On Thursday, plan shopping starts. The Annual Enrollment Period runs October 15 to December 7, and plenty of plans on Medicare.gov will show a $0 premium next to the name. For most people with Medicare, that number is the whole story. For about 1 in 12, it is not, and the difference has nothing to do with which plan they pick.
What is the Part D income surcharge?
It is an extra monthly charge for Medicare drug coverage, added on top of your plan's premium when your income from two years ago was above a set line. For 2026, that line is $109,000 on an individual tax return or $218,000 on a joint return. Medicare's official name for it is the Part D Income Related Monthly Adjustment Amount, or "Part D IRMAA," and according to Medicare's own fact sheet, about 8% of all people with Medicare pay it.
Part B has an income-based surcharge of its own. We covered how both of them work, and why they have a two-year memory, in an earlier piece. This one is about what the drug-coverage surcharge means for the plan you choose this fall.
Does a $0-premium plan make the surcharge go away?
No. The surcharge applies to Part D coverage from a stand-alone drug plan, from a Medicare Advantage plan that includes drug coverage, or from a Medicare Cost plan, and Medicare's fact sheet says it applies "even if your Medicare drug coverage is through your employer." You pay it in addition to whatever your plan charges. So for a household above the line, a $0-premium plan is really a $0 premium plus the surcharge.
That is the part that trips people up during plan shopping. The premium on the plan card is real, but for higher-income households it is not the full monthly cost of drug coverage, and no plan on the list can change that.
How much is the surcharge in 2026?
It depends on your income from your 2024 tax return. Here is Medicare's 2026 table for individual and joint filers, and each amount is per month, on top of your plan premium:
- $109,000 or less (joint: $218,000 or less): no surcharge
- Above $109,000 up to $137,000 (joint: above $218,000 up to $274,000): $14.50
- Above $137,000 up to $171,000 (joint: above $274,000 up to $342,000): $37.50
- Above $171,000 up to $205,000 (joint: above $342,000 up to $410,000): $60.40
- Above $205,000 and less than $500,000 (joint: above $410,000 and less than $750,000): $83.30
- $500,000 or above (joint: $750,000 and above): $91.00
So if a 2024 joint return showed $300,000, the surcharge is $37.50 a month, or $450 over the year, no matter which plan is on the card. Married couples who file separately have their own, steeper table, which is in the same fact sheet.
Who collects it, and how?
Not your plan. Social Security sends a letter if you owe the surcharge, and the amount comes out of your monthly Social Security benefit no matter how you pay your plan premium. If you do not get Social Security benefits, or the surcharge is bigger than your benefit, Medicare sends you a bill instead. Medicare's fact sheet is blunt about one thing: if you get a bill, pay it to Medicare, and do not send the extra amount to your plan.
That is why switching plans never moves the surcharge. It never went through the plan in the first place.
So what should you compare when you shop?
The things a plan actually controls. For drug coverage, that means whether your prescriptions are on the plan's list and at what cost, which pharmacies give you the best price, and what the whole year is likely to cost, not just the premium. If you are looking at Advantage plans, add your doctors and hospitals to the list. Treat the surcharge as its own line that is the same across every plan, so it does not distort the comparison. Our piece on whether your drug plan is still the right one walks through the drug side step by step, and Medicare's plan finder lets you enter your own prescriptions.
Can you do anything about the surcharge?
Two things, and neither one happens at the plan level.
If your income dropped because of a life change, ask Social Security to take another look. The fact sheet lists the events that count: marriage, divorce, or annulment; becoming a widow or widower; you or your spouse stopping work or cutting back hours; losing income from property because of a disaster; certain pension changes; and certain settlements from an employer. The place to start is Social Security's request to lower IRMAA page.
Think about income two years out. The surcharge you pay in 2027 will generally be based on your 2025 tax return, and 2025 income is already set. But the surcharge for 2028 will look at 2026 income, and 2026 is not over. That is one reason yesterday's piece on giving straight from an IRA matters beyond the charity itself: a gift that never counts as income can keep your income number lower. The 2027 surcharge tables have not been announced yet. Last year's came out in mid-November.
What a Certified Medicare Planner® does differently
They compare plans on what the plans control, your prescriptions, your pharmacies, and your doctors, and they treat the income surcharge as part of your income plan rather than your plan choice. For families near one of those income lines, that can mean looking at the timing of a Roth conversion, a large withdrawal, or a charitable gift with the two-year lookback in mind. The Annual Enrollment Period runs October 15 to December 7. The advisors are at 602-281-3898.
Disclaimer: This article is for educational purposes only. It is not sponsored, endorsed, or otherwise representative of Medicare or the federal Medicare program. American Retirement Advisors is not a government agency. For official Medicare information, visit medicare.gov or call 1-800-MEDICARE (1-800-633-4227).