than last year.

I discovered he had retired two years ago. His income from that year was high enough to go over the IRMAA threshold so that both his and his wife's Medicare premium was roughly double the normal amount.

Fortunately, you can appeal your extra Medicare costs through IRMAA, and "work stoppage" is one of the "life-changing" events Social Security will take into account.

My client had retired, and his income is now lower. So after the couple requested a new IRMAA determination based on his retirement and their reduced income, their combined Medicare premiums were reduced by roughly $5,000 for that year.

This client's IRMAA surcharge highlights how interconnected all the pieces of retirement are. Your added income in one year, from working or perhaps Roth conversions or stock sales, can affect your healthcare costs two years later.

Retirement isn't just about your Medicare decision and your investment decision, and your Social Security decision separately. It's about how each of these areas affect each other.

That's why I created a five-step retirement master plan to help all the pieces of retirement fit together, which you can find in my book Retire Today.

Mistake No. 5: Not re-evaluating your Medicare Advantage or drug plan each year

Each year during open enrollment from October 15 through December 7, I send a message to my clients encouraging them to review their Medicare Advantage or prescription drug plan for the following year.

By far, the most common response is, "Nothing changed for me this year, so I don't need to do this."

But here's the thing: Something may have easily changed. Your existing plan could have changed quite a bit.

Every year, your Medicare Advantage or Part D drug plan can change its cost, its network, its preferred pharmacy, its benefits, its provider list.

And even if your plan doesn't change one thing, all the other plans could change and you might be missing out on a better plan for you.

You may find another plan that better fits your healthcare needs, or your prescription drugs, providers and budget.

Whether you're on Medicare already, or getting ready for Medicare, follow these five steps to avoid big Medicare mistakes:

• File for Medicare at the right time
• Confirm how your current health insurance coordinates with Medicare
• Learn the different parts of Medicare and what they cover
• Understand how past income affects current Medicare costs — and whether you qualify for a reduction in those costs
• Re-evaluate your Medicare Advantage and drug plan options each year

Take these five steps before, and even after, you file for Medicare, and you'll feel much more confident in the Medicare decisions you make.

Related Content

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• Why Is My First Medicare Bill So High?
• Your 2027 Medicare Open Enrollment Guide: Essential Dates and Notices
• Claiming Social Security Soon? 5 Smart Moves to Make Before You File
• Retiring in the Next 12 Months? Answer These 3 Questions Before Your Paycheck Stops

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.

More retirees are asking AI the money questions they used to ask financial advisers.

The appeal is obvious. AI chatbot answers arrive in seconds, nothing is embarrassing to ask, and it costs nothing. The problem is that a wrong or incomplete answer looks exactly like a right one.

This guide explains why AI gets retirement questions wrong and provides seven steps you can use to check an answer before you act on it.

Why AI gets retirement numbers wrong

A chatbot does not look anything up. It was trained on a large body of text gathered up to a cutoff date, and it answers by predicting which words most plausibly come next. When it states a figure, it is reproducing what appeared most often in that text — it's not reading a current government page.

Retirement rules are badly suited to that, because most of the important numbers change every year.

Contribution limits are the clearest case. For 2026, the amount that can go into a 401(k) rose to $24,500, and the IRA limit to $7,500. A year earlier, they were $23,500 and $7,000. A model trained before that announcement would provide last year's figures with complete confidence, and nothing in the phrasing would suggest the numbers are stale.

Other figures can be changed by legislation, after the former figure has circulated for years. For example, the age when retirees must start taking required minimum distributions (RMDs) used to be 70½, then it was 72, then 73, and it reaches 75 in 2033. All four ages appear across the internet, usually with no date attached.

Basically, AI handles concepts reliably and specifics unreliably. The seven steps below are built around that split.

Step No. 1: Check the year on every number

Any answer containing a dollar amount, an age, a percentage or an income threshold needs a date attached before it is worth anything.

Ask the chatbot directly which tax year the figure applies to. When asked, a chatbot will often admit its information may be outdated, even though it volunteered the number without hesitation a moment earlier.

Consider any figure with no year attached suspect.

Step No. 2: Ask which agency sets the rule

This is the one question a chatbot answers reliably, because it is a concept question rather than a numbers question.

Information about contribution limits, RMDs and tax treatment should come from the IRS.

Benefit amounts and claiming ages should come from the Social Security Administration.

Information about Medicare premiums and income surcharges (IRMAA) should come from Medicare.gov and the SSA.

Pension rules sit with the Department of Labor.

Knowing which agency oversees the rule turns vague verification into a single page to open.

Step No. 3: Verify at the source

Once you get an answer from a chatbot, go to the agency's own site rather than simply reading a summary. For example, federal agency pages will state which year a figure applies to.

Skipping this step could be expensive. Missing an RMD triggers a penalty of 25% of the amount that should have been withdrawn, reduced to 10% if corrected quickly.

On a $40,000 distribution, that is $10,000 for a deadline a chatbot might have gotten wrong.

Step No. 4: Feed it your own circumstances

A chatbot answers in generalities unless you provide specifics.

Supply the details that actually influence the outcome: Age, types of accounts, pension income, state of residence and marital status, including whether your spouse has their own earnings record. (Never provide details that are personally identifiable, though.)

Then compare the answer with the answer you get when you provide none of those details.

If the response barely changes, then the advice for your particular situation cannot be trusted.

This matters most when it comes to thresholds. Medicare's IRMAA works as a cliff rather than a gradual increase — income above $109,000 in 2026 for a single filer and $218,000 for a couple.

A chatbot that suggests you do a Roth conversion without making any reference to IRMAA can lead to you facing four figures in annual premiums two years later (since IRMAA is based on your income two years ago).

Step No. 5: Ask the same question twice

Pose the question again in different words, ideally on a different day, and see whether the original response holds.

Then change one detail, such as adding five years of age or removing pension income, and check that the answer moves in a direction that makes sense.

Answers that swing wildly when you rephrase the question are being generated, not recalled. When two responses conflict, the tie gets broken by checking the relevant agency's page, not by asking the chatbot a third time.

Rawad Baroud, CFO of ZeroGPT, says that consistency should never be confused with accuracy when evaluating AI-generated information. "Generative AI can produce an answer that is clear, detailed and convincing without having verified the facts behind it.

"Asking the question again can expose inconsistencies, but getting the same answer twice doesn't prove it is correct. For financial information, the final check still needs to be against an authoritative source."

So use repetition as a warning system, not as proof of accuracy. Whether the answers are different or the same, you should always verify any important numbers or rules.

Step No. 6: Ask what it left out

Chatbots answer the question asked and rarely flag what sits outside it.

