Retiring After 65? Don't Let Medicare Use Your Old Income Against You

Imagine retiring after a long career only to receive a letter from Social Security telling you that your Medicare premiums are increasing due to the income that you previously earned while working.

Your first thought might be "This can't be right...I just retired and my income is much lower now."

The letter is triggered because Medicare generally bases your premiums on the income reported on your tax return from two years earlier (the "two-year lookback").

If you recently retired after earning a high salary, Medicare may initially assume you're still earning that income, even if your paycheck has stopped.

Fortunately, Social Security allows many retirees to appeal their initial income calculation and request lower premiums by filing Form SSA-44, one of the most overlooked forms in retirement planning.

Why This Happens

Medicare Part B and Part D premiums are generally determined using your Modified Adjusted Gross Income (MAGI) from two years prior.

For example:

• Your 2028 Medicare premiums will generally be based on your 2026 tax return.

• Your 2027 Medicare premiums will generally be based on your 2025 tax return.

This works well for people whose income stays relatively consistent.

But retirement often causes income to drop dramatically.

A Common Example

Let's assume John and Susan both retire at the end of 2024.

• 2024 household income while working: $350,000

• 2025 expected retirement income: $120,000

Even though they're now retired in 2026, Medicare initially looks at their 2024 tax return at which point they were still working full-time and earning much higher income.

As a result, they're treated as though they're still earning $350,000.

What Could That Cost?

The table below shows the 2026 Medicare IRMAA brackets for married couples filing jointly.

"IRMAA" is an often used abbreviation for Medicare's "Income-Related Monthly Adjustment Amount", which are the premium increases that can be applied for high earners.

Modified AGI	Part B Premium (per person)	Part D IRMAA* (per person)
Up to $218,000	$202.90	$0
$218,001–$274,000	$284.10	$14.50
$274,001–$342,000	$405.80	$37.50
$342,001–$410,000	$527.50	$60.40
$410,001–$750,000	$649.20	$83.30
Over $750,000	$689.90	$91.00

*The Part D IRMAA is an additional surcharge on top of your prescription drug plan's monthly premium.

Because John and Susan's prior income was $350,000, they initially fall into the $342,001–$410,000 bracket.

That means they would pay:

Monthly Medicare Premiums	Per Person	Married Couple
Part B	$527.50	$1,055.00
Part D IRMAA	$60.40	$120.80
Total	$587.90	$1,175.80 per month

If Social Security instead used their actual retirement income of $120,000, they would fall below the first IRMAA threshold and pay the minimum premium for Medicare Part B and Part D.

Their premiums would instead be:

Monthly Medicare Premiums	Per Person	Married Couple
Part B	$202.90	$405.80
Part D IRMAA	$0	$0
Total	$202.90	$405.80 per month

The potential savings if they weren't paying increase premiums:

• About $770 every month

• More than $9,200 over a full year

That's a meaningful difference, especially during retirement when income is lower.

The Solution: The Medicare "Life Changing Event Form"

Social Security recognizes that certain life events can cause your income to decline significantly.

If you've experienced one of these life-changing events, you can request that Medicare use your current or expected income instead of the normal two-year lookback by filing Form SSA-44 (Medicare Income-Related Monthly Adjustment Amount – Life-Changing Event).

Retirement Is a Qualifying Life-Changing Event

One of the most common qualifying events is:

• Work stoppage (retirement)

Other qualifying events include:

• Reduction in work hours

• Death of a spouse

• Divorce or annulment

• Marriage

• Loss of pension income

• Loss of income-producing property due to circumstances beyond your control

It's important to note that not every reduction in income qualifies.

For example, having lower investment income, choosing not to realize capital gains, or choosing not to perform Roth Conversions again generally does not qualify as a "life-changing event" for purposes of requesting an income recalculation to end up with lower Medicare premiums.

What You'll Need

When filing Form SSA-44, you'll generally provide:

• The date your retirement or work reduction occurred.

• Your current estimated or actual Modified Adjusted Gross Income (MAGI).

• Documentation supporting your retirement, such as a retirement letter from your employer or other evidence that your employment ended.

You May Need to File More Than Once

Another surprise for many retirees is that filing Form SSA-44 once doesn't always solve the issue permanently.

Because Medicare recalculates premiums each year using the two-year lookback, it's normal to have to file the Life Changing Event Form (form SSA-44) twice.

In the earlier example, John and Susan retired in 2024.

• 2025 Medicare premiums would be based on 2023 income, at which point they were still working.

• 2026 Medicare premiums would be based on 2024 income, at which point they were still working.

As a result, they may have needed to file the Life Changing Event Form (form SSA-44) in both 2025 and 2026 to avoid Medicare premium increases in both years.

Once they reach the year 2027 and Medicare's two-year lookback uses 2025 income, they may no longer need to file the form since in this example they retired in 2024 and had much lower income in 2025 as a result.

The Bottom Line

Every year, retirees pay thousands of dollars in additional Medicare premiums simply because the system is looking at income they no longer earn.

If you've recently retired after age 65 or plan to retire in the near future, don't assume you should automatically pay a higher premium if Medicare sends you a letter saying you owe higher premiums based on old earned income that no longer applies.

A simple form, the Medicare Life Changing Event Form (form SSA-44), can in some cases save hundreds of dollars per month or thousands of dollars per year on Medicare.

This can then free up more room in the cash flow for things you'd rather spend that money on, especially in the early years of retirement.

Want To Discuss This Individually?

1 - For clients: Call or email me any time as always.

2 - For non-clients: Complete the form on the website to request a retirement planning consultation: www.rolekretirement.com

This article is for informational purposes only and should not be considered as tax or legal advice. Advice is only provided after entering into an Advisory Agreement with the Advisor.