A Couple Bought the Cheapest Part D Plan to Save. Medicare Took a $174 Surcharge From Each of Their Social Security Checks Anyway.
A married couple picked the cheapest Part D drug plan during open enrollment, only to find Medicare still deducting a $174-per-person annual surcharge from their Social Security checks. The reason: Part D IRMAA, an income-based charge that ignores which plan…
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
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 retirees 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 chosen and everything to do with a separate income-based charge that gets added to Part D regardless of which plan a retiree selects.
Part D IRMAA: A Surcharge That Ignores Your Plan Choice
The piece that matters here is the Part D Income-Related Monthly Adjustment Amount, or IRMAA. Medicare adds this surcharge on top of whatever a retiree’s drug plan charges, and it is based entirely on 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 examined the couple’s 2024 tax return. The surcharge activates above a MAGI of $109,000 for a single filer or $218,000 for a couple filing jointly. Cross the joint line by a single 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 assessed per person, a couple on Medicare can each owe it, doubling the household hit.
The tiers climb steeply from there. At the top end, Part D IRMAA reaches $91 a month, or about $1,092 a year, for single filers above $500,000 or joint filers above $750,000. None of those dollars flow to the drug plan. They go directly to Medicare, deducted from Social Security or billed separately if there is no check to draw from. Choosing a $0-premium Part D plan saves 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 major retirement decision touches MAGI, and MAGI is what triggers IRMAA two years later. A Roth conversion in 2026 can push 2028 Medicare costs into a higher tier. A large capital gain, an inherited IRA distribution, or the first year of required minimum distributions (RMDs) can each nudge a couple past 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 during lower-income periods, 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 portion of it back from higher-income households.
What to Actually Do With This
Two things are worth holding onto.
First, if a one-time event pushed income up two years ago, such as a severance package or a large Roth conversion, the surcharge typically resets the following year once income falls back. It is not permanent.
Second, if income dropped because of a qualifying life-changing event such as retirement, the death of a spouse, or divorce, Social Security Form SSA-44 allows a request for the surcharge to be recalculated based on current income rather than the two-year-old return. Many retirees who qualify never file it. One important caveat: a voluntary home sale or capital gain does not normally qualify as a life-changing event under Social Security’s rules, so that route is available only when income fell for one of the recognized reasons.
The cheapest Part D plan remains a reasonable choice if it covers your drugs well. Just go in understanding that the plan premium and the IRMAA surcharge are two entirely separate bills. Only one of them responds to comparison shopping. The other responds to how income is managed in the years leading up to Medicare, which is where the real money is.
Editor’s note: This article was updated to clarify that voluntary capital gains events, such as a rental property sale, do not typically qualify a beneficiary for SSA-44 IRMAA relief, and to add the 2026 top-tier Part D IRMAA income thresholds of $500,000 for single filers and $750,000 for joint filers. The 2026 Part D first-tier surcharge of $14.50 per month ($174 annually) and the joint MAGI threshold of $218,000 were confirmed against current CMS figures.
Contact [email protected] for any questions or corrections.
Gerelyn Terzo is the author of dividend investing handbook "Dividend Investing Strategies: How to Have Your Cake & Eat It Too." A veteran financial journalist, she covers agri-finance for outlets like Global AgInvesting and the broader stock market and personal finance for 24/7 Wall Street. She began at CNBC and later helped launch Fox Business in New York. Gerelyn currently resides in Woodland Park, Colorado and dabbles in nature photography as a hobby.
