How to Lower Medicare Premiums in Retirement
How to Lower Medicare Premiums in Retirement
"Jim" is 67 years old. He retired at the beginning of February 2025. His joint income over the past few years exceeded $400,000 and their Adjusted Gross Income (AGI) was $350,000 in 2023. He and his wife are on Medicare, and their Part B premium for 2025 is $185, plus the Income-Related Medicare Adjustment Amount (IRMAA) surcharge of $295.90 per month (for each spouse). Combined, they were paying $961.80 a month for Medicare Part B, plus $35.30 per month per person for Part D. Medicare Part B premiums are based on your adjusted gross income. (To see the AGI breakpoints, visit the Medicare website at: https://www.medicare.gov/basics/costs/medicare-costs ).
Since Medicare premiums are based on the income from two years prior, Jim and his wife's 2026 Medicare premiums will be subject to the IRMAA surcharge because they are based on 2024 AGI. To avoid this surcharge, Jim and his wife can file Form SSA-44 with the Social Security Administration. This form allows you to request a review of your Medicare Part B premiums due to life-changing events, such as retirement.
Understanding the SSA-44 Process
The SSA-44 form is your pathway to potentially significant savings on Medicare premiums after a major life change. If you're like Jim, retirement represents a substantial reduction in income, which should be reflected in your Medicare costs. Here are the steps to file this form.
Step 1: Type of Life-Changing Event
First, you'll need to identify which qualifying life-changing event you've experienced. For Jim, it's "work stoppage" or retirement. Other qualifying events include:
- Marriage
- Divorce or annulment
- Death of Your Spouse
- Work Reduction (switching from full-time to part-time)
- Loss of Income-Producing Property (due to a disaster or other event)
- Loss of Pension Income
- Employer Settlement Payment
You'll need to indicate the exact date this event occurred—for Jim, this would be February 1, 2025.
Step 2: Document Your Reduction in Income
Next, you'll need to provide details about your income before the life-changing event. This includes your adjusted gross income, tax-exempt interest income, and filing status from your most recent tax return.
For Jim and his wife, they would report their 2023 AGI of $350,000, plus any tax-exempt interest income they received that year.
Step 3: Estimate Your New Income
This is where you demonstrate how your life-changing event will affect your finances going forward. Jim only had about $35,000 of employment income in 2025 and has not started receiving Social Security payments. He did start receiving monthly distributions from his IRA and expects that income to total $55,000 for the year. If he had pension payments or other investment income, he would add that up as well. As it is, he estimated his income to be $90,000.
Step 4: Provide Supporting Documentation
The Social Security Administration requires evidence of both the change in modified adjusted gross income (MAGI) and the life-changing event itself. For Jim, this would include:
- A signed copy of his most recent federal tax return or transcript from the IRS.
- Documentation of his retirement (such as an employer separation letter, copies of pay stubs, original or certified documents showing a transfer of his business)
Step 5: Submit Your Request
After completing and signing the form and gathering all necessary documentation, Jim and his wife can submit everything to their local Social Security office. They can either mail the materials or fax them, and should keep copies of everything for their records.
The Potential Savings
For Jim and his wife, the financial impact could be substantial. Since their retirement income dropped substantially, their new Part B premiums will be $185 per person, resulting in a monthly savings of $591.80 ($7,101.60 per year).
Remember, the Social Security Administration reviews these requests on a case-by-case basis. By accurately documenting your life change and income reduction, you put yourself in the best position to have your Medicare premiums adjusted appropriately.
Taking control of your Medicare costs is an important part of managing your retirement finances. Don't leave money on the table. If you are preparing for retirement and would like a complimentary consultation, CLICK HERE to schedule an introductory call today. For over two decades, the fiduciary financial advisors at Hurlow Wealth Management Group have helped Midwest Millionaires find clarity, make decisions with confidence, and feel comfort in retirement.