Why Medicare Premiums Increase Every Year

Most people open their Medicare bill in January, see a bigger number than last year, and assume somebody made a mistake. They didn’t. The increase was baked in months before you ever saw it, and the reasons behind it are more predictable than you’d think once someone actually explains them.

Here’s what frustrates me after two decades of sitting across kitchen tables from seniors trying to make sense of their Medicare statements: the standard explanations are technically accurate and practically useless. “Healthcare costs rise” tells you nothing. So let’s do better than that.

Medicare premiums go up for several distinct reasons, and they don’t all apply to every person equally. Some increases are universal. Some land only on higher earners. A few are avoidable with the right planning. The difference between understanding this and not understanding it can be several hundred dollars a year.

The Mechanics Behind the Annual Increase

Medicare Part B covers outpatient care, doctor visits, and most preventive services. Its standard monthly premium is set each fall by the Centers for Medicare & Medicaid Services (CMS) for the following year, based on projected costs across the entire Medicare program.

The formula is anchored in law: Part B is designed so that premiums cover roughly 25% of program costs, with general federal revenue covering the rest. When projected spending goes up, your premium follows. CMS looks at things like new drug approvals, physician fee schedule changes, and hospital outpatient costs. If an expensive new treatment becomes widely used, it genuinely affects what everyone pays.

What the brochures don’t tell you: a single high-cost drug or a CMS actuarial projection that turns out to be too conservative can swing the following year’s premium substantially. The Part B premium jumped by $21.60 per month between 2021 and 2022, in part because CMS had built in contingency costs for Aduhelm, an Alzheimer’s drug with a then-staggering list price. When utilization came in much lower than projected, CMS actually rolled back some of that increase the next year. The system is reactive in a way that most people never realize.

As of August 2026, the standard Part B premium sits at $185.00 per month for most beneficiaries. That’s a concrete number to anchor your planning.

IRMAA: The Increase Most Articles Underexplain

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Income-Related Monthly Adjustment Amounts (IRMAA, pronounced “er-MAH”) are premium surcharges added on top of your base Part B and Part D premiums if your income exceeds certain thresholds. This is where a lot of seniors get blindsided, and I’ve seen it happen to careful, informed people who just didn’t know how far back Medicare looks.

Here’s the part that surprises almost everyone: CMS uses your tax return from two years ago. So your 2026 Medicare premiums are based on your 2024 Modified Adjusted Gross Income (MAGI). If you sold a rental property in 2024, took a large IRA (Individual Retirement Account) distribution, or had a one-time capital gain, that income could push you into a higher IRMAA bracket today even if your 2025 and 2026 income are much lower.

I had a reader from Tucson email me last spring about exactly this. She’d sold her late husband’s business in 2024, a one-time event that pushed her MAGI over $200,000. Two years later, she was staring at a Part B premium that was more than double what her neighbor paid. She was genuinely shocked. The sale was over; the money was largely spent on estate costs. But Medicare’s two-year lookback didn’t care.

The table below shows current IRMAA brackets for 2026. These are per-person figures, not per-household.

Source: CMS 2026 Medicare premium and IRMAA schedules.

The jump from the base tier to the first IRMAA tier is over $74 per month, per person. A married couple where both spouses are on Medicare could pay nearly $150 more per month, or $1,800 more annually, just by crossing that first threshold. That’s real money.

You Can Fight an IRMAA Increase

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Medicare Part B Premium Cost - Shocking! What is IRMAA? · Medicare on Video - Medicare Specialist on YouTube

This is the part most people miss entirely because it’s buried in CMS documentation and your Medicare Summary Notice certainly doesn’t highlight it.

If you receive an IRMAA determination and your income has dropped significantly since the year CMS is looking at, you can file Form SSA-44 to request a review based on a qualifying life event. The list includes: marriage, divorce, death of a spouse, work stoppage or reduction, loss of income-producing property, and a few others. “My income is just lower now” by itself isn’t a qualifying life event. But if you retired in 2025 and your income dropped because you stopped working, that qualifies.

