- Medicare at 65 and IRMAA: The Pre-65 Insurance Gap
- IRMAA Cliff Example: One Dollar Over the Threshold (you are here)
This is part 2 of 2 of our guide to Medicare at 65, IRMAA, and the Pre-65 Health Insurance Gap. It picks up where Medicare at 65 and IRMAA: The Pre-65 Insurance Gap leaves off, and it is written to stand on its own: the key ideas are restated where you need them.
A single retiree’s 2024 MAGI was $136,500. A $1,000 extra IRA withdrawal that December lifted it to $137,500 — $500 over the $137,000 line. Her 2026 Part B premium becomes $405.80 instead of $284.10, and her Part D surcharge $37.50 instead of $14.50. Extra cost for 2026: ($405.80 − $284.10) × 12 = $1,460.40, plus ($37.50 − $14.50) × 12 = $276.00, for $1,736.40 — triggered by $1,000 of income.
Late enrollment is the other avoidable cost. Someone without employer coverage who signs up for Part B 30 months late has two full 12-month periods of delay: 2 × 10% = 20%, or $202.90 × 20% = $40.58 a month added for life at 2026 rates.
If income drops because of a “life-changing event” — retirement, reduced work hours, divorce, a spouse’s death — Social Security will recalculate IRMAA from the more recent income on request (form SSA-44).
The pre-65 gap. Anyone retiring before 65 needs coverage until Medicare starts. The options, roughly in the order most people should compare them:
- A spouse’s employer plan — often the cheapest route, since the employer subsidizes it; leaving your own job is a qualifying event for joining mid-year.
- Retiree coverage from a former employer — increasingly rare outside government and some union plans; ask the former employer’s benefits office.
- COBRA — the same plan for up to 18 months, but at up to 102% of the full cost. At 2025’s average single premium, that is $9,325 × 1.02 ÷ 12 ≈ $793 a month (Part 8.2).
- The ACA marketplace — subsidies are based on the year’s estimated income, which for a new retiree living on savings can be low. The enhanced premium credits expired on Dec 31, 2025, so households above 400% of the poverty line again receive no subsidy, and premiums for people in their early sixties are among the highest on the marketplace (Part 8.2). Losing job coverage opens a 60-day special enrollment window; dropping COBRA voluntarily mid-year does not.
Because marketplace subsidies depend on income, the same withdrawal decisions that drive IRMAA (10.5: Sequencing Withdrawals in Retirement) also drive the pre-65 premium: a large Roth conversion at 62 can cost subsidy dollars that year, and one at 63 or later can raise Medicare premiums at 65.
These situations change the standard enroll-at-65 answer.
| Situation | What changes | Why | Number or rule |
|---|---|---|---|
| Still working at 65 for an employer with fewer than 20 employees | Enroll in Part B at 65 even though you have job coverage | Medicare pays first; the group plan pays second and may pay little if Part B is missing | 20-employee threshold (Medicare secondary-payer rules) |
| Covered through a spouse’s current job at a large employer | You may delay Part B and D without penalty | Coverage from current employment, yours or a spouse’s, qualifies for the Special Enrollment Period | 8 months after the job or coverage ends, whichever is first; keep creditable drug coverage to avoid the Part D penalty |
| On COBRA or a retiree plan at 65 | Enroll in Part B anyway | Medicare is primary; COBRA may pay only a small part, and the delay counts toward the penalty | 10% per full 12 months, for life |
| Joined Medicare Advantage at 65 and dislike it | You can return to Original Medicare and buy any Medigap policy without health questions | The federal “trial right” | Only within the first 12 months; apply within 63 days after the Advantage coverage ends |
| Want Medigap later, after open enrollment | Insurers may underwrite, raise the price or refuse | Federal guaranteed issue is limited to set windows | As of KFF’s 2018 review, only CT, MA, NY (continuously) and ME (one month a year) guaranteed it to all beneficiaries 65+ |
| A spouse dies | IRMAA thresholds can halve for the survivor | Joint filing ends after the year of death, and single thresholds apply to the survivor’s later returns | A survivor with $150,000 MAGI pays ($405.80 − $202.90 + $37.50) × 12 = $2,884.80 a year more than at the joint threshold; SSA-44 lists a spouse’s death as a life-changing event |
| Married, filing separately, lived with your spouse during the year | IRMAA uses a two-step schedule | For separate filers who lived together, SSA’s schedule has only two surcharge bands, and the first starts at the single threshold | MAGI above $109,000 pays $649.20 for Part B plus $83.30 for Part D: ($649.20 − $202.90 + $83.30) × 12 = $6,355.20 a year extra |
| Delaying Medicare past 65 with an HSA | Stop HSA contributions six months before applying | Premium-free Part A is backdated up to six months (not before 65) | Contributions in those months become excess contributions |
HSAs after 65. An HSA (Part 6.6) cannot receive new contributions from the first month you are enrolled in Medicare. Premium-free Part A starts up to six months before the date you apply (but not before 65), so if you delay Medicare past 65, stop HSA contributions six months before applying. Existing balances remain usable: they can pay Medicare Part B, Part D, and Advantage premiums tax-free (Medigap premiums excepted), and after 65 non-medical withdrawals are taxed as income but no longer carry the 20% penalty.
