Transit Managerial Benevolent Association

Hochul plans cuts to Medicare reimbursements amid federal crunch
IRMAA on the chopping block
A Medicare reimbursement program saving thousands of retirees hundreds of dollars each month has been eliminated in Governor Kathy Hochul's proposed budget for Fiscal Year 2027. Hochul spoke at the Choose Healthy Life Summit last week.
A Medicare reimbursement program saving thousands of retirees hundreds of dollars each month has been eliminated in Governor Kathy Hochul's proposed budget for Fiscal Year 2027. Hochul spoke at the Choose Healthy Life Summit last week.
Mike Groll/ Office of Governor Kathy Hochul
Posted Wednesday, February 18, 2026 10:21 pm

BY HARPER FREEMAN
Many New York State retirees will pay hundreds of dollars more in healthcare premiums each month under Governor Kathy Hochul's budget proposal to eliminate a Medicare reimbursement program.

The Income-Related Monthly Adjustment Amount (IRMAA) has been a staple of the New York State Healthcare Insurance Program for years and covers the cost of premiums that, under federal law, are more expensive for higher-earning retirees under Medicare Part B and D. In 2026, if a retiree's working income is over $109,000 a year, or $218,000 as a couple, they qualify for the higher premiums under Medicare – between $81 and $487 a month – that are covered under IRMAA.

But IRMAA reimbursement comes at the cost of millions of dollars to the state in a period when Governor Hochul is looking to compensate for reduced federal spending on healthcare. In Hochul’s preliminary budget for Fiscal Year 2027 released last month, she proposed eliminating IRMAA program entirely in order to “limit costs to the Medicare program.”

“The savings achieved through this proposal would be equally shared by the State and certain State retirees in the form of an annual premium refund,” the budget briefing book reads. “The savings to the State is estimated to be $14 million in FY 2027 and $15.2 million in FY 2028.”

'This protects retirees'
Roann Destito, the president of the Retired Public Employees Association said that this change could affect between 3,500 and 4,000 retirees who will see their yearly premiums increase by thousands of dollars without IRMAA. She insisted that retirees had “earned” their benefits, including IRMAA.

"This protects retirees from having to pay from out of pocket when affordability has become a struggle,” Destito said of the reimbursement program. "We just want to ensure that there's fairness and security in retirement."

Marianne Pizzitola, the president of the New York City Organization of Public Service Retirees, said that IRMAA is one of the first programs on the state’s chopping block each year when trying to reduce spending. Pizzitola supports RPEA’s push to maintain IRMAA and said that the state would be “stealing” from retirees if the program is scrapped.

“The state should not be clawing back Medicare reimbursement from retirees,” she said.

Besides maintaining IRMAA, the RPEA is urging lawmakers to include funding in the budget that can ensure all retirees receive the same coverage in nursing homes. The retiree organization is also pushing for lawmakers to increase the cost-of-living adjustment for pensions.

“Supporting policies that protect the financial security and health care benefits of public sector retirees is our priority,” RPEA executive director Tom Tatun said in a statement.

In a statement on the pushback on IRMAA elimination, a spokesperson for Hochul said she "will continue to negotiate in good faith with the state legislature to deliver a budget that makes New York State safer and more affordable."

Federal cuts could affect millions
But New York is facing intense headwinds for its healthcare budget because of federal cuts.

Under H.R 1, which President Trump titled the Big Beautiful Bill and signed into law last July, the federal government cut $1 trillion over the next decade in Medicaid spending and up to $500 million in cuts to Medicare over the next eight years by further limiting immigrant eligibility. That has forced local leaders into a scramble to compensate for the increased cost burden that states and local communities will have to shoulder in the coming years to maintain healthcare benefits for millions.

These cuts place “immense strain” on the New York State budget that will have to be resolved over several years of financial planning, Hochul’s proposed budget says.

More than 6.8 million retirees are expected to be enrolled in Medicare in New York State by March, according to state figures, at a cost of more than $38 billion each year. The state also has the highest per-capita healthcare costs - over $4,755 per year per person – of any state in the nation and is expected to rise as the number of retirees increases.

Beyond the IRMAA reductions, lawmakers in New York are searching for ways to make up for the loss of federal funds covering the Essential Plan that covers more than 1.7 million New Yorkers. Those cuts could force the state to shoulder an additional $3 billion each year at the risk of many vulnerable New Yorkers losing their healthcare coverage.

Hochul has expressed strong resistance to raising taxes on the wealthiest New Yorkers to generate revenue to fill gaps in the state’s budget, even as she proposes expanding the state’s childcare initiatives.

Destito is insisting that changes at the federal level aren't a legitimate reason to shift cost onto retirees, most of whom have fixed incomes.

“Budgets shouldn't be balanced on the back of our public employee retirees,” she said.