Two prompts do most of the work here:

• Ask what assumptions the answer depends on
• Ask what would make this the wrong move

A recommendation to convert to a Roth, for instance, should surface the tax due this year, the effect on Medicare premiums and the five-year rule before it counts as complete.

According to Gregor Emmian, deputy chief growth and finance officer at Rise, "The most dangerous AI answers are the ones with no caveats attached. If a chatbot tells you to convert to a Roth or claim (Social Security) early without mentioning what could go wrong, that's not a complete answer — it's half of one.

"Retirees should treat 'what am I not being told?' as a mandatory follow-up question, not an optional one."

An answer that mentions no downside is incomplete — every retirement decision requires tradeoffs.

Step No. 7: Consult an adviser when an irreversible decision is involved

Some actions cannot be undone once you do them. Claiming Social Security, converting a large sum to a Roth, buying an annuity or taking a pension as a lump sum all belong in that category.

The cost of a wrong turn here is permanent. Claiming Social Security at 62, for someone whose full retirement age is 67, reduces the monthly benefit by about 30% for life, and that reduction extends to the survivor's benefit.

On a $2,400 benefit, it is roughly $720 a month, or more than $8,600 a year, for as long as either spouse lives.

For anything in this category, print the chatbot's answer and take it to an adviser or accountant. Ask which parts are wrong and why.

That conversation will be quicker and less expansive than one you start from nothing, and it puts the specifics in front of someone who can be held responsible for them, which no chatbot can.

The bottom line: If you're using AI this way, the main thing you should keep in mind is that the moment an answer sounds the most authoritative is the moment when you should question its accuracy and explore further, preferably through the relevant agency.

Related Content

• We Gave AI Chatbots 5 Financial Challenges. Here's How They Did
• 6 Ways to Use AI to Improve Your Financial Life
• How to Protect Your Privacy While Using AI
• Sitting on Housing Wealth? How to Safely Turn Home Equity Into Retirement Income
• An Expert Guide to Your Financial Priorities Decade-by-Decade: What to Focus on in Your 30s, 40s, 50s and 60s

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.

Most of the expensive mistakes I see in retirement planning as a CFP® are subtle. This one is not.

A Medicare enrollment trap springs most often on the very people who feel least worried about it: Those working past 65 with what they assume is perfectly good employer coverage.

But a hard Medicare deadline with a permanent penalty attached can snare people who did everything else right.

Here's how it happens, why it costs real money and what to do about it.

The setup

When you turn 65, you become eligible for Medicare. Most people know that. What trips them up is the assumption that because they're still working and covered by an employer health plan, they can ignore Medicare until they retire.

Sometimes that is true. Often, it's not, and the difference comes down to the size of the employer and the type of coverage you have.

If you work for a larger employer, generally one with 20 or more employees, your group plan can remain your primary coverage, and you can delay Medicare Part B without penalty under a special enrollment period.

But if you work for a smaller employer, Medicare might be considered your primary payer once you turn 65, even while you're still on the company plan.

In that situation, delaying Part B doesn't just risk a penalty. It can leave you with gaps in coverage, because your employer plan might pay as though Medicare is already covering its share, whether or not you're enrolled.

That distinction — 20 employees —isn't something most people think to check. They see, "I have health insurance through work," and reasonably conclude they're fine. The rules don't care how reasonable the assumption was.

The penalty that never goes away

Here's the part that stings. If you're required to enroll in Part B and you miss your window, the late enrollment penalty is not a one-time fee.

According to Medicare.gov, the Part B penalty adds 10% to your premium for each full 12-month period you could have had Part B but did not. You pay that surcharge for as long as you have Part B, which for most people means the rest of their lives.

Think about what that means. Delay three years when you should have enrolled, and you're looking at a 30% premium surcharge, every month, indefinitely. There is no statute of limitations, no point where it falls off. A misunderstanding at 65 becomes a line item you carry into your nineties.

Because that 30% applies to whatever the standard premium happens to be each year, the dollar cost climbs right along with premiums over time. Across a 20-year retirement, a few years of delay can quietly add up to thousands of dollars in surcharges you could have avoided.

I have seen people discover this years later and have no recourse, because the rules were followed exactly as written — just not by them.

The timing windows that matter

Medicare enrollment runs on specific windows, and missing them is what triggers the trouble. Your initial enrollment period is a seven-month stretch around your 65th birthday: the three months before, your birthday month, and the three months after.

If you qualify to delay because of active employer coverage at a large employer, you get a special enrollment period to sign up later without penalty, typically while you're still covered and for eight months after that coverage ends.

The danger zone is the space between assumptions and rules. People who retire and lose coverage sometimes assume they can enroll whenever they get around to it.

The eight-month clock after employment ends is easy to blow past, especially amid the chaos of leaving a job. Miss it, and you might be stuck waiting for a general enrollment period and carrying the penalty besides.

What to do

A few concrete steps make this entirely manageable.

Well before you turn 65, find out if your employer has more or fewer than 20 employees and confirm in writing how your plan coordinates with Medicare. Your human resources (HR) department or benefits administrator should be able to tell you whether your coverage lets you delay Part B. Do not guess, and do not rely on a coworker's situation, which might differ from yours.

If you're at a small employer, treat your 65th birthday as a real deadline and enroll during your initial enrollment period unless you have confirmed you genuinely qualify to wait.

If you're delaying because of large-employer coverage, mark the eight-month special enrollment period that begins when that coverage ends. Put it somewhere you won't lose it. The moment you retire or drop the employer plan, the clock starts.

Remember that Part D, prescription drug coverage, has its own late enrollment penalty with similar lifetime consequences. If your employer coverage is not considered creditable drug coverage, the same kind of permanent surcharge can apply.

There is one more wrinkle worth flagging, because it catches a particular group off guard. If you contribute to a health savings account, enrolling in any part of Medicare, including Part A, ends your ability to make new HSA contributions.

Part A is premium-free for most people and many enroll in it automatically without thinking, but doing so while still funding an HSA can create a tax problem. If you work past 65, still contributing to an HSA and plan to delay Medicare, that interaction needs to be on your radar.

It's a small detail with outsize consequences and is precisely the kind of thing that gets missed when someone assumes Medicare is a single on-off switch rather than a set of separate decisions.

The bigger lesson

What makes this trap so frustrating is that it punishes inaction by people who weren't being careless, they were just uninformed. There is no investment decision here, no market risk, no judgment call about strategy. It's purely a matter of knowing the rules and the dates, and acting before a deadline that doesn’t announce itself.

If you're approaching 65 and still working, don't let, "I have coverage through my job," be the end of your analysis. It's the beginning of a question, not the answer.

Spend an afternoon confirming exactly how your employer plan interacts with Medicare, and put the relevant enrollment windows on your calendar.

