New on FinoLib · Volume V: Personal Finance
New on FinoLib, my finance education website: I have published an article called Medicare at 65 and IRMAA: The Pre-65 Insurance Gap, from Volume V: Personal Finance. It is part 1 of a 2-part guide. Here is what the article explains, written as a short expert briefing; the full piece, with every worked example, is one click away.
The idea in plain words
Medicare has deadlines that are easy to miss. You get a seven-month window around your 65th birthday to sign up for Part B, unless you or your spouse are still covered through a job. Miss it and the penalty lasts for life. You then choose between Original Medicare with extra plans or a Medicare Advantage plan, knowing that in most states you can be refused if you try to move back from Advantage to Medigap because of your health. And from age 63, watch your income, because premiums rise at income cliffs called IRMAA, set from your tax return two years earlier.
Key points
■Part B costs $202.90 a month in 2026; above $109,000 of MAGI (single) or $218,000 (joint), IRMAA raises it in cliffs to as much as $689.90.
■Only coverage from current employment lets you delay Part B safely. COBRA and retiree plans do not, and a three-year delay adds 30% to every premium for life.
■At an employer with fewer than 20 employees, Medicare pays first from 65, so delaying Part B can leave most bills unpaid.
■Medigap is sold without health questions in its six-month open enrollment; afterward, in most states, an insurer can price or refuse you on health.
A closer look
Healthcare is the retirement expense most likely to be underestimated, and Medicare — the federal health program for people 65 and older — is where most of it is decided. Its rules are deadline-driven: miss a window and the penalty can last for life.
When to enroll. Your Initial Enrollment Period runs seven months: the three months before the month you turn 65, that month, and the three months after. If you or your spouse are still working and covered by that employer’s plan, you can delay Part B and enroll in an 8-month Special Enrollment Period after the job or coverage ends. COBRA and retiree coverage do not count as current employment for this purpose — a common and expensive mistake. Without a qualifying reason, late enrollment costs a Part B penalty of 10% for each full 12-month period you could have had Part B but didn’t, added to every premium for as long as you have Part B.
IRMAA — the income-related monthly adjustment amount — raises Part B and Part D premiums for higher-income retirees. It is set from the tax return two years earlier: 2026 premiums use 2024 modified AGI (adjusted gross income plus tax-exempt interest). It works as a set of cliffs, not a gradual phase-in: one dollar over a threshold triggers the full surcharge for that tier.
A worked example
Worked Example — Compare the Scenarios: Medigap Plan G or Medicare Advantage?
Both routes pay the same Part B premium ($202.90 a month in 2026), and both cap drug spending at $2,100 a year, so those costs cancel out. What differs is what you pay in premiums for the extra coverage and what you pay when you use care. Illustrative assumptions, since prices vary by state, age and insurer: a Medigap Plan G premium of $160 a month, a stand-alone Part D plan at $40 a month, and an Advantage plan with a $0 premium that includes drug coverage. Plan G covers everything Original Medicare leaves except the Part B deductible ($283 in 2026).
Under the hood
Under the Hood: Why IRMAA Comes in Cliffs and Lags Two Years
Part B is paid for mostly from general federal revenue. By law the standard premium is 50% of the “monthly actuarial rate” for aged enrollees, which works out to about 25% of the program’s cost per person; taxpayers cover the rest. IRMAA does not add a separate tax. It raises the enrollee’s share of that same cost to 35%, 50%, 65%, 80% or 85%. The arithmetic: implied full cost = $202.90 ÷ 0.25 = $811.60 a month; 35% × $811.60 = $284.06, 50% = $405.80, 65% = $527.54, 80% = $649.28 and 85% = $689.86, matching the published $284.10 to $689.90 within cents (CMS computes from unrounded rates).
Where Experts Disagree
The standard view: Medicare Advantage is a sound default for many people: low or zero premiums, an annual out-of-pocket cap that Original Medicare lacks, and extras such as dental or vision. Its popularity reflects that: it enrolled about 34.9 million people in 2025, 55% of beneficiaries with both Part A and Part B (MedPAC).
What the full article covers
The full article includes worked examples, a look under the hood at the mechanics, a recap, a reveal-on-click quiz and the official sources behind every figure.
Volume V: Personal Finance
Read the full article on FinoLib
The complete article, Medicare at 65 and IRMAA: The Pre-65 Insurance Gap, with every worked example, diagram, quiz and source, is free to read in Volume V, Personal Finance on finolib.com.
Explore the Finance Education Series: Vol. II — Capital Markets · Vol. I — Global Economy · Vol. III — Finance Encyclopedia · Vol. IV — Finance Careers · Vol. V — Personal Finance