Medicare checks your income annually to determine if you must pay an Income-Related Monthly Adjustment Amount (IRMAA) for Part B and Part D premiums. This review uses your modified adjusted gross income (MAGI) from two years prior (e.g., 2024 tax data is used for 2026 premiums).
For instance, in California, an electronic database, the Income Eligibility Verification System (IEVS), is used to match the income information provided by the applicant to other databases to verify it is accurate.
Here are some of the biggest Medicare mistakes to avoid:
Each fall, when we ask the IRS for information to determine next year's premiums, we ask for tax information to verify your reports of changes affecting your income-related monthly adjustment amounts, if any.
As long as you continue to work, even if you are receiving benefits, you will continue to pay Social Security taxes on your earnings. However, we will check your record every year to see whether the additional earnings you had will increase your monthly benefit.
Establish an Irrevocable Trust
Cash, property, and investments can be transferred into an irrevocable trust. By doing so, these assets would be removed from Medicaid's calculation. However, this trust would need to be established at least five years before applying for Medicaid to avoid lookback scrutiny.
If you have a higher income, you'll pay an additional premium amount for Medicare Part B and Medicare prescription drug coverage. We call the additional amount the “income-related monthly adjustment amount.”
You cannot make too much money to qualify for Medicare. Eligibility is based on age or disability status, not income. That said, higher earnings can trigger income-based surcharges on premiums, particularly for Part B and Part D coverage.
The Medicare "3-Day Rule" requires a beneficiary to have a qualifying 3-day inpatient hospital stay (admission day counts, discharge day doesn't) before Medicare will cover services in a Skilled Nursing Facility (SNF) for rehabilitation or skilled care, though this rule can be waived in certain Medicare Advantage plans or through specific Accountable Care Organization (ACO) initiatives. Time spent in observation or the Emergency Department doesn't count towards these 3 days, but new demonstration projects and waivers are emerging to offer more flexibility for patients needing SNF care.
Starting in 2025, there is an annual limit on what you pay out-of-pocket for prescription medications through Medicare and Medicare Advantage prescription drug plans. All prescription medications, including specialty medications, covered by Part D plans are included under this cap.
Some HAF Programs request applicants verify their income by providing, along with written self-attestation, certain documents such as: Paystubs. W2s or other wage statements. IRS Form 1099s.
The Health Insurance Marketplace® uses annual household income and other information to decide if you qualify for savings on health coverage through the Marketplace (like the premium tax credit) and other cost savings, like lower copayments, coinsurance, and deductibles (also called cost-sharing reductions).
IRA and 401(k) withdrawals can change what you have to pay for Medicare. This happens because those withdrawals add to your adjusted gross income and modified adjusted gross income.
For 2026, the standard Medicare Part B premium is $202.90/month (up from $185 in 2025), with the annual deductible rising to $283; higher earners pay more through Income-Related Monthly Adjustment Amounts (IRMAA), and most people with Part A don't pay a premium, but the inpatient deductible increases to $1,736. Medicare Advantage plans (Part C) often have low or no extra premiums, though most still require paying the Part B premium. Costs for Part D (prescription drugs) also have income-based adjustments.
Does Medicare check your bank account? Medicare examines your bank accounts and other assets when you seek financial help with Medicare costs. However, eligibility criteria and verification procedures differ by state of residence. In certain states, there are no asset limits for Medicare savings programs.
Want to make your assets virtually untouchable by creditors and lawsuits? Equity stripping may be the answer. This advanced technique involves encumbering your assets with liens or mortgages held by friendly creditors, such as an LLC or trust you control.
People leave Medicare Advantage (MA) plans due to difficulty accessing needed care (especially with worsening health), restrictive provider networks, complex prior authorization rules, and dissatisfaction with care quality, often feeling trapped as their health needs grow despite initial low costs and extra perks that become limiting. Issues with provider availability, network changes, and sometimes misleading marketing also drive disenrollment, pushing people back to Traditional Medicare for greater freedom, notes KFF.
If you earn over the Social Security limit while receiving benefits before your full retirement age (FRA), the Social Security Administration (SSA) will temporarily reduce your benefits, docking $1 for every $2 (or $3 in the year you reach FRA) earned above the limit, but you don't lose the money; it's credited back later with a higher monthly benefit once you hit your FRA. Once you reach FRA, there's no limit on earnings, and you get your full benefit, plus credit for any previously withheld amounts.
The COLA was 2.5 percent in 2025. Nearly 71 million Social Security beneficiaries will see a 2.8 percent COLA beginning in January 2026. Increased payments to nearly 7.5 million people receiving SSI will begin on December 31, 2025. (Note: Some people receive both Social Security benefits and SSI).