Medicare Planning for Pre-Retirees
When should you sign up for Medicare and how does your income affect your premiums?
Medicare is one of the most important — and most misunderstood — elements of retirement planning. For many pre-retirees, the first surprise comes when they realize their income affects how much they pay for coverage.
At Windward, we build Medicare planning into every retirement income conversation. Here is what we cover with clients.
Enrollment: Get the Timing Right
Most people become eligible for Medicare at age 65. Your Initial Enrollment Period is a seven-month window — three months before, the month of, and three months after your 65th birthday.
Missing this window can result in permanent late enrollment penalties on Part B (medical coverage) and Part D (prescription drug coverage). For example, the Part B penalty is an extra 10% of the premium for each full 12-month period you were eligible but not enrolled — for life.
There is an exception: if you are still working and covered by an employer health plan, you may be able to delay enrollment without penalty. But the rules are specific, and it is worth confirming your situation before making assumptions.
IRMAA: How Your Income Affects Your Premiums
IRMAA (Income-Related Monthly Adjustment Amount) is a surcharge added to Medicare Part B and Part D premiums for higher-income enrollees. It is based on your modified adjusted gross income (MAGI) from two years prior.
For 2026, standard Part B premiums are around $202.90 per person per month — but IRMAA surcharges can push that significantly higher for individuals above certain income thresholds. The surcharges apply in tiers, with the highest earners paying several hundred dollars more per month per person.
What surprises many clients: a one-time event — a large Roth conversion, the sale of a home or business, a large RMD — can trigger IRMAA two years later even if your income returns to normal afterward. You can appeal a one-time income spike to Medicare, but it requires a specific life-changing event subject to approval.
Coordinating Medicare with Your Retirement Income Plan
The IRMAA interaction is one of the most important reasons to model your retirement income strategy carefully — particularly in the years just before Medicare enrollment.
If you are planning Roth conversions (which we discuss with most pre-retiree clients), the size and timing of those conversions should be evaluated alongside the IRMAA thresholds. Converting too aggressively in the wrong year can mean paying thousands in additional premiums.
This is the kind of analysis our CPA heritage makes possible — integrating tax planning, investment decisions, and healthcare cost projections into a single coordinated picture.
The Windward Approach
We include healthcare cost projections — including Medicare premiums, IRMAA exposure, and potential long-term care costs — in every retirement income plan we build. These are not afterthoughts. They are line items that deserve real attention.
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