It's one of the rare retirement mistakes that is completely avoidable with a single phone call, and one of the few in which the cost of getting it wrong follows you for the rest of your life.

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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.

When the Centers for Medicare & Medicaid Services (CMS) ended subsidies for Part D premiums in August, 56.1 million Medicare Part D beneficiaries were left unsure as to what would happen to their monthly premiums. Among them are 24.1 million original Medicare enrollees and 3.4 million Advantage members who buy stand-alone drug coverage — plus 28 million who receive coverage through a bundled Medicare Advantage with drug coverage plan (MA-PD).

CMS addressed this in a recent statement, noting "encouraging signs that, as expected, the Part D program is returning to normal market conditions." CMS projects the average total monthly premium for stand-alone Part D plans will rise by less than $1 — from $35.09 in 2026 to $36.00 in 2027. Keep in mind these are averages; unlike federally set Part B premiums, private insurers ultimately set the prices for Part D plans.

However, for 2027, Medicare beneficiaries will have a higher out-of-pocket maximum of $2,400 (up from $2,100) and will face a higher maximum deductible of $700, a $75 increase from 2026.

CMS touts stable and lower premiums for 2027

Despite concerns that there would be sharp rate hikes following the end of federal intervention, CMS attributes the modest $1 increase to the Part D market naturally re-establishing equilibrium and returning to normal competitive conditions.

CMS announced in August the discontinuation of the voluntary Part D Premium Stabilization Demonstration Project. Originally introduced to smooth pricing shifts following major structural changes under the Inflation Reduction Act — such as the out-of-pocket spending cap — the demonstration program provided direct temporary government subsidies to insurers. CMS maintains that the market no longer requires these multi-billion-dollar backstops to keep consumer costs manageable, pointing to low baseline rates as proof that insurers have adjusted their pricing models sustainably.

“CMS is fighting to keep high-quality care options affordable and accessible for the millions of beneficiaries who rely on Medicare Advantage and Part D prescription drug plans,” said CMS Administrator Dr. Mehmet Oz.

CMS also highlighted stronger price drops across integrated coverage options. For Medicare Advantage plans that include prescription drug coverage (MA-PD), the average monthly Part D premium component is projected to fall by 38%, dropping from $11.32 in 2026 to $7.00 in 2027 after applying MA rebates. CMS also noted that 88% of non-low-income beneficiaries will have access to a basic stand-alone Part D plan for $10.30 or less per month, with 93% having access to an enhanced plan option under $6.00.

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Medicare Part B enrollees are set to receive a one-time $90 rebate delivered automatically over the next few weeks, President Trump announced on October 2. Created in 2008 as a flexible budget tool for provider payment adjustments, the Medicare Improvement Fund (MIF) is now being tapped by the federal government to issue direct cash rebates to Medicare beneficiaries.

In 2027, Medicare Part B premiums are estimated to rise by $6.60 per month to $209.50, according to the 2026 Medicare Trustees Report. If the premium estimates hold, the $90 rebate would cover the $79.20 increase, with $10.80 to spare. A couple can receive a total of $180 if both spouses independently meet the eligibility requirements.

In September, President Trump announced $500 rebates for certain Affordable Care Act (ACA) enrollees in 30 states who purchased coverage through the federal marketplace, HealthCare.gov, and did not receive premium assistance.

Here is what you need to know about Medicare Part B premium rebates: Who qualifies, when to expect your payment and where the money came from.

Who is eligible for the Medicare Part B premium rebate?

Are you one of the 20.8 million eligible beneficiaries who will receive the $90 Medicare Improvement Fund Premium Rebate? Generally, to be eligible, you must live in the United States, not receive any premium assistance from Medicaid, not pay the income-related monthly adjustment amount (IRMAA), and not be enrolled in a Medicare Advantage plan.

If you do qualify, payments are scheduled to arrive this October. Are you registered for direct deposit? If so, your funds should arrive on Thursday, October 8.

Here are other factors that could impact your eligibility:

• Who can get it. To qualify for the $90 rebate, you must be:
  • Enrolled in original Medicare Part B
  • Pay standard Medicare Part B premiums without third-party or high-income adjustments.
  • Not in premium arrears or undergoing a coverage termination process for non-payment.
• Who can't get it. You are not eligible for the premium rebate if:
  • You are enrolled in a Medicare Advantage (Part C) plan
  • You pay the IRMAA
  • Your Part B premiums are fully paid or subsidized by state Medicaid programs (such as the Qualified Medicare Beneficiary (QMB) or Specified Low-Income Medicare Beneficiary (SLMB) beneficiaries), as you did not incur out-of-pocket Part B premium expenses.
  • You are enrolled exclusively in Medicare Part A (Hospital Insurance) without Part B coverage.
  • You have lapsed Part B coverage or active premium delinquencies.

Where did the funds come from?

The Medicare Improvement Fund (MIF) was established in 2008 via the Medicare Improvements for Patients and Providers Act (MIPPA). Before now, the federal government had never spent MIF funds directly on program operations.

For nearly 18 years, Congress used the MIF primarily as a budgetary mechanism. Lawmakers would inflate or reduce the fund's paper balance to help balance out the projected budget costs of unrelated health legislation.

The amount of funding available has changed 28 times since the fund was established. Lawmakers have increased the amount of funding available to the MIF 11 times and decreased it 17 times, according to a Congressional Budget Office (CBO) analysis published in April 2023.

Sit tight and your money should be along soon

The best part of this direct rebate program is that eligible beneficiaries do not need to fill out any forms, submit claims, or register online. Payments will be processed automatically by the Social Security Administration using your existing direct deposit details or mailed address.

Keep an eye out for scammers posing as CMS or SSA officials — Medicare and Social Security will never contact you directly asking for bank info to "claim" your rebate. If you don't receive your rebate in the expected time frame, contact Medicare directly at 1-800-MEDICARE (1-800-633-4227 or TTY 1-877-486-2048).

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• Projected 2027 IRMAA Brackets and Surcharges for Medicare Parts B and D

Enrolling in Medicare Part D isn’t a "one-and-done" decision. Leaving your plan on autopilot during open enrollment (October 15-December 7) could cost you hundreds in unexpected premiums and out-of-pocket fees. A different plan might offer a much better deal — especially if you’ve started new medications or your current drugs have transitioned to generic over the past year.

Between major legislative redesigns — like the permanent end of the infamous "donut hole" — and routine plan changes, the Medicare Part D coverage landscape shifts every year. Even if your health hasn’t changed, your insurer’s formulary tiers, preferred pharmacy networks and deductibles likely have.

To make sure you aren’t overpaying, use the official Medicare Plan Finder tool to compare coverage in your area. By entering your specific medications, dosages and preferred pharmacies, you can see your true costs for 2027.

