Medicare Part D

$2,100 Out-of-Pocket Cap Reshapes Medicare in Palatine

PALATINE, Ill. — As Medicare's Annual Enrollment Period runs through Dec. 7, higher-income retirees in the northwest suburbs are taking a closer look at a line item that often catches people off guard: the income-related monthly adjustment amount, or IRMAA. For 2026, the surcharge kicks in once a single filer's income tops $109,000 — and it applies to both Part B and Part D premiums.

If your income has changed in recent years, or if you're planning a Roth conversion or the sale of a home, understanding how IRMAA works can help you avoid a costly surprise in 2027.

What IRMAA actually is

IRMAA stands for Income-Related Monthly Adjustment Amount. It's an extra amount added to your standard Part B premium and your Part D premium if your income is above a certain threshold. Most people pay only the standard Part B premium, but roughly the top 7% or 8% of Medicare beneficiaries pay some level of IRMAA.

Here's the key point: IRMAA is not a penalty. It's a sliding-scale surcharge tied to the income you reported to the IRS.

The 2026 income thresholds

For 2026, IRMAA begins above $109,000 for a single filer and above $218,000 for a married couple filing jointly, based on figures published by the Centers for Medicare & Medicaid Services. From there, the surcharge rises in tiers — the higher your income, the higher the added amount you pay on top of the standard Part B and Part D premiums.

There is a separate, much higher tier for people filing married-separately, so if that's your situation, check the official Medicare chart carefully.

Why 2025 income will determine your 2027 bill

Social Security looks back two years when setting your IRMAA. That means:

• Your 2026 Part B and Part D premiums are based on your 2024 tax return.
• Your 2027 premiums will be based on your 2025 return.

This two-year lag is why a one-time income event — selling a rental property, cashing out stock, taking a large IRA distribution — can push your Medicare costs up long after the money has been spent.

How IRMAA hits Part D, not just Part B

Many people know IRMAA raises the Part B premium. Fewer realize it also adds a surcharge to Part D drug coverage. That Part D surcharge is paid directly to Medicare (usually withheld from Social Security), separate from whatever premium your standalone drug plan or Medicare Advantage plan with drug coverage charges.

So if you're in a higher income bracket, you could see two IRMAA amounts on your Social Security statement: one for Part B, one for Part D.

When you can ask for a do-over

If your income has dropped since your last tax return, you don't have to just accept the surcharge. Social Security allows an appeal — formally called a "Request for Reconsideration" — after certain life-changing events, including:

• Retirement or reduced work hours
• Marriage, divorce, or death of a spouse
• Loss of a pension
• Loss of income-producing property due to a disaster

You file Form SSA-44 with documentation. If approved, Social Security uses a more recent (and lower) income figure to reset your IRMAA.

Local context for Palatine

Palatine is in Cook County, where beneficiaries have a wide range of Medicare Advantage and Part D options during Annual Enrollment. IRMAA, however, is a federal calculation — it applies the same way whether you live in Palatine, Peoria, or Phoenix. What varies locally is the plan landscape you choose from, not the surcharge itself.

For personalized help, Illinois residents can contact the state's SHIP program (Senior Health Insurance Program), which offers free, unbiased counseling.