Medicare mistakes are rarely dramatic in the year they happen; they compound. A missed enrollment window adds a permanent surcharge, and an unplanned income spike two years earlier raises premiums for a whole year. Mark the seven-month window on a calendar at 64, and check IRMAA thresholds before any large withdrawal, conversion, or asset sale from 63 onward.
At 64 and nine months, decide Part B by one test. If you or your spouse will still be covered at 65 by a group plan from current employment at an employer with 20 or more employees, and that plan includes creditable drug coverage, you may delay Parts B and D; enroll within eight months of the job or coverage ending. In every other case (COBRA, retiree plan, an employer under 20, individual coverage, no coverage), enroll in your Initial Enrollment Period.
Then choose the route. If the Medigap and Part D premiums you are quoted are affordable and your expected yearly Advantage cost-sharing is above them (the $2,683 flip point in the example), or you want to keep any provider without prior approval, buy Medigap during its six-month open enrollment. Choose Advantage if its network includes your doctors and hospital and you could absorb its full out-of-pocket maximum in a bad year.
From 63, check income against the IRMAA table before any Roth conversion, large withdrawal or asset sale: if the extra income would cross a tier edge, either keep it at least a few hundred dollars below the edge or make it large enough that the tax benefit outweighs the surcharge. Assumptions: 2026 premiums and tiers; a state without year-round Medigap guaranteed issue. Ignore the route test if you live in Connecticut, Massachusetts or New York, where Medigap could be bought later without health questions (as of KFF’s 2018 review; confirm with your state).
Treating COBRA or a retiree plan as a reason to delay Part B. Take someone who retires at 65 on COBRA, lets the coverage run, and signs up for Part B three full years after their Initial Enrollment Period. The penalty is 3 × 10% = 30% of the standard premium: 30% × $202.90 = $60.87 a month, or $60.87 × 12 = $730.44 a year. Over 20 years of Medicare at 2026 rates that is $730.44 × 20 = $14,608.80, and the real figure is larger because the penalty is a percentage of a premium that rises most years. Meanwhile Medicare was the primary payer, so COBRA may have paid only a small part of any claim, and a late sign-up in the General Enrollment Period can leave months with no coverage at all.
How to avoid it: enroll in Part B in your Initial Enrollment Period whenever your coverage is not from current employment. If you are unsure whether your coverage qualifies, ask the plan in writing and get Part B anyway; you can drop the plan, but you cannot undo a lifetime penalty.
Do I have to sign up for Medicare at 65 if I am still working?
Not always. If you or your spouse have group coverage from current employment, you can delay Part B and Part D and later use an eight-month Special Enrollment Period without penalty. Many people still take premium-free Part A. Two exceptions matter: at an employer with fewer than 20 employees Medicare pays first, so you need Part B at 65, and contributing to an HSA requires delaying Part A too.
How much does Medicare Part B cost in 2026?
The standard Part B premium is $202.90 a month in 2026, with an annual deductible of $283. People whose 2024 modified AGI was above $109,000 (single) or $218,000 (joint) pay more under IRMAA, from $284.10 up to $689.90 a month, plus a Part D surcharge of $14.50 to $91.00. Late enrollees add 10% for each full year they delayed without a qualifying reason.
Can I appeal or lower IRMAA?
Yes, if your income has fallen because of a life-changing event. File form SSA-44 with Social Security after retirement, reduced work hours, marriage, divorce, a spouse’s death, or loss of a pension, and it can use a more recent year’s income. If you amended the return or the income figure is wrong, contact Social Security to correct it. A voluntary one-time gain, such as selling a house or a large conversion, is not on the list of qualifying events.
Is Medicare Advantage better than Medigap?