Here are 10 critical Medicare Part D rules and changes you need to know before enrolling.

1. Part D is offered by private insurers — not the government

Unlike original Medicare (Parts A and B), which is administered directly by the federal government, Medicare Part D prescription drug coverage is managed by private insurers. Similar to Medigap and Medicare Advantage (Part C), the government sets baseline rules and benefit structures, while private carriers set the actual plans, premiums, pharmacy networks and formularies.

Because private insurers compete for your business, shopping around during open enrollment is critical — two plans in the same zip code can carry wildly different monthly premiums and out-of-pocket costs for the exact same set of prescriptions.

2. Don’t rely on premium costs alone when choosing a plan

For starters, there isn’t a single "standard" Part D premium — rates vary widely by plan. The Centers for Medicare & Medicaid Services (CMS) establishes a standardized base beneficiary premium, but that figure is only a benchmark used to calculate late enrollment penalties and IRMAA surcharges. For 2027, the base premium is $41.33. Keep in mind that the cheapest plan by monthly premium is rarely the most cost-effective option overall.

When shopping via the Medicare Plan Finder tool, always sort plans by "lowest drug + premium cost." This calculates your total estimated out-of-pocket costs (premiums + deductibles + copays) based on your specific drug list and preferred pharmacies, giving you the actual bottom-line cost

3. Formularies and preferred pharmacies change every year

Even if your medications haven’t changed, your insurer’s formulary and tier structures likely have. Look over their list of covered drugs and which tier your medication falls into — generic, preferred brand or non-preferred brand — because this affects your costs. Additionally, plans regularly change their "preferred pharmacy" networks. Filling a drug at a standard pharmacy versus a preferred one can double or triple your copay.

4. Your deductible depends on your plan

Your deductible can vary, and you may not have to pay one at all. However, if you are subject to a Part D deductible, there is a maximum that no policy may exceed.

If your plan has a deductible, you pay 100% of your gross covered prescription drug costs until the deductible is met. For 2027, the federally mandated maximum deductible a Part D plan can charge is $700, $85 more than the 2026 amount of $615.

You pay all out-of-pocket costs until you meet your plan’s full deductible. After that, you’ll pay 25% coinsurance for both generic and brand-name drugs. This continues until your total out-of-pocket spending on covered Part D drugs reaches $2,400 for 2027.

5. The ‘donut hole’ is gone

The infamous coverage gap or "donut hole," in which beneficiaries faced steep out-of-pocket costs after reaching a certain limit, was officially eliminated as of January 1, 2025.

Under the Inflation Reduction Act(IRA), the absolute limit you will spend out-of-pocket on covered formulary drugs in 2027 is $2,400, a $300 increase over the 2026 limit of $2,100. Once you hit the $2,400 out-of-pocket cap, your copays and coinsurance drop to $0.

6. There are no spousal discounts

Most spouses don’t take the same medications. One plan may have much better coverage for your drugs while another may be better for your spouse’s needs.

You should each look up your drugs and dosages using the Medicare Plan Finder to estimate out-of-pocket costs for the plans in your area.

Before you and your spouse sign up for plans with different preferred pharmacies, consider if you are willing to go to more than one pharmacy to fill your monthly prescriptions. Some plans only give you the best rates if you use their network.

7. You can opt into the Medicare prescription payment plan

This optional, fee-free program allows you to spread your drug costs out into capped monthly installments over the year instead of paying a massive chunk all at once at the pharmacy counter. You can directly opt in to the Medicare prescription payment plan through your Part D plan sponsor.

If you opt into the Medicare Prescription Payment Plan, you won’t pay at the pharmacy counter; your plan will be notified automatically. Instead, your insurer will send you a monthly bill detailing what you owe for your prescriptions with instructions on how to pay.

If you used this program last year and stayed with the same plan, your enrollment automatically renews; however, if you switch Part D plans during open enrollment, you must manually opt in again with your new insurer.

8. The options for stand-alone plans are shrinking

Over the last five years, the number of stand-alone plans available to the average Medicare beneficiary decreased from 30 in 2021 to 11 in 2026, according to KFF, a health information organization formerly known as the Kaiser Family Foundation.

From 2025 to 2026, plan availability decreased by 22%. With fewer plans to choose from, you cannot assume your current plan will remain competitive or even exist.

9. Premium subsidies will end this year

An IRA premium stabilization demonstration, established in 2024 to prevent substantial premium increases due to the Part D benefit redesign, subsidized and stabilized average monthly premiums in 2025 and 2026. The demonstration has ended, and no subsidies will be paid to offset premium increases in 2027. CMS scaled back that support earlier this year, stating in a memo that reducing federal subsidies is intended to help the Part D program "return to operating under regular market conditions."

The federal government provides roughly $190 in annual premium subsidies per enrollee under the stabilization demonstration in 2026, based on a projected $16 per member per month premium reduction, according to KFF.

"Without these subsidies in place for 2027, some Part D stand-alone drug plan enrollees could see a larger premium increase for drug coverage next year than they’ve faced in recent years, though plan-specific premiums are not yet known," says Juliette Cubanski, vice president and director of the Program for Medicare Policy at KFF.

10. Avoid the permanent late enrollment penalty

If you don’t enroll in Part D when you are first eligible, and you go 63 consecutive days or more without "creditable" drug coverage (coverage deemed as good as or better than Medicare’s standard), you will face a permanent late enrollment penalty when you eventually sign up. The penalty is assessed per month for each month you went without coverage and is added directly to your monthly premium for as long as you hold a Part D plan.

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.

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Medicare beneficiaries can expect some important mail beginning in September. The official Medicare notices, plan updates and statements you receive play a critical role in guiding your healthcare decisions. Far from routine "junk mail," these official notices serve as a personal roadmap to evaluate your care and protect your wallet.

Each year, the Medicare open enrollment period (also known as the annual election period (AEP)) runs from October 15 to December 7. During this window, you have the opportunity to review your healthcare and prescription coverage, compare it with new plans available in your area and make any necessary changes for the upcoming coverage year starting January 1.

Open enrollment calendar

Medicare beneficiaries should be careful to take note of the dates below. Some are hard and fast deadlines; others will alert you to days when important information is being released or should arrive in your mailbox.

Some of this information will be accessible earlier if you have (or create) a my Social Security account and/or Medicare account.

Notices to expect

Medicare's annual open enrollment period runs every year from October 15 through December 7. This limited, seven-week window is your primary opportunity to review your current health and drug plans, compare new options available in your area and adjust your coverage for the coming calendar year.

Navigating these choices can feel overwhelming, but you don't have to guess what's changing. The official Medicare notices, plan updates and statements you receive in the mail play a critical role in guiding your decisions during open enrollment.

