Seniors eagerly await two announcements every autumn: first, how large their Social Security pay raise will be the following year and, weeks later, how much of it will be eaten by Medicare premiums.
Medicare premiums are usually deducted automatically from monthly Social Security checks and announced between late October and early November.
Medicare Part B premiums, which cover medically necessary services and supplies and preventive care, have increased faster than Social Security's cost-of-living adjustment for three consecutive years and in seven of the last 10 years, according to The Seniors Citizens League. Over the last decade, Part B premiums have increased by an average of 5.3% per year, while COLAs have only averaged 3.1%, the advocacy
group said.
For those who don't keep a tight rein on income and pierce certain thresholds, even by $1, Medicare costs can suddenly jump by more than $1,000 per year due to the 'income-related monthly adjustment amount,' or IRMAA. That makes keeping track of inflation-adjusted annual income thresholds key to keeping health insurance costs down, but that's easier said than done, especially for 2027.
Not only must Medicare enrollees remember IRMAA is based on what they ea rned two years ago in 2025, but calculating the thresholds you must stay below in 2027 to avoid escalating IRMAA may be harder than usual. IRMAA income thresholds are adjusted each year using 12-months to August inflation, but the government shutdown from Oct. 1 to Nov. 12, 2025, prevented the Bureau of Labor Statistics from tallying October 2025 inflation data.
"We have all 11 data points needed for the 2027 IRMAA brackets...but it’s still not clear how the Social Security Administration will calculate the 12-month average with only 11 data points," wrote Harry Sit in The Finance Buff blog.
How does IRMAA work?
Medicare surcharges are based on modified adjusted gross income, or MAGI, from two years ago, which means what Medicare premium you pay in 2027 is determined by your 2025 MAGI. MAGI equals adjusted gross income plus tax-exempt interest from your tax return.
The higher the MAGI, the higher the premium due to tiered IRMAA surcharges. Medicare Part B prices begin with the standard premium at the lowest end and depending on MAGI, people can pay between 1.4x to 3.4x the standard premium. The 2026 Medicare Trustees Report forecasts the standard Part B monthly premium at $209.50 in 2027, up $6.60 or about 3.25%, from $202.90 this year.
SincePart D drug plans are also subject to IRMAA, MAGI also will determine how much surcharge enrollees will pay for their drug plan.
How might CMS calculate 2027 Medicare IRMAA brackets?
The Centers for Medicare & Medicaid Services can calculate IRMAA brackets in one of two ways, Sit said.
CMS can use only 11, instead of 12, months of data, or the inflation number Treasury used for October 2025 to to calculate interest on Treasury inflation-protected securities, or TIPS. The face values of TIPS are adjusted to inflation so when inflation rises, so do TIPS' face value. If inflation falls, so do TIPS' principal value.
Calculations each way yields a difference in brackets of $1,000 for individuals and $2,000 for joint filers, with the calculation using Treasury's October 2025 inflation number coming in lower, Sit estimated.
Below are his IRMAA bracket projections for 2027 with the predictions with an asterisk marking the ones based on Treasury's October 2025 data point:
How can Medicare participants limit IRMAA?
Some ways to limit IRMAA, said Nick Bour, founder and chief planning strategist at Inspire Wealth, include:
- Early Roth conversions, more than two years before starting Medicare, can provide income without triggering taxable income later that would be counted toward MAGI, financial advisers said.
- Qualified Charitable Distributions, or donating to charity directly from a traditional retirement account, if you're at least 70½ years old, will help satisfy a required minimum distribution and not count towards MAGI.
- Health Savings Accounts, as well as Roth IRA, withdrawals are tax-free and don't count toward MAGI.
Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
This article originally appeared on USA TODAY: Why 2027 Medicare surcharges may be harder to predict