Neither is better for everyone. Advantage usually costs less when you use little care, because premiums are low, but out-of-pocket costs can reach $9,250 in-network in 2026 and you work within a network and prior authorization. Medigap costs more each month but leaves little to pay when you are sick. Decide at 65, because switching from Advantage to Medigap later can be refused on health grounds in most states.
Can I keep contributing to an HSA after 65?
Only until you enroll in any part of Medicare. Contributions must stop from the first month of Medicare coverage, and because premium-free Part A is backdated up to six months when you apply after 65, stop contributing six months before applying. The balance stays yours and can pay Part B, Part D and Advantage premiums tax-free, though not Medigap premiums.
Medicare is deadline-driven: enroll during the seven-month Initial Enrollment Period around your 65th birthday unless you or your spouse have coverage from current employment, because COBRA and retiree coverage do not shield you from a Part B penalty of 10% for each full 12-month delay, charged for life. IRMAA sets 2026 Part B and D premiums from 2024 MAGI as a set of cliffs, so one dollar over $109,000 single ($218,000 joint) lifts Part B from $202.90 to $284.10 a month. Before 65, compare a spouse’s employer plan, retiree coverage, COBRA at up to 102% of full cost, and the marketplace, whose subsidies depend on the year’s income. Check IRMAA thresholds before any large withdrawal, conversion or asset sale from 63 onward, and stop HSA contributions six months before you apply for Medicare.
Four questions on this chapter. Decide on your answer first, then click “Reveal Answer.”
1. Someone with no employer coverage enrolls in Medicare Part B 40 months after first becoming able to. At 2026 rates, what lifetime surcharge is added to the monthly premium?
- $67.63
- $81.16
- $60.87
- $20.29
Reveal Answer
Answer: C. The penalty is 10% per full 12-month period without Part B; 40 months holds three, so 30% × $202.90 = $60.87. Counting partial periods gives $67.63 or $81.16, and $20.29 treats it as a single 10%. (Part 10.9: Medicare at 65, IRMAA, and the Pre-65 Health Insurance Gap)
2. Dana retires at 66, keeps her former employer’s plan through COBRA, and plans to sign up for Medicare Part B when COBRA ends. What is the flaw in this plan?
- COBRA premiums count as income that pushes her into IRMAA
- Her Part B premium will be set from the year her COBRA ends
- Delaying Part B also forfeits her premium-free Part A
- COBRA is not current employment, so a Part B penalty can apply
Reveal Answer
Answer: D. Only coverage from current employment, yours or a spouse’s, lets you delay Part B into the 8-month special enrollment period. COBRA and retiree coverage do not count, so the 10%-a-year penalty can apply for life. (Part 10.9: Medicare at 65, IRMAA, and the Pre-65 Health Insurance Gap)
3. Lee will keep working past 65 with an HSA-eligible employer plan, delaying Medicare, and plans to apply for it at 68. When should Lee’s HSA contributions stop?
- Six months before the Medicare application
- At the end of the year Lee applies
- At the start of the month Lee turns 65
- In the month Lee applies for Medicare
Reveal Answer
Answer: A. Premium-free Part A starts up to six months before the application (not before 65), and no HSA contributions are allowed once Medicare begins, so stop six months before applying. Turning 65 alone does not end eligibility while Medicare is delayed. (Part 10.9: Medicare at 65, IRMAA, and the Pre-65 Health Insurance Gap)
4. Raj turns 65 while still working for a company with 12 employees and is covered by its group health plan. What does the chapter say he should do about Part B?
- Enroll at 65, because Medicare pays first at an employer that small
- Delay it and use the 8-month Special Enrollment Period when he retires
- Delay it, since any job-based plan pays before Medicare
- Skip Part B and buy a Medigap policy to fill the gap
Reveal Answer
Answer: A. With fewer than 20 employees, Medicare is the primary payer and the group plan pays second, so without Part B much of each bill can go unpaid. The delay strategy fits current-employment coverage at employers with 20 or more employees. Medigap requires Parts A and B. (Part 10.9: Medicare at 65, IRMAA, and the Pre-65 Health Insurance Gap)
- 2026 Medicare Parts A and B premiums and deductibles — Part B premium and IRMAA tiers
- Avoid late enrollment penalties — Part B and D penalties
- Final CY 2026 Part D redesign program instructions — Part D out-of-pocket cap
- Publication 969 — HSA rules
- COBRA coverage and the Marketplace — Switching rules
- Medicare premiums: rules for higher-income beneficiaries — IRMAA and form SSA-44