By Theresa Cagle Fry, Senior VP and Manager of IRAs, Retirement & Education Planning
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The holidays are here—twinkling lights, joyful gatherings and gift lists galore. While you’re wrapping gifts and planning celebrations, consider wrapping up a few smart financial moves that could make your future Medicare costs merrier.
Why Year-End Planning Matters
For retirees living on a fixed income, every dollar counts. If you are planning to or are already enrolled in Medicare, you’ll likely be looking for ways to keep your Medicare costs as low as possible. While Social Security benefits will see a modest 2.8% increase in 2026—about $56 a month for the average recipient—the rising cost of Medicare premiums may make you feel less cheery. The standard monthly Medicare Part B premium will increase to $202.90 in 2026, up from $185.00 (a 10% increase). Combine that with what you pay for prescription drug coverage, and your holiday cheer might feel a little strained.
IRMAA—The Surcharge That Catches Many by Surprise
IRMAA, or “Income-Related Monthly Adjustment Amount,” is a surcharge added to Medicare Part B and Part D premiums. Your modified adjusted gross income (MAGI) determines what you pay for Medicare. And here’s the surprise—your 2024 MAGI determines your 2026 Medicare premiums, and your 2025 income determines what you’ll pay in 2027. Even tax-exempt interest income, which is not included in your adjusted gross income (AGI) for income tax purposes, is included for IRMAA. For example, if your AGI is $100,000 and you have $7,000 in municipal bond interest income, your MAGI for IRMAA is $107,000.
How much Medicare will cost you next year is based on which income tier you fall into from your 2024 tax return:
| 2024 Married, Filing Jointly, MAGI | 2024 Single MAGI | 2026 Part B Monthly Premium Amount | 2026 Part D Monthly Premium Amount |
| $218,000 or less | $109,000 or less | Standard Premium = $202.90 | Your plan premium |
| Above $218,000 up to $274,000 | Above $109,000 up to $137,000 | Standard Premium plus $81.20
Total Premium = $284.10 |
Premium plus $14.50 |
| Above $274,000 up to $342,000 | Above $137,000 up to $171,000 | Standard Premium plus $202.90
Total Premium = $405.80 |
Premium plus $37.50 |
| Above $342,000 up to $410,000 | Above $171,000 up to $205,000 | Standard Premium plus $324.60
Total Premium = $527.50 |
Premium plus $60.40 |
| Above $410,000 up to $750,000 | Above $205,000 up to $500,000 | Standard Premium plus $446.30
Total Premium = $649.20 |
Premium plus $83.30 |
| $750,000 or above | $500,000 or above | Standard Premium plus $487.00
Total Premium = $689.90 |
Premium plus $91.00 |
Reducing Your AGI Can Be Like a Gift to Your Future Self
Here are some steps you can take before the end of this year that could impact your AGI and help to keep your 2027 Medicare costs under control:
- Unwrap the gift of tax-free retirement income with Roth savings. If you have a Roth IRA or Roth account balances in your 401(k), 403(b) or 457(b), and you have had those accounts for at least five years, withdrawals are income tax free if you are also over the age of 59 ½. For workplace -designated Roth accounts, you have to also be separated from service or retired in most cases to access plan balances. Because Roth accounts can provide tax free income during retirement, they are a good way to provide retirement income without increasing your AGI. Keep in mind, however, if you are planning to fund a Roth IRA by converting, a conversion will temporarily increase your taxable income and AGI in the year of the conversion—so plan carefully.
- Trim your portfolio by harvesting losses to offset capital gains taxes. Selling investments at a loss can offset capital gains and reduce your taxable income. Just remember, it is the trade date—not the settlement date—that determines if your transaction is long term or short term. When netting capital gains and losses, you first net short-term gains and short-term losses, then net long-term gains and long-term losses, and then net short-term against long-term. You can also deduct up to $3,000 of excess losses against ordinary income and carry over any remaining losses to use in future tax years.
- Spread holiday cheer with charitable giving through QCDs. If you’re 70 ½ or older, qualified charitable distributions (QCDs) let you gift directly from your IRA to a charity—tax free. For 2025, the QCD limit is $108,000 (rising to $111,000 in 2026), and QCDs also count toward any required minimum distributions you have if you’re 73 or older.
HSAs Can Be a Great Way to Save for Future Health Care Costs
If you have a high-deductible health plan, contributing to a Health Savings Account (HSA) is another useful strategy for dealing with future health care costs in retirement. HSAs provide a triple tax benefit: contributions to HSAs are tax-deductible, the earnings on your investments grow tax-deferred, and qualified withdrawals are income tax free—including Medicare Part B, Part D and Medicare Advantage plan premiums, deductibles, copays and coinsurance. Contributions can be made until age 65 (Medicare’s initial enrollment age).
As you look at wrapping up 2025, talk to your financial and tax advisor to see if any of the strategies above will be helpful for you. May your holidays be bright and your Medicare premiums be light!
IMPORTANT DISCLOSURES: The information provided is based on internal and external sources that are considered reliable; however, the accuracy of this information is not guaranteed. This piece is intended to provide accurate information regarding the subject matter discussed. It is made available with the understanding that Benjamin F. Edwards is not engaged in rendering legal, accounting or tax preparation services. Specific questions on taxes or legal matters as they relate to your individual situation should be directed to your tax or legal professional.