Here is how keeping a close eye on these specific pieces of mail empowers you to make informed decisions before the December 7 deadline:

• Spotting changes before they take effect
  • The Annual Notice of Change (ANOC) should arrive by September 30 and serves as your early-warning system. It outlines exact changes your Medicare Advantage plan is making for the coming year — such as higher co-pays, dropped doctors or hospitals and removed medications. Reading it tells you whether your plan is still a good fit or if it’s time to switch.
• Avoiding unexpected gaps or loss of coverage
  • Notices such as the Plan Non-Renewal or Termination Notice alert you if your insurer is pulling out of your county or discontinuing your plan entirely. Receiving a plan non-renewal notice in the fall ensures you aren't caught off guard on January 1 without coverage. A termination notice can come at any time and unlocks a special enrollment period (SEP) so you can select a replacement plan.
• Managing prescription drug costs
  • Midyear formulary notices and ANOC updates highlight upcoming shifts in drug coverage tiers, brand-to-generic substitutions or new prior authorization requirements. Armed with this information, you can compare prescription drug plans (Part D) on Medicare.gov during open enrollment to find a plan that covers your specific medications at the lowest out-of-pocket cost.
• Planning your personal health care budget
  • IRMAA Determination letters and Social Security COLA statements detail your exact monthly Part B/D premium costs, income surcharges and net benefits for the coming year. Knowing these fixed costs helps you determine how much room you have in your budget for plan copays, co-insurance or private Medicare Advantage premiums/supplemental insurance.
• Protecting against errors and fraud
  • Reviewing your 2026 Medicare Summary Notices (MSN) or explanation of benefits (EOB) helps you verify what services you used throughout the past year, track progress toward deductibles and ensure you aren't paying for services you never received before you re-evaluate your coverage needs.

Don't ignore the notices or deadlines

As the December 7 open enrollment deadline approaches, taking a few minutes to review the notices in your mailbox can make a significant difference in both your healthcare coverage and your wallet for the year ahead. If you sign up for a my Social Security or Medicare account, you can receive the notices earlier via email.

Rather than leaving these mailings or emails unopened, use them to verify that your doctors stay in-network, your prescriptions remain covered and your out-of-pocket costs fit your financial plan. If your current coverage no longer works, open enrollment lets you switch to a better plan — ensuring seamless care and peace of mind on January 1.

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• Don't Toss It! Why Your Medicare Annual Notice of Change Matters
• The 7-Month Deadline That Determines Your Lifetime Medicare Premiums
• Medicare 2027 Projections: Here's How Much Your Monthly Premiums Are Estimated to Rise

Most people treat their Medicare supplement plan the way they treat a landline: It's something they sign up for once, at 65, and never think about again.

That instinct might make sense for other types of insurance. But it's the wrong instinct when it comes to your supplement plan, and it can cost you hundreds of dollars a year, sometimes for a decade or more, without you noticing.

The part nobody expects: Identical coverage, different price

Here's what most people don't know about Medicare supplement, or Medigap, plans: They're standardized by the federal government. A Plan G from one insurance company covers exactly the same things as a Plan G from every other insurance company selling in your state. Same benefits, same rules, no exceptions.

The only thing that changes from carrier to carrier is the premium, and that gap is often much bigger than people expect. It's common to see one company quoting around $140 a month for a Plan G in a given ZIP code, while another quotes $240 for identical coverage.

If you live in Massachusetts, Minnesota or Wisconsin, your state uses its own Medigap plan structure instead of the lettered system, but the same principle applies: Compare identical coverage across carriers.

That difference isn't a mistake in the system. It's simply how a heavily regulated product still leaves room for companies to compete on price. Once you understand that the benefits can't differ, price becomes the only variable worth comparing.

If it helps to see the price comparison laid out visually, this video walks through a similar rate check, including how identical Plan G quotes can vary by $100 or more depending on the carrier.

Why the same plan gets more expensive every year you ignore it

Insurance companies tend to price Medigap plans competitively when they're trying to attract new customers, then raise those rates gradually in years two, three and four.

Meanwhile, a different, equally reputable company may be offering the exact coverage you already have at close to what you originally paid. The result is a slow drift where loyal customers end up paying the most for the same benefits, simply by not looking elsewhere.

Consider this scenario based on real-life patterns I often see in my practice: Carol enrolled in a Plan G at 65 for $150 a month and never revisited it. Eight years later, she was paying $310 a month for the same coverage, on the same plan letter, that a different company was now selling to new customers for $165.

Nothing about her benefits had changed. What had changed was the price she was willing to keep paying without checking.

The catch: You need to shop while you're still healthy

Here's the part that makes this more than a simple money-saving tip. When you first become eligible for Medicare, you get a six-month Medigap open enrollment window where you can buy any plan, from any company, regardless of your health.

Once that window closes, switching companies generally means answering health questions. Depending on your answers, you can be charged more or declined altogether.

Several states (including New York, Connecticut, Massachusetts and others with "birthday rule" laws) require little or no underwriting to switch, but check with your State Health Insurance Assistance Program (SHIP) to see your state's specific rules before assuming this applies to you.

That's the trap in Carol's story. The money was there to be saved every year she waited, but the ability to make the switch wasn't guaranteed to still be there when she finally looked. The right time to compare pricing isn't when you're sick and need to. It's now, while you still qualify for whichever plan turns out to be the better deal.

The piece that isn't standardized: Part D

If you go the Medicare supplement route, prescription drug coverage isn't included. You'll need a separate Part D plan, and unlike Medigap, these plans aren't standardized.

Premiums, deductibles and which medications are covered can vary significantly and can change from one year to the next, even if you don't change anything yourself. This is worth reviewing every single year, not every few years, during the annual enrollment window that runs from October 15 through December 7.

Even people who aren't currently taking any medications are better off enrolling in a Part D plan rather than skipping it. Going without one, if you don't have other qualifying drug coverage, can trigger a penalty that gets added to your premium for as long as you're on Medicare.

What to do this fall

You don't need to wait until something feels wrong with your current plan to check whether it's still the right price.

Pull your current Medigap premium and compare it against current rates for the same lettered plan from other carriers licensed in your state, not just your existing company.

Do this while you're healthy. If your health has changed since you last shopped, ask an independent agent what your options are before assuming you can switch freely.

Mark October 15 through December 7 on your calendar every year, and use that window to review your Part D or Medicare Advantage plan, even if last year's plan still feels fine.

The takeaway

Medicare isn't a decision you make once at 65 and close the book on. Your health changes, insurance pricing changes, and the marketplace shifts every year whether you're paying attention or not.

