A Couple Bought the Cheapest Part D Plan to Save. Medicare Took a $174 Surcharge From Each of Their Social Security Checks Anyway.

The post A Couple Bought the Cheapest Part D Plan to Save. Medicare Took a $174 Surcharge From Each of Their Social Security Checks Anyway. appeared first on 24/7 Wall St..

• A couple filing jointly hits a Part D IRMAA surcharge of $14.50/month per person ($174/year each) once modified adjusted gross income exceeds $218,000.
• If a one-time income spike triggered the surcharge two years ago, it usually resets the following year once income drops.
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The Bargain Plan That Wasn’t

A married couple, both about 67 and newly on Medicare, sat down during open enrollment and did what many budget-minded people do. They lined up the Part D drug plans side by side, picked the one with the lowest monthly premium, and felt good about trimming a fixed cost. A few months later, their Social Security deposits came in lighter than expected. Medicare had pulled an extra surcharge from each of their checks, and the “cheap plan” they had chosen had nothing to do with stopping it.

This is one of the most common Medicare surprises among higher-income retirees, and online retirement forums are full of versions of the same question: we picked the lowest-cost drug plan, so why is Medicare still taking more out of our Social Security? The answer has nothing to do with the plan and everything to do with a separate income-based add-on that gets stapled onto Part D regardless of which plan you choose.

Part D IRMAA: A Surcharge That Ignores Your Plan

The piece that matters here is the Part D Income-Related Monthly Adjustment Amount, or IRMAA. It is a surcharge Medicare adds on top of whatever a retiree’s drug plan charges, and it is based entirely on someone’s income from two years earlier. As Suze Orman put it on her Women & Money podcast episode on September 26, 2024: “IRMAA is based on your modified adjusted gross income (MAGI) from two years prior. So they’re always looking back two years.”

For 2026, that means Medicare looked at the couple’s 2024 tax return. The thresholds kick in above MAGI of $109,000 for a single filer or $218,000 for a couple filing jointly. Cross the joint line by a dollar and the first-tier Part D surcharge applies. In 2026, that first tier runs $14.50 a month per person, which works out to roughly $174 a year coming out of each spouse’s Social Security check. Because IRMAA is charged per person, a couple on Medicare can each owe it, doubling the household hit.

The tiers climb from there. At the top end, Part D IRMAA reaches $91 a month, or about $1,092 a year, for the highest income band. None of those dollars go to the drug plan. They go to Medicare, deducted straight from Social Security or billed directly if there is no check to pull from. Picking a $0-premium Part D plan saves you the plan premium. It does not move the IRMAA needle by a penny.

How This Tangles With Everything Else in Retirement

The reason this matters beyond one year is that almost every retirement decision touches MAGI, and MAGI is what triggers IRMAA two years later. A Roth conversion in 2026 can buoy 2028 Medicare premiums into a higher tier. A large capital gain from selling a rental, an inherited IRA distribution, or the first year of required minimum distributions (RMDs) can each nudge a couple over the $218,000 joint line and trigger surcharges on both spouses’ Part B and Part D for a full year.

The lever is income timing, not plan shopping. Spreading a Roth conversion across several years, harvesting gains in lower-income years, and watching the income cliff in December can save far more than any drug plan switch. The 2.8% Social Security cost-of-living adjustment (COLA) for 2026 helps, but IRMAA can quietly claw a chunk of it back from higher-income households.

What to Actually Do With This

Two things are worth holding onto:

1. If a one-time event pushed income up two years ago (a home sale, a severance package, a large Roth conversion), the surcharge usually resets the following year once income drops. It is not permanent.
2. If the income spike came from a qualifying life-changing event such as retirement, the death of a spouse, or divorce, Social Security form SSA-44 lets you ask for the surcharge to be recalculated based on current income rather than the two-year-old return. Many retirees who qualify never file it.

The cheapest Part D plan is still a reasonable choice if it covers your drugs well. Just go in knowing the plan premium and the IRMAA surcharge are two different bills, and only one of them responds to comparison shopping. The other responds to how you manage income in the years leading up to it, which is where the real money is.

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The post A Couple Bought the Cheapest Part D Plan to Save. Medicare Took a $174 Surcharge From Each of Their Social Security Checks Anyway. appeared first on 24/7 Wall St..