Two Social Security Notices Can Arrive Around Year-End. One Gives You the 2027 Raise. The Other Prices Medicare on Money You Made in 2025 and Can Take Part of It Back
Two letters can land in a retiree's mailbox within weeks of each other, and they pull in opposite directions. One promises a bigger Social Security check for 2027, while the other reaches back into 2025 income to price Medicare in…
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A 66-year-old who earned a full salary and year-end bonus in 2025 then retired may receive two notices from Social Security this winter. One shows a bigger check for 2027. If his 2025 income is high enough, the other is an Income-Related Monthly Adjustment Amount (IRMAA) notice explaining why Medicare will take a bigger share of that check.
The two numbers run on different schedules. The COLA tracks 2026 inflation. The 2027 Medicare surcharge looks back to 2025 tax income. So a raise based on today’s prices can clash with a premium based on a paycheck that stopped months ago. Most retirees never get the second letter.
The Centers for Medicare & Medicaid Services (CMS) says income-related surcharges hit roughly 8% of Part B enrollees. If your 2025 modified-adjusted gross income (MAGI) fell well below the 2026 thresholds of $109,000 for single filers or $218,000 for joint filers, you avoid IRMAA at those levels, although an increase in the standard Part B premium can still shrink the net COLA increase.
First Notice: The 2027 Raise
The 2027 COLA becomes final when September CPI-W data comes out on Oct. 14. The latest estimate is 3.5%. At that rate, a $2,000 monthly benefit gains roughly $70.
Second Notice: A Bill Built on Your 2025 Tax Return
IRMAA uses modified adjusted gross income (MAGI) from two years earlier, so 2025 income sets your 2027 premiums. SSA defines MAGI as your total adjusted gross income and tax-exempt interest income. That means municipal bond interest counts here even though it escaped income tax. A 2025 return can carry income that has already gone from your life:
- a final salary or bonus
- a Roth conversion or large IRA withdrawal
- capital gains from selling stock or property
- an unusually strong year of investment income
One Surcharge Can Swallow the Whole Raise
Until CMS releases the 2027 schedule, the 2026 numbers show the scale. At the first level, Part B IRMAA adds $81.20 a month and Part D IRMAA adds $14.50, for a total of $95.70. That is $25.70 a month more than the $70 example raise. For one person, the first-tier surcharge comes to $1,148.40 a year. A married couple with both spouses on Medicare pays $2,296.80.
| 2026 MAGI (Single) | 2026 MAGI (Joint) | Part B IRMAA (Monthly, Per Person) | Total Part B Premium (Monthly, Per Person) |
|---|---|---|---|
| $109,000 or less | $218,000 or less | $0.00 | $202.90 |
| Above $109,000 to $137,000 | Above $218,000 to $274,000 | $81.20 | $284.10 |
| Above $137,000 to $171,000 | Above $274,000 to $342,000 | $202.90 | $405.80 |
Each level is a drop. A single filer at exactly $137,000 pays the first-tier Part B surcharge of $81.20. Any income above that line raises it to $202.90. IRMAA is one of several Medicare surcharges that catch retirees by surprise, and we covered the rest in a free guide to Medicare’s hidden bills.
Hold-Harmless Protection Skips IRMAA Payers
Most beneficiaries have a backstop called hold-harmless protection. It limits a Part B premium increase that would otherwise reduce their net Social Security payment. People who pay IRMAA are excluded from that hold-harmless protection. For them, the COLA can raise the gross benefit while Medicare takes back part of the increase, or more than all of it.
Ask One Question When the IRMAA Letter Arrives
Does your 2025 income still describe your situation? If it dropped because of an event SSA knows as life-changing, you can file Form SSA-44 and ask SSA to base your premium on a lower income estimate. Qualifying events include work stoppage, work reduction, divorce, death of a spouse and loss of pension income. Retirement can qualify as a work stoppage or work reduction when it lowers his income.
One r/medicare commenter described it this way: SSA makes the first decision from your old MAGI, then looks ahead to your estimated income after a retirement. Voluntary income spikes do not qualify. A 2025 Roth conversion or stock sale stays on the record however one-time it felt.
Moves to Make Before January
- Find your 2025 MAGI now. On your 2025 Form 1040, add line 11 to line 2a and compare the result with the brackets above. CMS released the 2026 schedule on November 14, 2025, so expect the 2027 level in the same season.
- File SSA-44 as soon as the notice comes if you stopped or cut back work. Attach proof, such as an employer letter confirming your last day or a final pay stub.
- Time any remaining 2026 income. Your 2026 income sets 2028 premiums, and that year closes on December 31. If your income sits near a threshold, consider moving a Roth conversion or a large capital gain into a lower-income year.
One year-end letter says Social Security will pay you more. The other can say Medicare will charge you more based on money you earned in 2025. In January, the figure that counts is the deposit left after Medicare takes its share.
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.
