He’ll Retire in June, and Medicare Will Bill Him $5,400 Extra for the Year, Off a Tax Return From When He Still Had a Salary. He’ll Tell Them He’s Retired, and the Bill Will Go Back to the Standard Premium
Medicare can charge you a surcharge based on a salary you no longer earn, and most new retirees never realize they have a federal regulation on their side that can wipe out thousands in extra annual premiums.
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If you were enrolled in Medicare Part B and still drawing a salary two years ago, your 2026 premium may include a surcharge based on income you no longer earn. Social Security sets the Medicare income surcharge, called IRMAA (income-related monthly adjustment amount), using your tax return from two years back.
That means someone who retires in June 2026 can still be charged based on their 2024 salary. A single filer whose 2024 modified adjusted gross income was over $205,000 and under $500,000 pays an extra $446.30 a month for Part B. Over 12 months, that comes to $5,355.60. You can use Form SSA-44 to ask Social Security to base the surcharge on your lower post-retirement income.
Your Retirement Date Can Reset Your Medicare Bill
By default, Social Security uses your modified adjusted gross income from the tax year 2 years prior to the premium year. For 2026 premiums, that means your 2024 return. The same rules let Social Security use a more recent year’s income if you report a major life-changing event that lowers your income, and retirement counts as one.
If your new estimate puts you in a lower bracket, the surcharge shrinks. If your income falls to $109,000 or less as a single filer, or $218,000 or less filing jointly, the surcharge goes away, and you pay the standard $202.90 monthly premium.
Where the Rule Sits in Federal Law
The surcharge comes from Section 1839(i) of the Social Security Act, found at 42 U.S.C. 1395r(i). Social Security’s regulation at 20 CFR 418.1135(a) sets the two-year lookback. Section 418.1135(e) lets the agency use a more recent tax year. The list of qualifying events is in 20 CFR 418.1205, which includes: “You or your spouse stop working or reduce the hours you work.” Under 20 CFR 418.1215, the income drop must be large enough to move you to a lower bracket or eliminate any income-related monthly adjustment amount.
Who Qualifies and Who Gets Turned Away
Section 418.1205 lists seven qualifying events: a spouse’s death, marriage, divorce or annulment, stopping or cutting back work, loss of income-producing property through disaster, fraud, or theft, a scheduled end or reorganization of an employer pension, and an employer settlement linked to a closure or bankruptcy. Your spouse’s retirement counts too.
For its part, Section 418.1210 excludes every other event, including events that affect your expenses, but not income and lost dividends from normal investment risk. A one-time income spike from selling a home, converting to a Roth IRA, or taking a large IRA withdrawal isn’t on the list, so a surcharge caused by one of those generally stays in place.
How to File Your Way Back to the Standard Premium
- Find your IRMAA notice from Social Security. Check which year’s income it used and which bracket it put you in.
- Estimate your 2026 modified adjusted gross income. Count your wages from January through June, any severance or unused vacation payout, pension income, IRA withdrawals, and taxable investment income. Compare the total with the 2026 thresholds of $109,000 for single filers and $218,000 for joint filers.
- Fill out Form SSA-44. You can submit it online after signing in to your Social Security account, fax or mail it to a local office, or call 1-800-772-1213. Choose work stoppage as your event and enter your retirement date.
- Include evidence of the event, such as paperwork from your employer showing your last day, along with support for your income estimate.
- Read your 2027 notice when it comes. The default for 2027 is your 2025 return, which reflects a full year of salary. If the notice still shows a surcharge, file again with your 2027 estimate.
Social Security Checks Your Estimate Against the IRS
Social Security eventually gets your actual 2026 income from the IRS. Under 20 CFR 418.1140(d), if that number differs from your estimate, the agency makes retroactive corrections to all months of the year. If your estimate leaves out a severance check or a year-end bonus, you could get a bill later.
Your half-year of salary can also limit how much you save. If your January through June wages alone put you over the threshold, filing the form lowers your bracket but won’t bring back the standard premium. For example, a single filer with income above $109,000 and up to $137,000 still pays $81.20 a month extra for Part B. Part D drug coverage has its own surcharge, which is $83.30 a month in the over-$205,000 single bracket.
The same request can lower the extra amount for both Part B and Part D. Several income-linked premium traps from two years ago exist beyond IRMAA, and we mapped out the rest in a free Medicare guide.
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David Beren has been a Flywheel Publishing contributor since 2022. Writing for 24/7 Wall St. since 2023, David loves to write about topics of all shapes and sizes. As a technology expert, David focuses heavily on consumer electronics brands, automobiles, and general technology. He has previously written for LifeWire, formerly About.com. As a part-time freelance writer, David’s “day job” has been working on and leading social media for multiple Fortune 100 brands. David loves the flexibility of this field and its ability to reach customers exactly where they like to spend their time. Additionally, David previously published his own blog, TmoNews.com, which reached 3 million readers in its first year. In addition to freelance and social media work, David loves to spend time with his family and children and relive the glory days of video game consoles by playing any retro game console he can get his hands on.
