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

Similar to Social Security, Medicare is facing funding issues. You may have heard that the Hospital Insurance fund for Medicare Part A is expected to be able to fully pay scheduled benefits only until the second quarter of 2033, one quarter sooner than last year’s projection. However, it's not as if the cost of Medicare will stay steady and suddenly increase in 2033. Instead, Medicare beneficiaries have a more immediate problem in the form of rising premiums and surcharges starting in 2027 and continuing over the next decade.

The 2026 Medicare Trustees Report projects a steady increase in Medicare Part B/Part D premiums and IRMAA surcharges over the next nine years. The projections are based on expected rises in healthcare costs, particularly for outpatient hospital services and physician-administered drugs. It's crucial for retirees and those approaching retirement to understand these projections for proper financial planning.

It's essential to note that these projections are subject to change, and the official figures may vary. The Centers for Medicare and Medicaid Services (CMS) will release the official numbers this fall.

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Projected Medicare Part B premiums

The projections in the 2026 report show a modest decrease compared to last year's report for Part B premiums and Part B deductibles. The largest year-over-year jump is expected between 2032 and 2033, with a projected increase of $23.40. The 2027 Part B premium is estimated to be $209.50, up from $202.90, for an increase of 3.25% or $6.60 per month. Although estimates of the Part D base premiums remained steady until 2029, the premiums and deductible estimates are considerably higher starting in 2030.

The report estimates that the standard monthly premium for Medicare Part B will potentially reach $360.60 by 2035. If the estimates are accurate, the Part B premium is expected to increase by 77.7% by 2035. That base premium for Part D is expected to rise by almost 100% from $38.99 in 2026 to $77.81 in 2035.

Here are the tables with the projected standard monthly premiums:

Why the Part D base premium is important

In the table below, you will find an amount called the "Part D base premium." This figure is used to calculate both Part D late enrollment penalties and the Part D IRMAA surcharge. Why? Unlike Part B premiums that are standardized, Part D premiums vary by provider and coverage. The base amount serves as the constant the Social Security Administration (SSA) uses to calculate penalties and surcharges.

The current base premium is $38.99 and the deductible is $615. In 2027, the deductible will increase by $75 to $700.

Projected Medicare Part B and Part D IRMAA surcharges

The IRMAA is a monthly surcharge added to the standard Part B premium. The SSA uses the most recent complete federal tax return data that the IRS provides to assess your liability for the IRMAA, generally, two years prior. For 2027, the SSA will look at your 2025 tax return to calculate the surcharge you owe, if any.

These surcharges, which affect high-income beneficiaries, are expected to grow significantly over the next nine years.

Essentially, those who pay the IRMAA are paying a greater share of their actual Medicare Part B and D premiums. As it stands, the government pays a substantial portion — about 75% — of the Part B premium for most beneficiaries who pay, on average, the remaining 25%. For 2025, premiums from Parts B and D covered 26% of Medicare program costs, according to the 2026 Trustees' Report.

If you are a higher-income beneficiary, you will pay a larger percentage of the total cost of Part B based on the income reported on your annual tax return. You'll pay monthly Part B premiums equal to 35%, 50%, 65%, 80%, or 85% of the total cost, depending on your income and subsequent surcharge amount. For 2026, the IRMAA Part B surcharge ranged from $81.20 to $487.00 per month, or $974.40 to $5,844.00 annually, on top of the base premium of $202.90.

For 2027, the standard Part B premium is projected to be $209.50, and monthly Part B surcharges will range from $$87.40 to $502.60.

Here is a table with the projected Part B and Part D IRMAA surcharges:

Other factors that contribute to IRMAA surcharges

As I explained above, the IRMAA surcharge shifts responsibility for a greater portion of Part B premiums from the Medicare trust fund directly to high earners. However, politics also plays a role in determining how many people pay the IRMAA by adjusting thresholds, freezing inflation adjustments and changing methodologies.

Effective in 2018, the Medicare Access and CHIP Reauthorization Act of 2015 lowered certain income thresholds used to determine the IRMAA amounts that beneficiaries must pay, resulting in a greater number of beneficiaries paying the higher amounts. Moreover, beginning in 2020, the legislation adjusted the methodology used to index the thresholds, and accordingly, more beneficiaries will be subject to the income-related premiums.

Lastly, the Bipartisan Budget Act of 2018 established an additional premium level that took effect in 2019 for individuals with incomes at or above $500,000 (and couples with incomes at or above $750,000), who pay a premium covering 85% of the average program cost. These thresholds will not be indexed until 2028 at the earliest.

Related Content

• 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
• What the 2032 Social Security Shortfall Will Cost Retirees in Every State
• When Will Social Security Run Out of Money? And Medicare?
• How to Appeal the IRMAA for Medicare Parts B and D