Our 2027 Medicare Projections

Every fall, CMS announces two sets of Medicare numbers within a single notice: the standard Part B premium, and the income thresholds that decide who pays a surcharge on top of it. The announcement for 2027 will land around November.

Most projections you will read between now and then treat the two as one problem — take this year's numbers, apply an inflation guess, publish. They are not one problem. The thresholds are set by a formula written into federal law and computable from published data today. The premium is an actuarial decision that no outsider can compute. One can be calculated; the other can only be bounded.

This piece does both, shows the work, and — in November, when CMS publishes the real numbers — we will grade ourselves against them in public.

Section 1839(i)(5) of the Social Security Act indexes each IRMAA threshold to inflation in a very specific way: take the 12-month average of CPI-U ending in August of the preceding year, divide by the 12-month average ending August 2018, apply that growth to fixed statutory base amounts, and round to the nearest $1,000. For the 2027 thresholds, the window is September 2025 through August 2026 — and nine of those twelve months are already published.

Before trusting a formula, test it. We ran the same computation for every year since indexing resumed: 2020, 2021, 2022, 2023, 2024, 2025, and 2026. It reproduces the first threshold CMS actually published exactly, all seven years — $87,000, $88,000, $91,000, $97,000, $103,000, $106,000, $109,000 — and all four indexed 2026 tiers exactly.

Run on 2027: the first threshold lands at $112,000 for a single filer and $224,000 for a joint return, up about 2.75% from $109,000 and $218,000. The later tiers project to roughly $141,000–142,000, $176,000–177,000, and $211,000–212,000 for single filers, with joint amounts double. The remaining uncertainty is confined to the three unpublished window months, and in five of the six scenarios we ran — from zero inflation to an aggressive 0.4% a month — the first threshold does not move.

Two quirks of the 2027 computation worth knowing. October 2025's CPI value was never published because of the government shutdown — the first hole in the statutory window since indexing resumed; we computed the average both with the month omitted and interpolated, and the answer is the same either way. And the top tier — $500,000 single, $750,000 joint — is frozen by statute through 2027 regardless of inflation. It first indexes in 2028.

The Part B premium has no CPI formula. Each September, CMS actuaries project the coming year's per-enrollee program cost, set the premium at roughly a quarter of it, and add a margin to keep the program's reserve near its target. No outside model has the claims data to replicate that. What an outsider can do is use the one published projection with a verifiable record: the Medicare Trustees Report.

The current report estimates the 2027 standard premium at $209.50 a month — up $6.60, or 3.25%, from 2026's $202.90. The Trustees' year-ahead estimates have been close in every normal year: off by −3.1% for 2023, −0.06% for 2024, exactly right for 2025, and −1.7% for 2026. The one big miss, 2022, was +7.3% — a mid-year shock when CMS added a reserve for a new Alzheimer's drug the projection had explicitly excluded. Note the direction of the recent errors: when they miss, they have missed high.

You may also have seen 2027 estimates of $215 or more. Those trace to the previous report's two-year-out figure of $218.60 — and two-year-out numbers are the ones with the bad record, missing by −8% to +4%. The same stale-number problem ran the other way a year ago: the 2024 report's two-year figure had 2026 at $186.90, a near-flat year, right before the actual 9.7% increase. The rule we apply: quote the one-year figure, never the two-year figure.

A fair objection: the 2026 premium rose 9.7%, so why believe 3.25% for 2027? CMS's own rate notice answers it, because the notice publishes the premium's components.

Of the $17.90 increase, about $10.27 was real per-enrollee cost growth — expenditures rose about 5.4%. The other $8.76 was the contingency margin swinging from negative to positive. CMS had over-collected in 2022 for a drug benefit that never materialized, and passed the excess back by running negative margins three years straight — subsidizing the 2023, 2024, and 2025 premiums. In 2026 the excess ran out, the margin flipped to rebuild the reserve, and the subsidized baseline snapped back.

In other words, roughly half of the 9.7% was a one-time event ending, not costs exploding. The rebuild does not repeat, which is exactly why the Trustees' 2027 estimate — enough to maintain the reserve rather than grow it — implies a much smaller increase on the same underlying cost trend.

Put the two machines together and the projected 2027 surcharge schedule follows, because the law sets each tier's payment as a fixed multiple of the standard premium. At $209.50, the first-tier surcharge is $83.80 a month and the top tier is $502.80 — on top of the standard premium, per person.

The structural fact advisors should keep in front of clients is that the surcharge is a cliff, not a slope. One dollar of MAGI over the first joint threshold costs a couple a projected $2,011 for the year; one dollar over the fourth costs $11,062. The size of the crossing is irrelevant — only which side of the line the return lands on.

And the two growth rates are not symmetric. On the Trustees' own trajectory the premium reaches $338.50 by 2034 — up 67% from 2026, roughly 6.6% a year — while the thresholds crawl at a CPI pace near 2.75%. Treat the out-years as direction, not destination; but the direction is one-way: every tier's dollar penalty grows with the premium, and brackets that grow slower than retirement income pull more households over the line every year.

Why publish a November number in August? Because of the two-year lookback. The 2027 bracket a client lands in was set by their 2025 return — that is already history. The bracket still open is 2028's, and it will be set by 2026 income, with about four and a half months left in the year.

• Project each client's 2026 MAGI now, against the 2028 thresholds the same formula will produce — not against this year's brackets, which is what most software defaults to.
• Size year-end moves — Roth conversion amounts, gain harvesting — against the nearest threshold, remembering the cliff: the cost of crossing is the same whether the line is missed by one dollar or twenty thousand.
• For charitably inclined clients over 70½, model a qualified charitable distribution against a deducted gift — a QCD reduces MAGI, a below-the-line deduction does not.
• For clients near the frozen $500,000/$750,000 line, note that its first indexing in 2028 creates a small, dated planning window.

None of this is a prescription — it is a projection exercise, and the whole point of an August number is that there is still time to run it.

Methodology: thresholds computed under SSA §1839(i)(5) from BLS CPI-U (not seasonally adjusted, U.S. city average), September 2025–August 2026 window, nine of twelve months published as of August 11, 2026; validated against CMS-published thresholds 2020–2026. Premium and out-year trajectory from the 2026 Medicare Trustees Report, intermediate assumptions; surcharges are the statutory multiples of the standard premium. 2026 actuals from the CMS premium notice of November 2025. Part D surcharges are set by separate machinery and are deliberately not projected here. All 2027 figures are projections; CMS finalizes official amounts in fall 2026, and this page will be graded against them.