Medicare Open Enrollment runs October 15 through December 7, 2026, with changes taking effect January 1, 2027. Health care is among the highest and least predictable costs in retirement, and it is more closely tied to tax and investment planning than many people expect. Grey Ledge Advisors does not sell Medicare or insurance products; our aim is to help you see how these decisions fit your broader financial picture.
Medicare Basics in Plain English
Here is a quick breakdown of the four parts of Medicare:
- Part A (Hospital): Inpatient care, skilled nursing, and hospice. Premium-free for most people with 10 years of Medicare-taxed work. The 2026 inpatient deductible is $1,736.
- Part B (Medical): Doctor visits, outpatient care, and preventive services. In 2026, the standard premium is $202.90 per month, and the deductible is $283; after that, you generally pay 20%, with no annual cap under Original Medicare.
- Part C (Medicare Advantage): Medicare-approved private plans that bundle Parts A and B, and usually D. You still pay the Part B premium.
- Part D (Prescription Drugs): Stand-alone plans or coverage built into Advantage plans.
What Medicare generally does not cover: most long-term custodial care and, under Original Medicare, most routine dental, vision, and hearing care. These are worth planning for separately.
Centers for Medicare & Medicaid Services (CMS) typically announces 2027 Part B premiums and income brackets in the fall, so budget for a modest increase.
Medicare Advantage vs. Medigap
| Original Medicare + Medigap + Part D | Medicare Advantage | |
| Providers | Any U.S. provider that accepts Medicare | Usually, a network; referrals are often required |
| Out-of-pocket | Medigap fills most gaps in Original Medicare | Annual cap on covered in-network costs |
| Premiums | Part B + Medigap + Part D | Part B + plan premium (often low or $0) |
| Extras | Generally not included | May include some dental, vision, and hearing |
Source: Medicare.gov.
- Compare total cost, not just premium: Add premiums, deductibles, copays, and the out-of-pocket maximum, and confirm your doctors and hospitals are in network for 2027.
- Understand the Medigap enrollment window: Under federal law, your best opportunity to buy a Medigap policy is during the six-month Open Enrollment Period that begins once you turn 65 and enroll in Part B. Fortunately, Connecticut is more generous, offering guaranteed issue rights year-round (though a pre-existing condition waiting period may apply if you have a gap in coverage). Keep in mind that most other states do not offer this flexibility, which is crucial to consider if you ever plan to relocate.
Prescription Planning: Formularies, Tiers, and Pitfalls
For 2027, Part D deductibles are capped at $700, and annual out-of-pocket costs for covered drugs are capped at $2,400. Prices for 15 more Medicare-negotiated drugs, including Ozempic and Wegovy, take effect in January, and the cap on covered insulin remains at $35 per month. A federal program that held down stand-alone drug plan premiums ends after 2026, so check your plan’s 2027 premium closely.
- Formularies and tiers: Each plan sets its own covered-drug list and cost tiers, and both can change annually.
- Coverage rules: Prior authorization, step therapy, and quantity limits may apply; your prescriber can request an exception.
- Common pitfalls: Renewing on autopilot, entering an incomplete list of drugs in the Medicare Plan Finder, and overlooking preferred pharmacy pricing.
Enrollment Deadlines and Penalties
- Initial Enrollment: Seven months surrounding your 65th birthday.
- Medicare Advantage Open Enrollment (January 1 – March 31): Advantage enrollees can make one change, including returning to Original Medicare (Medicare.gov).
- Leaving employer coverage: You generally have eight months after employment or group coverage ends to enroll in Part B without penalty. COBRA does not extend that window.
- Penalties: Part B premiums rise 10% for each full 12-month period you delay without qualifying coverage; Part D adds 1% of the base premium for each month without creditable coverage. Both generally last as long as you have coverage.
- HSAs: Your contribution limit drops to zero once you enroll in Medicare. If you enroll in Medicare after age 65, Part A can be retroactive up to six months, so Medicare advises stopping contributions six months before you apply to avoid tax penalties.
IRMAA: Why Premiums Are a Multi-Year Tax Story
Higher-income beneficiaries pay an Income-Related Monthly Adjustment Amount (IRMAA) on Part B and Part D. Social Security generally uses your tax return from two years earlier. The income measure includes tax-exempt interest, so municipal bond income counts.
2026 IRMAA Brackets (Note: 2027 figures are typically announced in November)
| Income: Individual / Joint | Part B surcharge | Part D surcharge |
| $109,000 / $218,000 or less | $0 | $0 |
| Up to $137,000 / $274,000 | $81.20 | $14.50 |
| Up to $171,000 / $342,000 | $202.90 | $37.50 |
| Up to $205,000 / $410,000 | $324.60 | $60.40 |
| Below $500,000 / $750,000 | $446.30 | $83.30 |
| $500,000 / $750,000 or more | $487.00 | $91.00 |
Brackets work like cliffs: one dollar over a threshold triggers the full surcharge, and each spouse on Medicare pays it separately. Roth conversions, large capital gains, and required minimum distributions can all increase income. Topics worth reviewing with your advisor and tax professional include the timing of conversions and realized gains, as well as qualified charitable distributions for IRA owners age 70½ or older. If your income dropped due to retirement or another life-changing event, you can ask Social Security to use more recent income with Form SSA-44.
Annual Review Checklist
- Read your Annual Notice of Change, mailed each September.
- Update your drug list and compare plans in the Medicare Plan Finder.
- Confirm that doctors, hospitals, and pharmacies are in-network for 2027.
- Compare total annual cost, not just premiums.
- Review IRMAA exposure from 2025 income and any large transactions planned this year.
- Fund near-term health costs from liquid reserves in your withdrawal plan.
How Grey Ledge Advisors Can Help
Premiums, out-of-pocket costs, and IRMAA connect directly to your income plan, tax strategy, and portfolio withdrawals. As fiduciaries, we help you see those connections and coordinate with your tax and insurance professionals. To review how this year’s choices fit your plan, contact a Grey Ledge advisor.
This content is for educational purposes only and does not constitute personalized financial, tax, or legal advice. Views expressed are current as of the date of publication and are subject to change based on market and economic conditions.