The Medicare Decision You Make in 2026 Could Cost You in 2028
Most people think of Medicare planning and tax planning as two separate decisions. They aren’t.
Medicare uses your income from two years earlier to determine whether you’ll pay an Income-Related Monthly Adjustment Amount, better known as IRMAA. That means financial decisions you make in 2026 could affect what you pay for Medicare in 2028.
A Roth conversion is a good example. Converting money from a traditional IRA to a Roth creates taxable income today. That additional income could increase your future Medicare premiums.
The same can happen with large capital gains, investment income, or other significant taxable events.
But that doesn’t necessarily mean you should avoid the transaction.
Paying somewhat more for Medicare for a year could still make sense if a Roth conversion, for example, substantially reduces your lifetime tax bill. The mistake is looking at either decision in isolation.
Good retirement planning asks a bigger question: What combination of taxes, Medicare costs, retirement income and investment decisions leaves you better off over your lifetime?
That’s why tax planning and Medicare planning should be coordinated—not handled separately.
Retire on Your Terms Quote
“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— Warren Buffett
