Quick answer: Medicare Part B and Part D premiums rise with your income, and the income Social Security looks at includes withdrawals from retirement accounts such as a TIAA 403(b). The premium you pay in a given year is generally based on your tax return from two years earlier, so decisions you make before 65, like a Roth conversion or a large payout, can show up later in your Medicare bill. Planning the two together can help you avoid surprises.
Over the years, I have talked with many faculty, staff, and physicians who plan carefully for retirement income and then find that Medicare adds a layer they had not expected. The connection is real, and it is easier to manage when you see it early. Open enrollment runs through December 7, which makes this a good time to look at how your retirement income and your health coverage fit together.
How does retirement income affect Medicare premiums?
Most people pay the standard Part B premium. Higher-income households pay an additional amount, called an income-related monthly adjustment amount (IRMAA), on both Part B and Part D. Social Security decides who pays it based on your modified adjusted gross income, which is your adjusted gross income plus certain tax-exempt income.
The key point for people with a TIAA account is that withdrawals from a traditional 403(b) count as income. So do the following:
- Required minimum distributions
- The taxable portion of annuity payments
- Lump-sum withdrawals, including a payout at retirement
- Roth conversions, which add the converted amount to income in the year of the conversion
Qualified withdrawals from a Roth account are generally not counted in adjusted gross income, which is one reason the mix of account types matters.
What are the 2026 Medicare premium brackets?
For 2026, the standard Part B premium is $202.90 a month and the Part B deductible is $283. The surcharge begins at a modified adjusted gross income above $109,000 for a single filer and $218,000 for a joint return, according to the Centers for Medicare & Medicaid Services (CMS).
Modified adjusted gross income (single) | Modified adjusted gross income (joint) | Total monthly Part B premium |
|---|---|---|
Up to $109,000 | Up to $218,000 | $202.90 |
Over $109,000 to $137,000 | Over $218,000 to $274,000 | $284.10 |
Over $137,000 to $171,000 | Over $274,000 to $342,000 | $405.80 |
Over $171,000 to $205,000 | Over $342,000 to $410,000 | $527.50 |
Over $205,000 to under $500,000 | Over $410,000 to under $750,000 | $649.20 |
$500,000 or more | $750,000 or more | $689.90 |
These are 2026 figures. Part D carries its own surcharge on top of this, which Social Security lists as $14.50 to $91.00 a month depending on income. Different thresholds apply to married people who file separately. CMS typically announces the next year's amounts in the fall, so the 2027 numbers may differ.
Why can a decision at 63 affect my Medicare bill at 65?
Social Security uses the most recent tax return the IRS provides, which is generally the return from two years earlier. For 2026 premiums, that is usually tax year 2024. That lag creates two planning points:
- Roth conversions before Medicare. Converting in your early 60s can be a useful strategy, but a large conversion raises income in that year, and it can lift your premiums two years later. Spreading conversions over several years may keep income below a bracket line.
- One-time payouts. A lump sum, a retirement payout, or the sale of an asset can push a single year's income above a threshold, even if your income is lower in the years around it. Brackets work like cliffs, so a small amount over the line can change the premium for the whole year.
This does not mean avoiding income you have earned or need. It means knowing when income lands, and choosing the order in which you draw from different accounts.
Free guide for TIAA participants. If you are planning around TIAA retirement income, our TIAA retirement guide is a good place to start organizing the decisions that come with it, so you can see how the pieces fit together before you meet with an advisor. Download the TIAA retirement guide and bring your answers to a conversation if you would like a second set of eyes. Tidewater Wealth Management is not affiliated with or endorsed by TIAA.
What if my income drops after I retire?
If your income falls because of a qualifying life-changing event, you can ask Social Security to use more recent income instead. Social Security's list includes marriage, divorce or the death of a spouse, stopping work or reducing your hours, and the loss of income-producing property, among others. You make the request with Form SSA-44 and provide documentation, such as a retirement letter from your employer. Many retirees do not realize this option exists, and it can matter in the first years after leaving work, when the older, higher-income tax return would otherwise set the premium.
How does this connect to Medicare open enrollment?
