Every fall, the Centers for Medicare & Medicaid Services announces the next year’s Medicare Part B premium and deductible. For 2026, the headline number is $202.90 per month for most beneficiaries. That is the figure most federal retirees will see quoted, and it is the figure most federal retirees should plan around.

It is also a figure that obscures a more complicated picture. The standard premium is what most people pay, but higher-income beneficiaries pay more through the Income-Related Monthly Adjustment Amount (IRMAA), and lower-income beneficiaries may pay less through Medicare Savings Programs administered at the state level. The annual deductible behaves the same way: a standard amount, with rules about who pays more or less.

For a federal retiree weighing Part B enrollment, the right number to plan around is not always the standard $202.90. It is the number that applies to your Modified Adjusted Gross Income, two years prior, under the IRMAA brackets in effect for the year of coverage.

What the $202.90 actually buys.

The Part B premium covers the outpatient side of Medicare: physician visits, outpatient hospital services, preventive screenings, durable medical equipment, ambulance, mental health services in outpatient settings, and a long list of other services that come up frequently in retirement. Part B does not cover prescription drugs (that is Part D), most dental care, or most vision and hearing services. The benefit is broad but not unlimited.

For federal retirees with FEHB, Part B is the layer that makes Medicare the primary payer for outpatient claims, with FEHB acting as the secondary payer. The coordination effect is significant. A retiree who enrolls in Part B and chooses a Medicare-friendly FEHB plan often sees out-of-pocket cost drop sharply compared with staying on FEHB alone.

How IRMAA raises the premium for higher-income retirees.

IRMAA is a surcharge that the Social Security Administration calculates based on the beneficiary’s Modified Adjusted Gross Income from two years prior. For a 2026 Part B premium, IRMAA is determined by your 2024 MAGI. The surcharge is added to the standard premium, and a parallel surcharge applies to Part D premiums for higher-income beneficiaries.

IRMAA brackets are publicly published by CMS and adjusted annually. The brackets escalate quickly. A retiree whose MAGI crosses into the next bracket pays the standard premium plus the IRMAA surcharge for that bracket — the surcharge is not a small adjustment. For 2026, the top IRMAA tier can add several hundred dollars per month to the Part B premium above the $202.90 standard.

The MAGI that determines IRMAA is largely under the retiree’s control. TSP withdrawals, traditional IRA withdrawals, taxable dividends, and capital gains all flow into MAGI. Roth withdrawals, properly structured, do not. This makes IRMAA planning one of the cleaner financial levers in retirement: small adjustments to MAGI can shift a retiree out of a higher IRMAA bracket and save real money on premiums.

How the annual deductible fits in.

Part B also has an annual deductible that the beneficiary pays before Medicare begins its share of outpatient costs. For 2026, the standard Part B deductible is published by CMS in the same annual announcement that sets the standard premium. After the deductible is met, Medicare generally pays 80% of the approved amount for covered services, with the beneficiary responsible for the remaining 20% — unless a secondary payer (like FEHB) covers the coinsurance.

For federal retirees, the FEHB plan typically picks up the 20% coinsurance on Medicare-covered services, often without a separate deductible of its own. This is the core of the FEHB-Medicare coordination story and one of the most valuable features of carrying FEHB into retirement.

How to think about cost in the larger retirement picture.

For most federal retirees, the financial case for Part B comes down to a comparison between the annual premium and the annual savings on out-of-pocket costs. The premium is visible and predictable. The savings are partly invisible — they show up as avoided deductibles, avoided coinsurance, and avoided late-enrollment penalties later in life.

A useful exercise is to estimate next year’s healthcare utilization in dollars — doctor visits, outpatient procedures, durable medical equipment, the occasional emergency room visit — and compare it against the same scenario under FEHB alone. For most retirees, the comparison favors Part B enrollment. For a smaller group of retirees with very low utilization, the comparison can swing the other way. The only way to know which group you are in is to do the math.

What to do in the year before you turn 65 or retire.

If you are within twelve months of Medicare eligibility, practical steps include:

  • Confirm your projected 2024 (or relevant look-back) MAGI against the IRMAA brackets published for 2026.
  • Identify any Roth conversion or TSP withdrawal strategies that could shift your MAGI below a bracket boundary.
  • Compare your current FEHB plan against Medicare-friendly FEHB plans available in your zip code. The plan that was best at 60 may not be best at 65.
  • Apply for Part A and Part B three months before your 65th birthday month (or use the SEP at retirement if 65+).

For more on how IRMAA interacts with TSP withdrawal strategy, and for a broader look at the Part B decision, read what Medicare Part B is, and whether it is mandatory.