Reviewing your coverage every two to four years, and your Part D plan every single year, can mean meaningful savings without giving up a single benefit. The only real risk is waiting too long to look.

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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.

For many retirees, few acronyms generate more anxiety than IRMAA.

Countless articles, videos and financial discussions warn retirees to stay below the next Medicare premium threshold. But what if avoiding an IRMAA surcharge causes you to pay more over the course of retirement?

In many cases, that's what can happen when annual tax planning takes priority over lifetime tax planning.

The income-related monthly adjustment amount (IRMAA) is the Medicare surcharge higher-income beneficiaries might pay for Medicare Part B and Part D coverage.

Because IRMAA is based on your modified adjusted gross income (MAGI) from two years earlier, many retirees become intensely focused on staying below the next surcharge threshold.

That focus is understandable — but it can also be expensive.

Many retirees reject Roth conversion strategies or other tax-planning opportunities solely because they might temporarily increase Medicare premiums. In some cases, avoiding an IRMAA surcharge can ultimately result in paying significantly more in lifetime taxes.

• The better question isn't: "How can I avoid IRMAA this year?"
• Instead, ask: "How can I minimize the total taxes and costs my family is likely to pay over the course of retirement?"

Those are two very different objectives.

Think beyond this year's tax return

Traditional tax planning often centers on reducing this year's tax liability.

Lifetime tax planning takes a broader view by evaluating how today's decisions affect taxes, retirement income and wealth in the next 20 to 30 years.

That distinction matters because strategies that intentionally increase taxable income today — such as Roth conversions — can sometimes reduce taxes substantially later.

Depending on the circumstances, converting part of a traditional IRA to a Roth IRA could:

• Reduce future required minimum distributions (RMDs)
• Lower taxable income later in retirement
• Reduce the taxation of Social Security benefits
• Provide additional tax-free assets for future spending
• Improve tax flexibility throughout retirement
• Reduce taxes for a surviving spouse
• Leave heirs with more tax-efficient inheritances

None of those benefits can be evaluated by looking at only one tax year.

Focus on the right goal

Key takeaway: IRMAA is an important planning variable — but it should rarely outweigh a well-supported strategy that meaningfully reduces lifetime taxes.

Understanding the tax valley

Many retirees experience a period after they stop working but before claiming Social Security and before required minimum distributions begin.

During these years, taxable income might be temporarily lower than it will be later in retirement.

Financial planners often refer to this as a tax valley — a window that might present an opportunity to recognize income at relatively favorable tax rates.

Consider a hypothetical married couple, both age 63, with $2 million in traditional IRAs.

Because they recently retired, they temporarily find themselves in the 24% federal income tax bracket. Their retirement income plan projects substantially higher taxable income once Social Security benefits begin and required minimum distributions become mandatory.

Suppose they convert $150,000 per year to Roth IRAs over several years. The conversions increase their taxable income enough to trigger higher Medicare premiums through IRMAA.

At first glance, paying higher Medicare premiums seems undesirable.

However, those same Roth conversions might significantly reduce future required minimum distributions, lower future taxable income, reduce taxes for a surviving spouse, create greater tax flexibility later in retirement and leave heirs with more tax-efficient assets.

If a temporary Medicare surcharge of several thousand dollars helps reduce projected lifetime taxes by six figures, many retirees would likely consider that an attractive trade-off.

The numbers — not the premium increase alone — should drive the decision.

IRMAA is one variable — not the objective

Retirement planning requires balancing many competing financial factors:

• Federal income taxes
• State income taxes
• Social Security taxation
• Required minimum distributions
• Medicare premiums
• Estate planning
• Legacy goals

Each deserves consideration, but the mistake is allowing any one of those to dominate the entire planning process.

IRMAA should be viewed the same way investors evaluate transaction costs or capital gains taxes. It is a legitimate expense to consider — but not necessarily a reason to abandon an otherwise beneficial strategy.

Waiting can be expensive

Many retirees assume paying less tax today automatically leads to paying less tax overall.

Unfortunately, that assumption often proves incorrect.

Traditional IRAs continue growing tax deferred. Larger account balances frequently produce larger required minimum distributions, which could:

• Push retirees into higher tax brackets.
• Increase the taxable portion of Social Security benefits.
• Trigger higher Medicare premiums later in retirement.
• Increase tax burdens after the death of a spouse, when the surviving spouse begins filing as a single taxpayer.
• Leave beneficiaries inheriting taxable retirement accounts that generally must be distributed within 10 years under current law.

Ironically, retirees who spend years trying to avoid modest IRMAA surcharges today might pay larger Medicare surcharges later because their required minimum distributions have become substantially larger.

Every recommendation should begin with a projection

No two retirees have identical circumstances.

The appropriate Roth conversion strategy depends on numerous variables, including expected investment returns, future tax rates, longevity, charitable giving goals, pension income, state taxes, estate-planning objectives and anticipated spending needs.

For that reason, sophisticated retirement planning relies on long-term projections rather than general rules.

Stopping a Roth conversion because it crosses an IRMAA threshold might feel prudent, but without a lifetime analysis, it's impossible to know whether that decision improves a retiree's long-term financial outcome.

The goal isn't to win this year's tax return

The Internal Revenue Service calculates your taxes one year at a time — your retirement plan shouldn't.

The objective of retirement tax planning isn't minimizing taxes this year — nor is it minimizing Medicare premiums this year.

The objective is maximizing after-tax wealth throughout retirement while preserving flexibility for future spending, charitable giving and legacy planning.

Sometimes that means staying below an IRMAA threshold.

Other times, the math clearly supports accepting a temporary Medicare surcharge because doing so produces substantially larger long-term tax savings.

The answer depends on the analysis — not the acronym.

The Centers for Medicare & Medicaid Services (CMS) establishes IRMAA as an income-based adjustment to Medicare premiums, while IRS rules govern the taxation of Roth conversions in the year they occur.

Neither rule suggests retirees should automatically avoid Roth conversions because of a temporary increase in Medicare premiums. Instead, both reinforce the importance of evaluating tax decisions within the context of an overall retirement income strategy.

The most ideal retirement tax plans rarely optimize a single year — they optimize a lifetime.

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• The Illinois 'Cliff Tax': A Single Dollar Could Cost Families Hundreds of Thousands

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 the maximum out-of-pocket and deductible amounts for Part D are set, the full picture for 2027 isn't quite complete yet. Now, all eyes turn to the fall, when the Centers for Medicare & Medicaid Services (CMS) officially releases the upcoming figures for standard Part B premiums, as well as the Part A and Part B deductibles. Keeping an eye out for those numbers — along with reviewing your plan's Annual Notice of Change (ANOC) this October — will ensure you have every piece of the puzzle before open enrollment begins.

