He Retired From Ironwork in June. Medicare’s 2027 Letter Will Price Him on the $180,000 He Earned During His Last Overtime Year
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A 67-year-old union ironworker spent 2025 on a major bridge job, and overtime pushed his income to $180,000. He worked part of 2026, retired in June, and expects about $60,000 of income in 2027. This fall, a Social Security letter will set his 2027 Medicare premium. That letter will base his premium on the busiest, best-paid year of his career — a year that no longer matches his life.
Other new retirees are running into the same wall. On Reddit’s r/SocialSecurity, one asked whether to file for relief before the surcharge notice even arrived: “I have a letter from my employer stating that I retired on June 30, 2026 and have my last pay statement.”
He has proof the paychecks stopped. The challenge now is getting Social Security to price his Medicare coverage on what he actually earns.
Why an Accurate Tax Return Produces a Stale Premium
Social Security sets the income-related monthly adjustment amount (IRMAA) using modified adjusted gross income (MAGI) from two years before the premium year. For 2027 premiums, that means his 2025 return. MAGI is adjusted gross income (AGI) plus tax-exempt interest, including municipal bond interest.
His salary and overtime ended in June. The two-year lookback carries them into 2027 regardless. The return is accurate. The picture it paints is already outdated.
Most people on Medicare never deal with this. CMS reports that IRMAA affects about 8% of Part B enrollees. A single filer whose MAGI sits at or below $109,000 pays the standard 2026 Part B premium of $202.90 and no Part D surcharge. For 2027, the threshold is projected to rise to approximately $112,000, based on the statutory CPI-U inflation formula, though CMS has not yet released the official 2027 figures. The 2026 Medicare Trustees Report estimates the standard 2027 Part B premium at $209.50 per month, up from $202.90.
What $180,000 Costs Him in Surcharges
CMS released the 2026 figures on November 14, 2025. The 2026 schedule below is the most reliable stand-in for 2027 rates, shown for a single filer. The MAGI thresholds in the table reflect 2024 income, since 2026 premiums use a two-year lookback.
| 2024 MAGI (single filer) | Part B surcharge (monthly, per person) | Part D surcharge (monthly, per person) | Combined surcharge (annual, per person) |
|---|---|---|---|
| $109,000 or less | $0.00 | $0.00 | $0 |
| Above $109,000 to $137,000 | $81.20 | $14.50 | $1,148 |
| Above $137,000 to $171,000 | $202.90 | $37.50 | $2,884.80 |
| Above $171,000 to $205,000 | $324.60 | $60.40 | $4,620 |
At $180,000 of MAGI, his Part B surcharge would be $324.60 a month, plus a $60.40 Part D surcharge. Together those total $385 a month, or $4,620 each year, stacked on top of income tax already owed on that overtime. At $60,000, he would owe no surcharge at all.
Retirement Qualifies as a Work Stoppage on Form SSA-44
Social Security lets beneficiaries request a lower IRMAA after a life-changing event that reduced income. Qualifying events include marriage, divorce, losing a spouse, and loss of income. Form SSA-44 lists “Work Stoppage” as a qualifying event, and retirement counts. Filing the form asks the agency to use his recent, lower income instead of waiting two years for it to cycle through his tax records.
One timing note matters: Social Security requires that the initial IRMAA determination letter be in hand before the form can be processed. Filing SSA-44 before that letter arrives may result in the appeal being returned as premature. Once the notice lands, he should submit:
- Form SSA-44, uploaded through his my Social Security account or faxed or mailed to a local office.
- A union or employer letter confirming his June retirement date, plus his final pay stub.
- The IRMAA notice itself.
- An estimate of his MAGI for the year his income dropped.
The form covers only income drops caused by qualifying life events. If he completes a Roth conversion or sells a property in retirement, that income stays on the bill no matter how high it pushes his MAGI. SSA-44 addresses the wage income that stopped; it does not shelter voluntary transactions.
Six Months of Overtime Can Still Trip a Bracket
Retiring does not automatically drop him below IRMAA thresholds. His 2026 income estimate must include six months of wages, his pension, taxable IRA withdrawals, investment gains, tax-exempt interest, and any vacation payout or severance. If those items push him past $109,000, an approved SSA-44 moves him down a tier but may still leave a surcharge in place. His 2028 premium will reflect the actual 2026 return, so a second SSA-44 filing may be needed using his 2027 income estimate.
Three Moves to Make Before the 2027 Bill Arrives
- Check the tax year printed on the notice. If it says 2025, the premium reflects his final overtime year. That number is not fixed.
- File SSA-44 promptly once the notice lands. Attach the retirement letter and final pay stub. Published guidance from multiple sources puts processing at 30 to 90 days. If approved, Social Security will recalculate the premium and refund any overpayment already withheld.
- Build his 2026 MAGI estimate line by line. If the total falls within $20,000 of a bracket threshold, he should defer optional IRA withdrawals and capital gains into 2027. At roughly $60,000 of projected income, that year carries plenty of room below the thresholds.
His last overtime year belongs on his 2025 return. With the right form and documentation, it does not have to follow him onto his 2027 Medicare bill.
Editor’s note: This article was updated to add the missing first IRMAA tier ($109,001 to $137,000, carrying a $81.20 monthly Part B surcharge and $14.50 Part D surcharge), to correct the table’s MAGI column header from “2025” to “2024” (reflecting the actual two-year lookback for 2026 premiums), to include the 2026 Medicare Trustees Report projection of a $209.50 standard Part B premium for 2027 and an approximately $112,000 single-filer IRMAA threshold, and to update SSA-44 processing time from an anecdotal figure to the 30-to-90-day range cited in published guidance, with a note that SSA requires the initial determination letter before the form can be accepted.
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Gerelyn Terzo is the author of dividend investing handbook "Dividend Investing Strategies: How to Have Your Cake & Eat It Too." A veteran financial journalist, she covers agri-finance for outlets like Global AgInvesting and the broader stock market and personal finance for 24/7 Wall Street. She began at CNBC and later helped launch Fox Business in New York. Gerelyn currently resides in Woodland Park, Colorado and dabbles in nature photography as a hobby.
