Healthcare Planning Calculator
Retirement Healthcare Decision Tool: What It Calculates and How to Read the Result
Quick answer
Healthcare in retirement breaks into three distinct planning windows: pre-Medicare (typically using ACA marketplace coverage, where your taxable income directly controls premium subsidies), Medicare enrollment at 65 (where IRMAA surcharges based on income from two years prior can add thousands per year), and long-term care (where the planning options are insurance, self-funding, or hybrid life-insurance products). Each window has its own tax-and-income consequences.
What This Calculator Actually Answers
This decision tool maps your healthcare-coverage choices and their financial consequences across three retirement phases. Pre-Medicare: ACA marketplace plans, COBRA bridge options, and how your modified adjusted gross income (MAGI) affects subsidies. Medicare: Original Medicare + Medigap + Part D versus Medicare Advantage, plus the IRMAA surcharge structure that adds premiums based on income from two years prior. Long-term care: stand-alone LTC insurance, hybrid life-insurance-with-LTC riders, and self-funding strategies.
The key insight the tool surfaces: healthcare planning is heavily income-driven in retirement. The same retiree can pay $4,000/year or $14,000/year in Medicare premiums depending on whether their tax planning kept them below or above key IRMAA thresholds. The same retiree can qualify for $10,000+/year in ACA subsidies or zero, depending on how they structure pre-65 income.
How to Read the Result
For pre-Medicare retirees, focus on the MAGI threshold for ACA subsidies (currently elevated under enhanced subsidies; will revert if Congress doesn't extend). A retiree drawing from a Roth IRA or harvesting long-term capital gains at the 0% bracket can keep MAGI low and capture substantial subsidies; a retiree drawing from a traditional IRA cannot.
For Medicare-age retirees, the IRMAA tiers are the operative consideration. The base premium plus surcharge can range from roughly $185/month to $628/month per person depending on which tier you fall into, and the determination is based on your tax return from two years prior, so a one-year income spike (Roth conversion, capital gain) has a two-year-delayed premium consequence.
Common Mistakes
- Doing a large Roth conversion in the years before Medicare eligibility without accounting for the IRMAA surcharge that will kick in two years later.
- Choosing Medicare Advantage without understanding the network restrictions and what happens if you spend significant time outside the network area (a common issue for snowbird retirees).
- Forgetting the 8-month Medicare special enrollment period after stopping employer coverage. Missing it can trigger lifetime late-enrollment penalties.
- Buying long-term care insurance too early (premiums you'll pay for decades before claiming) or too late (after underwriting becomes difficult or impossible).
- Failing to coordinate retirement-account distributions with ACA subsidy thresholds in the pre-Medicare years. The pre-65 window is one of the most tax-sensitive periods in retirement.
When This Calculator Is Not the Right Tool
This is a strategy-mapping tool, not an enrollment tool. Specific Medicare plan selection (which Medigap policy, which Part D formulary, which Advantage network) requires working through plan-finder tools and possibly a Medicare-specific broker. Use this calculator to set the overall strategy; then implement plan selection separately.
Frequently Asked Questions
What are the 2026 IRMAA thresholds?
For 2026, the standard Medicare Part B premium is $202.90/month and applies up to $109,000 MAGI for single filers or $218,000 for married filing jointly. Above that, IRMAA adds a surcharge across five tiers, topping out at a combined Part B premium of $689.90/month for MAGI above $500,000 (single) or $750,000 (married filing jointly). Part D carries its own separate surcharge on top of your plan premium, ranging from about $14.50 to $91.00/month across the same tiers. The premium tier is determined by your tax return from two years prior, so 2026 premiums are based on 2024 MAGI.
Should I buy long-term care insurance?
It depends on your asset level and family longevity history. Households with $5M+ in assets often choose to self-fund LTC; households below $1M usually rely on Medicaid (which requires asset spend-down). The middle range, $1M–$5M, is where LTC insurance or hybrid products provide the most defensive value, protecting the surviving spouse from being financially destroyed by a long care need.
How do ACA subsidies work for early retirees?
ACA marketplace plans cap your premium as a percentage of MAGI; the subsidy fills the gap. The exact percentage depends on income relative to the federal poverty level. The Inflation Reduction Act's enhanced subsidies, which let higher-income households qualify, expired at the end of 2025 after Congress failed to extend them; marketplace premiums for those households reverted to the pre-2021 rules in 2026. For a household retiring at 60 with $1.5M in mostly pre-tax accounts, careful MAGI management still reduces the premium, but the dollar value of that management is smaller than it was under the enhanced subsidy years — model your specific household's numbers rather than relying on the old figures.
What is the IRMAA two-year lookback and why does it matter?
Medicare uses your tax return from two years prior to determine your IRMAA tier for the current year. This means a one-time income event (large Roth conversion, capital gain, NQDC distribution) has a two-year-delayed premium consequence. Forward-looking tax planning needs to model not just this year's tax bill but the IRMAA tier you'll trigger two years out.