Open enrollment runs from October 15 to December 7 each year. During that window, people with Medicare can change their health and prescription drug plans for the following year, as described by CMS. Changes take effect January 1, and people already in a Medicare Advantage plan have a second window, January 1 to March 31, to switch plans, according to Medicare.gov. CMS also notes that people who want to keep their current coverage generally do not need to re-enroll. Open enrollment is a decision about which plan fits next year's needs.
Income planning is a separate decision that works alongside it. Your plan choice affects what you pay for coverage and care. Your income affects the premium charged for that coverage. Looking at both at once gives you a clearer picture of your total health costs in retirement.
What should I review before and after I retire?
- Map your income sources. List what you expect from Social Security, pensions, TIAA annuity income, required distributions, and any lump sums, and note the year each one begins.
- Check the timing of large items. If a payout, a Roth conversion or a sale will land in one year, see where it places you against the brackets above.
- Plan Roth conversions with the two-year lag in mind. The years before you turn 65 are often the ones to review closely.
- Confirm how your employer coverage works with Medicare. If you or your spouse are still working and covered by an employer plan, you may be able to delay Part B without a penalty, but the rules depend on the employer and the plan. Medicare.gov notes that COBRA is not considered group health plan coverage, and retiree health plans may expect you to have both Parts A and B. Contact your benefits office to confirm. Also note that, according to IRS Publication 969, your HSA contribution limit is zero beginning with the first month you are enrolled in Medicare, including retroactive coverage.
- Keep your plan current. Review your Medicare choices each open enrollment, and revisit your income plan whenever your situation changes.
Where does the TIAA retirement guide fit in?
The questions above are the ones I walk through with clients who are preparing for retirement. Our TIAA retirement guide is a place to start organizing them. Download the retirement guide to work through the questions at your own pace, and bring your answers to a conversation if you would like a second set of eyes.
If you would like to talk it through, you are welcome to schedule a complimentary review with me.
Frequently asked questions
Do withdrawals from my TIAA account count toward my Medicare premium? Withdrawals from traditional pre-tax accounts, such as a 403(b), are taxable income and count toward the modified adjusted gross income Social Security uses. Qualified Roth withdrawals generally do not.
Which year's income sets my Medicare premium? Social Security generally uses your tax return from two years earlier. For a 2026 premium, that means your 2024 return.
Can I lower my Medicare premium if my income drops? If your income falls because of a qualifying life change, such as retirement or reduced work, you can ask Social Security to base your premium on more recent income.
Does Medicare open enrollment change my income-related premium? No. Open enrollment lets you change plans for next year. Your income-related adjustment is set separately, based on your tax return.
Do I need to enroll in Medicare at 65 if I am still working? Not always. If you have employer coverage through current work, you may be able to delay Part B. Rules vary, so confirm with your benefits office before deciding.
About the author
David Wheatley, CLU® ChFC®, is a Senior Partner and financial advisor at Tidewater Wealth Management in New Haven, Connecticut. He specializes in retirement planning for higher education professionals and physicians, with over 30 years of experience in tax-efficient income distribution and estate strategies. Investment advisory services provided by NewEdge Advisors, LLC doing business as Tidewater Wealth Management.
This article is for general educational purposes and is not tax, legal, or medical advice. Medicare rules and amounts change, so confirm your own situation with Social Security, Medicare, your employer, and your tax professional. Tidewater Wealth Management is not affiliated with or endorsed by TIAA or the Centers for Medicare & Medicaid Services.
References
Facts and figures in this article were checked against these sources on October 20, 2026.
- CMS: 2026 Medicare Parts A and B premiums and deductibles: Part B premium, deductible and income thresholds
- Social Security: Medicare premiums, rules for higher-income beneficiaries: tax year used, life-changing event requests (Form SSA-44) and Part D surcharge amounts
- Medicare.gov: Joining a plan: open enrollment, January 1 start and the January 1 to March 31 Medicare Advantage switch window
- Medicare.gov: Remember key Medicare dates: open enrollment dates
- CMS: Medicare open enrollment: open enrollment dates and guidance on keeping current coverage
- Medicare.gov: What Medicare costs: standard Part B premium and income-based adjustments
- Medicare.gov: When does Medicare coverage start: employer coverage and enrollment timing
- IRS Publication 969: HSA contributions and Medicare enrollment
- Medicare Plan Finder: compare plans for next year