What is IRMAA and how much will I pay?

IRMAA = Income-Related Monthly Adjustment Amount. It's a Medicare premium surcharge for high-income retirees, applied to Part B and Part D. For 2026, the brackets start at $109,000 MAGI for single filers ($218,000 joint). The top bracket adds $444/month to Part B and $85.80 to Part D — that's $6,357 per person per year on top of standard premiums. IRMAA is based on your MAGI from 2 years prior, so retirement-year income shocks (like a Roth conversion) hit Medicare premiums in the 2nd year after.

Should I get Medigap or Medicare Advantage?

Medigap (Plan G is the most popular) costs more upfront ($150–$300/month) but covers nearly all out-of-pocket Medicare costs — predictable and comprehensive, with the freedom to see any Medicare-accepting provider nationwide. Medicare Advantage typically has lower or zero monthly premium but uses provider networks, requires referrals, and has copays at every visit. Medigap is generally better for high healthcare users and frequent travelers; Advantage is often better for healthy retirees who stay in one area.

What if I retire before age 65?

You'll need to bridge the gap until Medicare. Options: (1) ACA marketplace plans — KFF estimates the 2025 unsubsidized premium for a 60-year-old at ~$850/month for a silver plan; subsidies can reduce this dramatically based on income. (2) COBRA from your former employer (typically 18 months, 102% of full premium). (3) Spouse's employer plan if available. (4) Retiree health benefits if your former employer offers them. Pre-65 healthcare is the single biggest cost surprise for early retirees — budget at least $850–$1,200/month per person.

Does Medicare cover long-term care?

No — and this is a critical gap. Original Medicare covers up to 100 days of skilled nursing after a qualifying hospital stay, but does NOT cover custodial care (help with bathing, dressing, eating) which is what most long-term care actually is. Average nursing home cost in 2025 is ~$108,000/year (Genworth). Options to plan for this: long-term care insurance, hybrid life/LTC policies, self-insurance with a separate dedicated portfolio, or qualifying for Medicaid (requires depleting most assets). 70% of 65-year-olds will need some form of long-term care.

How does inflation affect healthcare costs?

Healthcare inflation has historically run 1.5–2 percentage points higher than general CPI inflation. Fidelity uses 5% as the long-term healthcare inflation assumption (vs. 3% general inflation). At 5% inflation, $20,000 of healthcare costs today doubles in about 14 years. This is why retirees who plan for a 25–30 year retirement need to dramatically increase their healthcare budget over time — and why a 5–15% precious metals allocation is often recommended as an inflation hedge for the healthcare portion of the budget.

Can I use an HSA to pay for retirement healthcare?

Yes — HSAs are arguably the best account for retirement healthcare. Contributions are pre-tax, growth is tax-free, and qualified medical withdrawals are tax-free at any age. After 65, HSA funds can pay Medicare premiums (Parts B, D, and Advantage but NOT Medigap), long-term care premiums, and prescription drugs — all tax-free. After 65 you can also withdraw for non-medical use, paying just ordinary income tax (no penalty). Building a $300k+ HSA balance by retirement effectively pre-funds your healthcare costs.

How can I reduce my IRMAA surcharge?

Several strategies: (1) Roth conversions BEFORE age 63 to reduce future MAGI from Traditional IRA RMDs. (2) Manage capital gains realization — large one-time sales push you into higher IRMAA brackets for one year. (3) Qualified Charitable Distributions (QCDs) from IRAs at age 70½+ — these don't count toward MAGI. (4) File appeals (Form SSA-44) for life-changing events like retirement, divorce, or death of spouse. (5) Use HSA for medical expenses to keep withdrawals out of MAGI.

How much do healthcare costs really cost in retirement?

Fidelity's 2024 estimate: $172,500 per person from age 65 onward (lifetime, present value). Realistic 65-year-old couple ranges $300k–$450k including Medicare premiums, IRMAA surcharges, Medigap or Advantage premiums, dental/vision, and out-of-pocket expenses. Long-term care is a separate $100k–$300k risk on top.

Income-Related Monthly Adjustment Amount — Medicare's surcharge on Part B and Part D premiums for higher-income retirees. 2026 IRMAA starts above $108,000 single / $216,000 MFJ MAGI and tops out at $750,000+. The look-back is 2 years, so 2026 IRMAA uses your 2024 MAGI. A single bad year (e.g., big Roth conversion or pension cash-out) can trigger 2 years of IRMAA later.

How do I avoid IRMAA?

Manage MAGI: spread Roth conversions across years to stay below thresholds; coordinate Social Security claiming to control taxable income; use QCDs after 70½ instead of taxable IRA withdrawals; harvest tax losses; and remember the 2-year look-back when planning a large taxable event.

What does Medicare actually cover?

Part A (hospital) is premium-free for most. Part B (doctor) base premium $185/mo in 2025 (rising in 2026), covers 80% of outpatient. Part D (drugs) has a separate premium. Medicare does NOT cover most dental, vision, hearing, long-term care, or care outside the U.S. — Medigap or Advantage plans fill some of those gaps.

Should I get Medigap or Medicare Advantage?

Medigap (Plan G is most common) = predictable premiums, see any Medicare provider, separate Part D drug plan. Average $150–$300/mo. Medicare Advantage = often $0 premium but uses HMO/PPO networks, includes drug coverage and extras (dental/vision/gym). Tradeoff: Advantage limits provider choice; Medigap costs more upfront but caps out-of-pocket more reliably.

What about healthcare BEFORE age 65?

