Understanding Medicare Parts A, B, and D
Medicare has different parts. Part A covers hospitalizations and is usually free (you paid into it via payroll taxes). Part B covers doctor visits and is optional but recommended (standard premium ~$185/month in 2026). Part D covers prescription drugs and you enroll separately during open enrollment. If you don't enroll in Part B or D when eligible, you face lifetime premium penalties.
What is IRMAA and How Does It Work?
If your income is above certain thresholds, Medicare charges an extra fee called IRMAA (Income-Related Monthly Adjustment Amount). For Part B, single filers earning over ~$106,000 (2026 estimate) pay extra; married couples over ~$212,000. IRMAA is based on your Modified Adjusted Gross Income (MAGI) from 2 years prior. Even if your income drops, you're stuck with the prior year's IRMAA unless you report a life-changing event.
Medigap vs Medicare Advantage
Two options supplement Medicare. Medigap (supplemental insurance) covers copays, coinsurance, and deductibles that Medicare doesn't. Plans vary by state; Plan G and Plan N are popular. Medicare Advantage (Part C) is a private insurance alternative that bundles Parts A, B, and usually D. Advantage plans often have $0 premiums but network restrictions and higher out-of-pocket costs. Choose based on your health and preferences.
Strategies to Reduce IRMAA and Medicare Costs
IRMAA uses MAGI from 2 years prior, so timing of Roth conversions, charitable withdrawals, or large income events matters. Some retirees strategically withdraw from traditional IRAs in low-income years to minimize future IRMAA. If your income drops significantly (retirement, job loss), request a review of your IRMAA. Keep good records of deductions and life-changing events.