The premium is set by a tax return you filed two years ago.

The windows, and what missing one costs

The Initial Enrollment Period runs seven months around your 65th birthday. If you are still working and covered by a qualifying employer group health plan, a Special Enrollment Period generally lets you delay Part B without penalty, but the size of the employer, and whether the coverage is truly “creditable,” determine that. COBRA and retiree coverage are generally not treated the same as active employer coverage, and that misunderstanding is the single most common source of penalties.

The Part B late enrollment penalty is 10% of the standard premium for each full 12-month period you could have had Part B and did not, and it is added to your premium for as long as you have Part B.³ Part D carries its own separate penalty for going without creditable drug coverage.

IRMAA: the two-year lookback

Part B and Part D premiums are income-related. For 2025, the standard Part B premium was $185.00 a month,¹ and surcharges began above modified adjusted gross income of $106,000 for a single filer and $212,000 for a couple filing jointly, determined from the tax return filed two years earlier.²

Two consequences follow. First, a one-time income event at 63 (a Roth conversion, a business sale, an exercised option, a large capital gain) raises Medicare premiums at 65. Second, the brackets are cliffs, not phase-ins: a single dollar over a threshold moves you into the higher surcharge for the entire year. That is a planning problem you can only solve before the return is filed.

Life-changing events such as retirement, the death of a spouse, divorce or the loss of income-producing property can be appealed on Form SSA-44 to have a more recent year used instead. Most people do not know the form exists.

Original Medicare plus a supplement, or Medicare Advantage

This is a coverage-architecture decision with a timing component that is easy to miss. Medigap (supplement) policies have their own medical-underwriting rules outside the initial six-month Medigap open enrollment period, so the ability to move from a Medicare Advantage plan to Original Medicare plus a supplement later may depend on your health at that time and on state law.

We do not sell Medicare plans and we are not affiliated with any carrier or with the federal program. Our role is to model the cost and cash-flow consequences of each path inside the retirement plan and to make sure the enrollment deadlines are met.

Budgeting for the whole bill

Medicare is not free and does not cover everything. Fidelity’s widely cited annual estimate put the amount a single 65-year-old retiring in 2024 might need for health care and medical expenses through retirement at roughly $165,000 after tax, excluding long-term care.⁴ Estimates like that are averages built on assumptions, not a bill, but planning for a number near zero is not a plan.

Long-term care is a separate exposure and is covered on our long term care page.