According to Fidelity, a 65-year-old retiring in 2026 can expect to spend an average of $185,500 on healthcare and medical expenses throughout retirement. That's an increase of 7% or $13,000 over the 2025 estimate.

Are rising costs and evolving program coverage rules frustrating? Absolutely — that's why we've waded through this year's Medicare changes to help keep you informed and hopefully save you money.

Here are eight Medicare changes to be aware of in 2027.

1. Stand-alone Part D drug plan options are shrinking

The landscape for stand-alone prescription drug plans (PDPs) continues to shrink. Five years ago, Medicare beneficiaries could pick from an average of 30 stand-alone plans; by 2026, that selection dropped to just 11. That represents a 63% drop in plan availability over five years; from 2025 to 2026 there was a single year drop of 22%.

Because options are consolidating rapidly, enrollees can no longer rely on their current plan staying available — or remaining price-competitive — heading into next year. Be prepared to shop around.

CMS has a great tool that allows beneficiaries to compare drug plans that can be filtered by deductible, premium or premium + drug costs.

2. Part D premium subsidies end in 2027

The temporary federal support that lowered Part D premiums in 2025 and 2026 is officially ending. The federal government's IRA premium stabilization demonstration — which lowered monthly premiums by an estimated $16 per person in 2026 — will not be extended to 2027.

CMS announced in July that this federal relief will conclude at the end of the year to transition Part D back to standard market conditions, clearing the way for potential premium increases in 2027.

For now, we are all in the dark about what type of rate increases will result from the discontinuation of the subsidy. "Without these extra subsidies in place for 2027, some Part D stand-alone drug plan enrollees could face a larger premium increase for drug coverage next year than in recent years, though plan-specific premium amounts are not yet known," said Juliette Cubanski, vice president and director of the Program on Medicare Policy for KFF.

3. Medicare Part D deductible will go up

Your deductible for your Medicare Part D insurance will depend on the plan you choose. Moreover, the deductible can vary, and you may not have to pay one at all. However, if you are subject to a Part D deductible, there is a maximum that no policy may exceed.

Annual deductible. If your plan has a deductible, you pay 100% of your gross covered prescription drug costs (GCPDC) until the deductible is met. For 2027, that maximum is $700, $75 more than the 2026 amount of $615.

You pay all out-of-pocket costs until you meet your plan's full deductible. After that, you'll pay 25% coinsurance for both generic and brand-name drugs. This continues until your total out-of-pocket spending on covered Part D drugs reaches the out-of-pocket maximum for 2027.

4. Maximum out-of-pocket for Part D expenses is going up

Beneficiaries pay 100% of prescription costs until they hit their deductible ($700 maximum), after which a flat 25% coinsurance rate applies until out-of-pocket spending reaches the statutory maximum for 2027.

In 2027, the cap on out-of-pocket prescription drug costs is $2,400, a $300 increase over the 2026 limit of $2,100. That means you'll be liable for an additional $300 in drug costs over the year in 2027.

5. Medicare Advantage perks and hemp

Federal law still strictly bans traditional medical marijuana across all Medicare plans, but federal regulators have established updated rules that allow access to select non-intoxicating hemp and CBD products.

While high-THC marijuana remains prohibited, Medicare Advantage plans can use updated guidelines for Special Supplemental Benefits for the Chronically Ill (SSBCI) to cover basic, federally legal hemp items. Plans can offer FDA-recognized "Generally Recognized as Safe" (GRAS) products, such as hulled hemp seeds, hemp protein powder and low-THC hemp seed oil.

6. CBD pilot program at Innovation Centers

Medicare is also expanding testing doctor-prescribed CBD through CMS Innovation Center initiatives. Starting in 2027, the Long-term Enhanced ACO Design (LEAD) Model will be able to supply non-inhalable CBD directly to patients to help manage chronic pain or sleep issues.

You will not be able to access this benefit at a regular doctor's office. The Substance Access Beneficiary Engagement Incentive (BEI) is a model-specific tool within Innovation Center models and is not available to all Medicare beneficiaries.

The CMS announced in an April 2026 press release that ACO REACH Models and the Enhancing Oncology Models (EOM) may furnish eligible hemp-derived products for up to $500 per year per eligible beneficiary, subject to model requirements and safeguards, as well as clinical determination. This was contingent on submission and approval of an implementation plan.

Note: The ACO REACH models will be ending at the close of 2026 and will be replaced by the new Long-term Enhanced ACO Design (LEAD) that comes online in 2027.

7. Medical telehealth coverage has been extended through 2027

The use of telehealth appointments took on new significance during the pandemic. Previously reserved for patients in rural areas, it was expanded to all Medicare beneficiaries.

However, Medicare's expanded telehealth benefits have since operated under a temporary safety net. Rather than making these broad virtual rules permanent, lawmakers have kept them alive through a patchwork of short-term legislative extensions to avoid a coverage cliff.

That cycle continues for the 2027 plan year. Under the Consolidated Appropriations Act of 2026, Congress extended core Medicare telehealth flexibilities through December 31, 2027. This extension gives beneficiaries and healthcare providers guaranteed stability for at least one year.

While permanent reform remains the ultimate goal for health systems and patient advocates, this latest legislative extension ensures virtual care remains fully accessible and reimbursable through the end of 2027.

8. Lower negotiated prices for some prescription drugs

Medicare beneficiaries will save on these 15 medications starting in 2027. They were on the second list of prescription medications that should cost less due to negotiations under the Medicare Drug Price Negotiation Program.

Of course, how much you pay overall will also be impacted by the terms of your Part D policy.

Prepare now to get the best Medicare coverage in 2027

Medicare open enrollment starts on October 15 and runs through December 7. In late October or early November, CMS will officially announce the updated Part B monthly premiums along with the Part A and Part B deductibles. Once those baseline numbers land, you’ll have the complete roadmap you need to compare coverage options and pick the best plan(s) for the coming year.

If you have a Medicare Part D or Medicare Advantage Plan, your ANOC is crucial. The information inside will help you decide whether to keep your current coverage or find a new plan for the coming year. Don't make the mistake of keeping your plan on autopilot without reviewing it first.

Related Content

• Your 2027 Medicare Open Enrollment Guide: Essential Dates and Notices
• Medicare 2027 Projections: Here's How Much Your Monthly Premiums Are Estimated to Rise
• 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
• Don't Toss It! Why Your Medicare Annual Notice of Change Matters

Costco is preparing to bring its signature bulk savings to the healthcare industry through a proposed partnership with SCAN Health Plan (SCAN). While the co-branded Medicare Advantage and Medigap options are still awaiting official approval from the Centers for Medicare & Medicaid Services (CMS), the plan signals a major shift in how seniors might soon shop for coverage.