Biggest pre-Medicare risk for early retirees. Options: COBRA (18 months, expensive), ACA marketplace (subsidies phase out as income rises — works great for FIRE-style low-income retirees), spouse's employer plan, or BaristaFIRE part-time work for benefits. Budget $1,200–$2,000/mo per couple for ACA at moderate income, or $400–$900/mo with full subsidies.

Does Medicare cover long-term care?

No. Medicare covers only short-term skilled nursing after a hospital stay (up to 100 days). Long-term custodial care — nursing home, memory care, in-home aides — is paid out-of-pocket, by long-term care insurance, or by Medicaid (after spending down assets). Average nursing home cost: $9,000–$13,000/mo in 2026.

Should I buy long-term care insurance?

Depends on assets. Net worth under $300k → likely will rely on Medicaid; insurance often not cost-effective. $300k–$2M → strong candidate for traditional or hybrid LTC insurance. Over $2M → can self-insure but many still use hybrid life-insurance/LTC policies for the asset-protection benefit. Best buying age is 55–65; premiums spike sharply after.

How does an HSA help with retirement healthcare?

HSAs are the most tax-advantaged account in the IRS code: deductible going in, tax-free growth, tax-free withdrawals for qualified medical expenses. After age 65 you can also withdraw for non-medical purposes (taxed like a Traditional IRA, no penalty). Maxing the HSA from 30 to 65 ($4,300 individual / $8,550 family in 2026) can build a $200k–$400k healthcare warchest.

Can I use HSA money to pay Medicare premiums?

Yes — Medicare Part B, Part D, and Advantage premiums are all qualified medical expenses for HSA purposes (Medigap premiums are NOT). After 65 this becomes a powerful drawdown sequence: pay Medicare premiums from the HSA tax-free, leaving more taxable IRA/401(k) to grow.

What's the biggest healthcare planning mistake retirees make?

Underestimating IRMAA and the 2-year look-back. A retiree who does a big Roth conversion at 63 to 'lock in' tax rates may not realize they're triggering Medicare premium surcharges for ages 65–66. Always model healthcare cost as part of any conversion or large distribution decision.

How does inflation affect retirement healthcare costs?

Healthcare inflation has averaged 4.5–5.5% historically — well above general inflation (~3%). A 65-year-old's $15k/yr healthcare cost typically grows to $50k+ by age 90 in nominal dollars. Plan with at least 5% medical inflation, not the broader CPI rate.

Healthcare Cost in Retirement Estimator (1970)

Plan · 2026 Medicare data

How much will healthcare cost you in retirement?

2026 Medicare premiums, IRMAA surcharges, and supplemental coverage projected over 30 years of retirement at 5% healthcare inflation. Includes pre-65 ACA marketplace gap.

Current age

Planned retirement age

Coverage scenario

Tax filing status

Annual MAGI (for IRMAA)

Modified Adjusted Gross Income — IRMAA uses 2 years prior

Out-of-pocket monthly estimate

Dental, vision, drug copays not covered above

Healthcare inflation rate

3%5%7%

Fidelity uses 5% — historical avg 5–6%

Year 1 monthly cost

$538

$6,456/year

IRMAA surcharge

$0/mo

Bracket 1 of 6 (MAGI $140,000)

Lifetime cost (to age 95)

$456,832

Inflated at 5%/year

Annual healthcare cost from age 65 to 95

Costs grow with healthcare inflation (5%/yr) — this is the main reason healthcare is the #1 budget line for late retirement.

Compared to industry benchmark

Fidelity's 2024 estimate for a 65-year-old retiring today: $172,500 per person lifetime ($345,000 per couple). Your projection of $456,832 is 165% above the Fidelity baseline — driven mostly by your IRMAA bracket, coverage choice, and inflation assumption.

Healthcare Cost in Retirement Estimator — How It Works

2026 Medicare premiums sourced from CMS final rule (November 2025): Part B base $185/mo, Part D average $38/mo, Medigap Plan G national average $165/mo. Medicare Advantage modeled at Part B + average $25/mo MA premium with included drug coverage. Pre-65 marketplace cost uses KFF 2025 silver-plan benchmark (~$850/mo unsubsidized for age 60–64).

IRMAA surcharges use the 2026 brackets from the CMS final rule, which determines surcharges based on MAGI from 2 years prior. We show all 6 brackets — top bracket ($500k+ single / $750k+ joint) adds $444/mo to Part B and $85.80/mo to Part D, totaling $6,357/year extra per person.

Lifetime cost projects from your retirement age to age 95, inflating annual cost by your stated healthcare inflation rate (default 5%, matching Fidelity's industry-standard assumption). Note: this estimate excludes long-term care, which adds a separate $100k–$300k risk depending on length of nursing home stay (Genworth 2025: $108k/year average nursing home cost).

Frequently Asked Questions

Fidelity's 2024 Retiree Health Care Cost Estimate puts the average for a 65-year-old retiring today at $172,500 per person ($345,000 per couple) over the rest of their life. This includes Medicare Part B and D premiums, supplemental coverage, dental, vision, hearing, and out-of-pocket costs — but NOT long-term care, which can add another $100,000+ depending on length of stay. High earners with IRMAA surcharges and those retiring before 65 will face significantly higher totals.

How Gold IRA Blueprint Keeps This Tool Accurate

Medicare premium and IRMAA bracket data is reviewed each November when CMS publishes the final rule for the following year. Healthcare inflation default (5%) is reviewed annually against the Milliman Medical Index and Fidelity's Retiree Health Care Cost Estimate. Marketplace ACA premium data reviewed each open enrollment (October) using KFF benchmark plan data.

Last reviewed: January 2026 — next review January 2027

Gold IRA Blueprint|Healthcare Cost in Retirement Estimator