His Company Pension Is Being Cut as the Plan Fails. Medicare Can Keep Pricing Him on the Old Pension for Two More Years Unless He Checks One Box
When a company pension plan fails, Medicare keeps billing retirees at the old income level for up to two years unless they know about a single checkbox on one federal form that almost no one files.
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
His company pension drops sharply in 2026 after the plan fails. He files his taxes as a single person, and his income just fell by $60,000. Medicare has no record of the drop. Social Security sets his 2027 Part B and Part D premiums from his 2025 tax return, filed while the full pension was still coming in. Unless he asks Social Security for a new determination, it can keep using the old $155,000 income figure. Form SSA-44 gives him a box specifically for Loss of Pension Income.
The Centers for Medicare & Medicaid Services (CMS) says IRMAA surcharges reach roughly 8% of Part B enrollees. Under 2026 rules, single filers with modified adjusted gross income (MAGI) at or below $109,000 pay the standard $202.90 and no surcharge. A retiree whose old pension already kept him under that line has nothing to fix. Someone whose pension cut moves his income into a lower tier may be paying more than necessary unless Social Security uses the newer figure.
Medicare Is Still Charging Him for the Old Pension
IRMAA looks back two years. His 2025 income sets his 2027 premiums. His 2026 income sets his 2028 premiums. Here are his numbers:
- 2025 MAGI: $155,000
- 2026 projected MAGI after the pension cut: $95,000
For IRMAA, MAGI is adjusted gross income plus tax-exempt interest. Municipal bond interest looks tax-free, but it still counts. Unless he asks for a new determination, his 2027 premiums generally start from the older 2025 tax information. If his 2024 return also included the full pension, his 2026 premiums are based on the old income too. That makes two premium years tied to a pension he no longer gets.
A Failed Pension Plan Lets Him Skip the Two-Year Lookback
SSA regulations list a short set of major life-changing events. One of them is a “scheduled cessation, termination, or reorganization of an employer’s pension plan”. SSA’s operations manual calls this loss of employer pension income. A plan failure, termination, or bankruptcy restructuring that reduces his monthly check qualifies.
The box has limits. The pension must generally be a traditional defined-benefit or cash-balance plan, and the reduction must result from a qualifying failure, termination or scheduled cessation. Falling dividends or a shrinking brokerage account count as ordinary investment risk. SSA-44 also cannot undo income he chose to take, such as a Roth conversion or home sale that raised his MAGI.
One Checked Box Drops Him Two IRMAA Tiers
These figures use 2026 rates for illustration; CMS has not yet published 2027 amounts:
| MAGI (Single Filer) | Part B Total Premium (Monthly, Per Person) | Part D IRMAA (Monthly, Per Person) | Part B Plus Part D IRMAA (Monthly, Per Person) |
|---|---|---|---|
| $155,000 | $405.80 | $37.50 | $443.30 |
| $95,000 | $202.90 | $0.00 | $202.90 |
The difference comes to $240.40 a month, or $2,884.80 a year.
Check the lower side of the line too. Using 2026 thresholds for illustration, his $95,000 estimate sits $14,000 below the first surcharge line. If his final MAGI rises enough to cross the threshold in effect for 2027, he could move back into an IRMAA tier even after Social Security accepts the pension reduction.
What He Sends Social Security
- SSA-44 with Loss of Pension Income checked
- The date the pension reduction took effect
- Plan, employer, or PBGC documentation showing the reduction
- His updated MAGI, or an estimate if he has not filed the tax return yet
He can upload the form after signing in to his Social Security account, mail or fax it to a local office, or call 1-800-772-1213. A request for a new determination applies only to the beneficiary who files it.
Three Moves Before the 2027 Bills Arrive
- Report both affected years. If his 2026 premium includes a surcharge based on 2024 income, he can request a new determination now using his 2026 estimate. He can also give Social Security an estimate for the next premium year; if he does not provide a second estimate, SSA generally carries the first estimate forward.
- Get the letter that shows both numbers. A PBGC benefit determination or a plan notice that lists the new monthly amount and the effective date makes the best evidence. Send that letter rather than a general news story about the plan.
- Watch MAGI through December. His $95,000 estimate leaves room under the current threshold, but a large IRA withdrawal or Roth conversion late in 2026 could narrow or erase that cushion. Social Security can later verify his estimate against the tax return he files.
His pension dropped right away, but Medicare’s income record runs two years behind. SSA-44 lets him switch the pension Medicare recalls for the one he actually gets.
Contact [email protected] for any questions or corrections.
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.