"For more than 40 years, Costco has consistently listened to our members and earned their trust delivering consistent value on essential goods and expanding our health service offerings," said Ron Vachris, CEO of Costco, in a press release from SCAN.

Recent data show that 63% of Costco customers are Gen X (born 1965-1981) or baby boomers (born 1946-1964), making senior health services a natural extension of their current membership. This expands on Costco's recent healthcare push, which includes discounted prescription drug pricing programs (Costco Member Prescription Program) and virtual doctor visits through Sesame.

Here is what we know so far about the potential rollout.

What we know now about Medicare Advantage and Medigap at Costco

Costco announced a strategic partnership with SCAN Health Plan, a major nonprofit Medicare insurer, to launch co-branded Medicare Advantage and Medigap (Medicare Supplement) plans.

"Older adults want healthcare that is easier to navigate, more responsive to their needs and rooted in organizations they trust," SCAN Group CEO Dr. Sachin H. Jain told The Independent. SCAN Group is a mission-driven, not-for-profit organization that serves almost 460,000 members across 33 counties in six states, including California, Arizona, Nevada, Texas, New Mexico and Washington.

The initiative aims to bring Costco's low-cost, high-value retail model into the $500+ billion Medicare Advantage program by leveraging its existing pharmacy, optical and hearing center offerings.

• Insurance partner: SCAN Group / SCAN Health Plan, a California-based nonprofit Medicare Advantage program serving nearly 500,000 members.
• Initial scope of the rollout: The rollout will begin as a limited pilot, offering co-branded Medicare Advantage products in two states and a Medicare Supplement (Medigap) plan in a third state, pending federal regulatory approval from CMS. Together, these initial target markets reach an estimated 5 million Medicare-eligible enrollees.
• Where it will be sold: The insurance products will be offered online, through insurance-licensed brokers and inside participating Costco warehouses. Enrollees do not strictly need a paid Costco membership to sign up, though the plans are designed to incentivize members to utilize Costco services.

Be loyal to your needs, not a brand

A Costco-branded Medicare plan sounds appealing on paper, but brand loyalty shouldn't replace a thorough side-by-side comparison of plans.

Until official pricing and local network details are released, the smartest move for retirees is to stay informed, review your current drug and doctor coverage and wait to see whether the actual savings live up to the Kirkland name.

Related Content

• Is a Medicare Advantage Plan Right for You?
• Medicare 2027 Projections: Here's How Much Your Monthly Premiums Are Estimated to Rise
• Your Medicare Costs Are Set to Soar: What to Expect Over the Next Decade
• Projected 2027 IRMAA Brackets and Surcharges for Medicare Part B and D

Whether you’re planning a cross-country road trip to see family or an overseas getaway, packing your bags is only half the prep. Healthcare coverage doesn't always travel as smoothly as you do.

While standard Medicare steps up for emergency care within the U.S., international travel rules — and out-of-state network restrictions — can catch even seasoned travelers off guard.

Take our quick Medicare travel readiness Quiz to test your knowledge, spot hidden coverage gaps, and make sure you're protected wherever your itinerary takes you.

Don't worry if you miss an answer; you can follow the links below the quiz to brush up on your knowledge.

More on Medicare and Traveling:

• What Medicare Covers When You Travel in the US and Abroad
• Medicare and Cruises: The 6-Hour Rule
• What’s the Best Medigap Plan?
• The 12 Travel Tips Every Retiree Needs to Know
• The 10 Most Valuable Vacation Destinations for Retirees in 2026
• The 10 Best Splurge Destinations for Retirees in 2026

Dividing an estate is a deeply personal matter, but disinheriting a family member requires far more than just omitting a name from your will. Between state spousal laws, federal 401(k) rules, and strict probate requirements, a single paperwork misstep can invite costly court battles and overturn your exact intentions.

Whether you are navigating a second marriage or protecting a child with special needs, testing your estate planning IQ is the best way to spot hidden vulnerabilities. Take our 10-question quiz below to learn the smartest legal tools — from no-contest clauses to non-probate designations — that ensure your hard-earned assets go exactly where you want them.

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

More on Estate Planning, from the Kiplinger retirement team:

• 6 Reasons to Disinherit Someone and How to Do It
• Wills Gone Wild: How to Avoid Estate Planning Disasters
• 15 Estate Planning Terms You Need to Know
• Is Your Estate at Risk? The 5 Trusts You Need to Understand
• Revocable vs Irrevocable Trusts: It Comes Down to Control vs Protection
• The Little-Known Tool to Protect Your Retirement Savings in a Divorce

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 KFF, a nonpartisan health policy research, polling, and news organization.

It's easy to see why so many people find these plans appealing. Many Medicare Advantage plans have $0 premiums, and 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 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, Medicare Advantage may simply be a poor fit for some people. 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 drive your decision. 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. 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.

A lifestyle that costs $100,000 at age 60 could require more than $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 four to five years. While market cycles are unpredictable, these historical patterns suggest that over a typical retirement:

• A 30-year plan will navigate six to seven bear markets.
• A 40-year plan must survive eight 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.

• It doubles your chances of starting retirement during a market trough.
• 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 multidecade 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 at 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're forced to take.

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 (about 4.07% of balance mandatory withdrawal)
• Age 85: Divisor 16.0 (about 6.25% of balance mandatory withdrawal)
• Age 95: Divisor 8.9 (about 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 more than $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 multidecade 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 might 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 multiyear 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 plus $2,200 interest)
• Deductions: -$35,500 (2026 standard deduction for joint filers 65-plus)
• 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 multihundred-thousand-dollar tax-free health fund.

• 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 might 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.

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 in the next 40 years.

By converting pretax assets early, building multibucket flexibility, and leveraging tax-free accounts such as 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

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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

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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

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• Your Medicare Costs Are Set to Soar: What to Expect Over the Next Decade
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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

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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.

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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 has been difficult because the Bureau of Labor Statistics (BLS) did not publish official CPI-W data for October 2025, due to last year's federal government shutdown. The Centers for Medicare & Medicaid Services (CMS) should release the numbers by early November.

Projections remained unchanged after August CPI data came in at 3.4%, down slightly from 3.5% in July. We have 11 of the 11 data points needed for the 2027 IRMAA brackets (based on 2025 income). However, it's still not clear how the Social Security Administration (SSA) will calculate the 12-month average with only 11 data points.

All the numbers included are estimates and forecasts. The bracket estimates come from The Finance Buff, and surcharge amounts are forecasts from the 2026 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 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, 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: $460.70 Part B surcharge plus $88.30 Part D surcharge.

$386,000 or more: $502.60 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 extra dollar pushes 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 IRMAA 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. Even with the forecasting challenges resulting from 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.

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