He Retired in June and Medicare Billed Him $5,400 Extra for the Year, Off a Tax Return From When He Still Had a Salary. He Told Them He’d Retired, and the Bill Went Back to the Standard Premium

Medicare beneficiaries who retired this year may be paying a premium surcharge based on a salary they no longer earn. The reason is that Medicare’s income-related monthly adjustment amount (IRMAA) comes from a federal tax return filed two years earlier, so a 2026 bill can reflect 2024 wages. Social Security has a process to reduce IRMAA after retirement, and beneficiaries file Form SSA-44, which replaces the old return with an estimate of current income. That can bring the premium back to the standard rate for the whole year.

How a 2024 Paycheck Sets a 2026 Medicare Bill

For 2026 premiums, Social Security used the modified adjusted gross income (MAGI) on the 2024 federal return. If that return wasn’t available, it used 2023. For context, MAGI here means adjusted gross income plus tax-exempt interest. While the standard Part B premium is $202.90 a month, single taxpayers above $109,000 and joint taxpayers above $218,000 pay more. The Centers for Medicare & Medicaid Services (CMS) says the surcharge hits about 8% of Part B enrollees.

In one example, a single filer’s 2024 salary drove his MAGI above $205,000, and he retired in June 2026. His Part B premium is now $649.20 a month, which includes a $446.30 surcharge. Over a year, that surcharge adds up to an extra $5,355.60 out of his pocket. He also pays an extra $83.30 a month on his Part D drug coverage. If his estimated 2026 MAGI does not exceed $109,000, Social Security adjusts, and his Part B premium drops back to $202.90.

Federal Rules Already Allow the Switch

The rules for this are in 20 CFR 418.1201 through 20 CFR 418.1270. One of them, 20 CFR 418.1205, defines a “major life-changing event.” Social Security’s staff manual (POMS HI 01120.005) tells employees to accept a beneficiary’s statement that the event lowered their income. They must sign it under penalty of perjury.

Staff confirms only that MAGI went down and that the event happened first, “regardless of how far in the past the LCE occurred”. LCE stands for life-changing event. Social Security handles the request as a new decision about the premium.

Eight Events Qualify, and Retirement Is One of Them

The form lists eight qualifying events. They are marriage, divorce or annulment, death of a spouse, work stoppage, work reduction, loss of income-producing property, loss of pension income, and an employer settlement payment. Retiring counts as a work stoppage. Cutting back to part-time counts as a work reduction, and the income drop must also be “significant,” meaning it lowers or eliminates the surcharge for that tax year.

Some people can’t use the form. If the most recent return already falls under the limits, no surcharge is owed, and the form says not to file even with a qualifying event. An income drop not tied to one of the eight events doesn’t qualify, and the request covers only the person who files it. If a spouse is also paying a surcharge, that spouse must contact Social Security separately.

Filing the SSA-44 in Five Steps

1. Check the IRMAA notice to see which tax year Social Security used to set the premium.
2. Fill out Form SSA-44 (the current version is dated 12-2025). Check “Work Stoppage” and enter the month and year work stopped.
3. Use Step 2 for an income drop that already appears on a filed tax return. Use Step 3 to estimate adjusted gross income, tax-exempt interest, and filing status for a lower-income year that hasn’t been filed yet.
4. Include an estimate for next year, too. If you leave it out, Social Security uses the current-year estimate for the next premium year.
5. Attach proof of both MAGI and the life-changing event. Taxpayers can submit online through a my Social Security account, fax or mail the form to a local office, or call 1-800-772-1213.

A Calendar Deadline Can Cost a Full Year of Savings

The filing date sets how much of the reduction applies. For someone with Part B all year, the new decision takes effect January of that year, so filing during 2026 can cover all 2026 premiums. Social Security generally won’t apply the change to a year that has already ended. The one exception covers events in the last three calendar months of the prior year, and only for those who file by March 31. That means a June 2026 retiree who waits until 2027 to file will likely lose the 2026 reduction unless Social Security accepts good cause for filing late.

The estimate also gets checked later. Once the tax return is filed, Social Security will later check with the IRS to verify the number. It will then decide whether any IRMAAs are owed. If a taxpayer underestimates income, the surcharge can come back.

Medicare open enrollment for 2027 is underway, and Social Security has announced a 3.6% cost-of-living adjustment for 2027. With the same two-year lookback, 2027 surcharges would come from 2025 returns, which for a 2026 retiree means a full year of salary. The second-year estimate on the SSA-44 sets which income Social Security uses for that 2027 premium. IRMAA is one of several Medicare costs that catch retirees by surprise, and we mapped out the rest in a free guide to Medicare’s hidden bills.

Contact [email protected] for any questions or corrections.