The process: Download Form SSA-44 from SSA.gov (the Social Security Administration’s website), gather documentation of the life event and your current income, and submit it to your local Social Security office. Processing times vary, but in my experience you’re looking at four to eight weeks for an answer. When it works, the adjustment applies retroactively to January of the current year, which means a refund if you’ve been overpaying.

Scenario: Retired teacher, age 67, sold an investment property in 2024 for a $180,000 gain → income pushed into the fourth IRMAA tier → filed SSA-44 in February 2026 documenting retirement in 2025 with pension income of $38,000 → IRMAA surcharge removed retroactively → recovered approximately $2,900 in overpaid premiums.

That outcome isn’t guaranteed. The SSA has to agree that your situation qualifies. But it’s absolutely worth filing if you have a legitimate event.

Part D and Medicare Advantage Premiums

Part D (prescription drug coverage) premiums are set by private insurers, so they vary considerably by plan and by where you live. What they share with Part B: they also carry IRMAA surcharges for higher earners (see the table above), and they go up for the same broad reason Part B does, rising drug costs passed through to plan pricing.

One thing I’d flag: switching Part D plans during open enrollment (October 15 through December 7 each year) is one of the few levers you actually control. Plans can change their drug formularies (the list of covered drugs) and their premiums every year. A plan that was a good deal in 2025 might cost you $40 more a month in 2026 for the same coverage. Medicare.gov has a plan comparison tool that lets you enter your specific prescriptions and find your actual out-of-pocket cost across available plans. Use it. Most people don’t.

Medicare Advantage (Part C) plans work differently: the base Part B premium still applies, but many Advantage plans have their own monthly premium on top (sometimes zero, sometimes $50 or more), and that can change year to year. The State Health Insurance Assistance Program (SHIP) at shiphelp.org offers free one-on-one counseling to help you compare your options, and they don’t sell anything, which matters.

The Hold-Harmless Rule (and Who It Doesn’t Protect)

There’s a provision called “hold harmless” that prevents Part B premiums from rising faster than your Social Security cost-of-living adjustment (COLA) in a given year. Sounds protective. It mostly is, with a catch: it only applies to people who have their Part B premium deducted directly from their Social Security benefit. If you’re paying your premium another way, or if you’re new to Medicare, you’re not protected by it.

Also: if the COLA is large (as it was in 2022, when it hit 5.9%), the hold-harmless rule matters less because premiums can rise freely without exceeding the Social Security increase. The rule provides a real floor only in low-COLA years.

Scenario: Two neighbors, both on Medicare. One receives Social Security; Part B deducted automatically → protected by hold-harmless in a low-COLA year, premium increase capped → premium rises $6/month. The other is 64, pays Part B directly because she deferred Social Security → no protection → premium rises the full amount → pays $22/month more than her neighbor for identical coverage.

Same Medicare. Different rules. That asymmetry bothers people when they discover it, and reasonably so.

Sources

• CMS Medicare Costs: Official 2026 premium, deductible, and coinsurance amounts from Medicare.gov.
• Social Security Administration, Form SSA-44: The official form for requesting IRMAA reconsideration based on a life-changing event.
• CMS IRMAA Determination: CMS documentation on income-related premium adjustments.
• SHIP National Technical Assistance Center: Free Medicare counseling resources by state.
• Kaiser Family Foundation Medicare Policy Research (2025): Annual analyses of Medicare premium trends and beneficiary cost burdens.

Photo: RDNE Stock project via Pexels

This article is for informational purposes only. Medicare rules change annually. Always verify current plan details at Medicare.gov or by calling 1-800-MEDICARE (1-800-633-4227). This site does not sell insurance or recommend specific plans.

Recommended Resources

Disclosure: As an Amazon Associate, we earn a small commission from qualifying purchases at no extra cost to you. We only recommend products that genuinely support the topics covered in this article.

• Medicare For Dummies (~$22), The definitive consumer guide to Medicare, enrollment windows, Part A/B/C/D, and supplement plans.
• Get What’s Yours for Medicare (~$17), Maximize your Medicare benefits and minimize out-of-pocket costs. Covers Part D drug coverage gaps and Medigap in depth.