Why can a $0 drug plan still bill you?

And for most of them, that's close enough to true. But there's this group, about one in twelve on Medicare, where that zero is not the whole story, and the extra cost has nothing to do with which plan they pick.

Right. It's called Part D IRMAA. The Income Related Monthly Adjustment Amount for drug coverage. Medicare adds it on top of whatever your plan charges, and it's based on your income from two years ago.

And the threshold for 2026 is $109,000 on an individual filing, $218,000 on a joint filing. If your 2024 income came in under those numbers, you don't owe the surcharge at all.

Then you're paying extra every month, and no plan on Medicare.gov can make that go away.

Same for everyone in that bracket. Ian Schaeffer puts it really well in the article. For a household above that line, a zero premium plan is really a zero premium plus the surcharge. That's the complete receipt.

And here's the kicker about that bill. It doesn't come from your plan at all. Social Security sends you a letter, and the surcharge comes straight out of your Social Security benefit.

Not if you're not watching your benefit amount carefully. And if Social Security can't pull it from your benefit, Medicare sends you an actual bill. The article is pretty direct about this: pay that bill to Medicare. Do not send the extra amount to your plan, because your plan never had anything to do with it.

It's an understandable mistake. But it would be wrong, and understanding why helps. The surcharge never touches the plan. It's a Medicare charge, collected by Social Security. Switching plans has zero effect on it.

There's a full table in Ian Schaeffer's piece with every income bracket, and I'd send people there to find their specific number. But let me give you two that really illustrate how this works. The lowest bracket above the threshold is just $14.50 a month. That's manageable. But if a married couple filing jointly showed $300,000 on their 2024 return, they're in a bracket where the surcharge is $37.50 a month.

That's $450 for the year. And the plan choice didn't change it by a single dollar.

And it goes higher. The top bracket for 2026 is $91 a month, every month, on top of whatever plan you chose.

It surprised me too. And I want to be clear, that's just the Part D surcharge. Part B has its own, and the article mentions that they covered how both of those work in an earlier piece.

Compare what the plan controls. Does it cover your prescriptions? At what cost? Which pharmacies give you the best price? And if you're looking at Advantage plans, are your doctors and hospitals in the network? Those are the real variables.

Treat it that way. It's the same across every plan, so it shouldn't affect which plan you pick. It just affects your total monthly picture.

There are two things, and neither one happens when you're picking a plan. So let's take them one at a time.

First one: if your income dropped because of a major life change, you can ask Social Security to take another look using your more recent income instead of the two-year-old number.

The article lists them: marriage, divorce, annulment, becoming a widow or widower, you or your spouse stopping work or cutting back hours, losing income from property because of a disaster, and certain pension changes or employer settlements. There's a specific page on Social Security's site where you start that request.

Right. If one of those things happened, you have a legitimate path. If nothing on that list applies, you're working with the two-year-old return, and that's the number Medicare is going to use.

Think two years ahead. Here's how the math works: the surcharge you'll pay in 2028 will be based on your 2026 income. And 2026 isn't over yet. So decisions you make this year, about how much you take out of retirement accounts, whether you do a Roth conversion, whether you make certain charitable gifts, those can move your 2026 income number and change what you pay two years from now.

And the article makes a specific connection here that's worth flagging. Ian Schaeffer references a piece they published on giving directly from an IRA. The reason that comes up is that a gift made that way, if it qualifies, never counts as income. So it can reduce your income number without reducing your generosity.

That's the idea. Two goals, one action. The specific rules on how that works, what qualifies and how to set it up properly, that's genuinely a question for one of our advisors at American Retirement Advisors, because the mechanics matter a lot and you don't want to get it wrong.

Think about it this way. The brackets are not evenly spaced. If your joint return shows $275,000, you're in the $37.50 bracket. At $274,000, you're in the $14.50 bracket. That's a difference of $23 a month, $276 a year, from one bracket line.

Which is exactly why this is about planning, not plan shopping.

It creates taxable income in the year you do it. So if you're doing a big one in 2026, that shows up on your 2026 return, and Medicare uses that return to calculate your 2028 surcharge. It doesn't mean don't do it. It means know it's part of the picture.

That's a really good way to put it. And the article makes the point that what a Certified Medicare Planner does differently is treat the surcharge as part of the income plan, not the plan choice. They're looking at timing of withdrawals, conversions, gifts, with this two-year lookback in mind.

Very different. And there's nothing wrong with using the plan finder. The article recommends it. But for the income piece, you need someone who can see the whole picture.

For 2027, yes, 2025 income is already set. The article notes that the 2027 tables haven't been announced yet. Last year's came out in mid-November. So that's coming, but the income number underneath it is already locked in for most people.

That's very much in play, because 2026 isn't over.

It runs steeper, and the specific numbers are in the Medicare fact sheet that Ian Schaeffer cites. If that's your situation, you really want to look at those numbers specifically, and frankly, that's worth a conversation with an advisor before you make any decisions about filing status.

Potentially, yeah. It's one of those things where the answer isn't obvious without doing the math for your specific situation. Our team at American Retirement Advisors would be the right people to run that comparison.

That's the whole framework. And the enrollment window is October 15 to December 7. So the plan shopping piece is time-sensitive. The income planning piece is ongoing, but the two-year clock means there's no such thing as dealing with it later. Later is already happening.

I'll get right on that.

And if you're near the line, close enough that a different income year might move you one way or the other, that's exactly when sitting down with someone who can see the full two-year picture is worth your time.