Retired but Paying Higher Medicare Premiums? Check the Income Calculation

1. Know which part of your Medicare bill increased

The income-related monthly adjustment amount, usually called IRMAA, is an extra charge for people whose income exceeds specified limits. It applies to Medicare Part B, which covers physician and outpatient services, and Medicare Part D prescription drug coverage. Social Security determines the adjustment using tax information, generally supplied by the IRS. Your insurer does not decide whether you owe it.

For 2026, the standard Part B premium is $202.90 per month. The first income-related surcharge generally starts above $109,000 for an individual return or $218,000 for a married couple filing jointly. Different rules apply to married people who file separately and lived with their spouse during the tax year. Check the filing-status category on your notice rather than assuming every separate return follows the individual thresholds.

IRMAA is assessed per person, not per household. If both spouses have Part B and drug coverage, each can owe adjustments based on the same joint return. A Part D adjustment is separate from the plan premium and is paid to Medicare, usually through benefit withholding or a bill, rather than to the drug plan.

2. Trace the income figure back to the tax return

For 2026 premiums, Social Security generally uses your 2024 federal income tax return, filed in 2025. That two-year lookback is why someone who retired in 2025 can still receive a surcharge tied to a full year of salary. If the usual return is unavailable, the agency may initially use older information. Your determination notice should identify the tax year and income used.

For Medicare IRMAA, modified adjusted gross income, or MAGI, means adjusted gross income plus tax-exempt interest. On a 2024 Form 1040, start with line 11 for adjusted gross income and add line 2a for tax-exempt interest. This is not take-home pay, taxable income after the standard deduction, or the total deposited into your checking account.

Taxable retirement-account withdrawals, Roth conversions, capital gains and the taxable portion of Social Security benefits can be included in adjusted gross income. Municipal-bond interest can count through the tax-exempt-interest addition. Qualified Roth withdrawals generally do not increase this figure. Review the actual return rather than trying to rebuild income from bank deposits, and remember that a large deduction below adjusted gross income may not help with IRMAA.

3. See whether a qualifying life event explains the drop

Social Security recognizes specific life-changing events that may justify using lower, more recent income. Retirement commonly fits the category of work stoppage; moving from full-time work to fewer paid hours may fit work reduction. An event involving your spouse can also matter. The key is showing that the qualifying event reduced income enough to affect the adjustment.

The recognized events are listed below. Some have narrower requirements than their everyday names suggest, particularly losses involving property, pensions or employer settlements. Use Social Security's definitions and evidence instructions, not simply a description such as “my finances changed.”

By contrast, finishing a planned Roth conversion or not repeating a profitable stock sale generally is not a qualifying life-changing event on its own. Selling a vacation home is not automatically a qualifying loss of income-producing property. These distinctions matter because an expensive but correctly calculated surcharge cannot necessarily be removed just because the income was unusual.

• Marriage, divorce or annulment, or the death of a spouse.
• Work stoppage or work reduction affecting you or your spouse.
• Loss of income-producing property because of circumstances beyond your control.
• Loss or reduction of certain pension income under the agency's rules.
• An employer settlement payment connected to an employer's closure, bankruptcy or reorganization.

4. Build a realistic estimate of post-retirement income

A retirement date is only half the picture. Social Security also needs an income figure for the relevant year. Form SSA-44, Medicare Income-Related Monthly Adjustment Amount — Life-Changing Event, walks applicants through the event, income reduction and supporting information. Depending on the circumstances, the agency may consider income from a more recent completed year or an estimate for a year whose return is not yet available.

Estimate the entire calendar year, not just the months after retirement. Someone leaving work in June may still have substantial wages, a bonus, severance or a vacation payout. Add expected taxable pension income, retirement distributions, investment income and tax-exempt interest. Do not assume that a lower monthly paycheck puts the annual total below an IRMAA threshold.

Ask how to report a material change in your estimate. Social Security can later compare estimates with tax information, and an understated figure can lead to additional amounts owed.

• Separate adjusted gross income from tax-exempt interest; the form requests both figures.
• Include income already received and reasonable expectations for the rest of the year.
• Account for a spouse's income when using a joint filing status.
• Keep the worksheet and assumptions behind your estimate, including planned withdrawals or conversions.

5. Gather the records before contacting Social Security

Prepare a small file that connects the notice, the qualifying event and the lower income. You do not need every financial statement you have ever received. You need enough reliable documentation to show what happened, when it happened and why the income figure should change. Keep copies of everything submitted and ask which documents must be originals or certified copies.

The strongest records depend on the event. A retirement letter may document work stoppage, while a death certificate or divorce decree supports a different change. If your latest tax return has not been filed, follow SSA-44's instructions for estimates and ask what additional evidence the agency needs.

• Your IRMAA determination notice, including its date, the income year used and the premium amounts.
• The tax return used in the notice, plus any more recent filed return and relevant IRS correspondence.
• A completed SSA-44, if requesting a change based on a qualifying life event.
• An employer letter, retirement notice, final pay stub or other evidence of work stoppage or reduced hours.
• Event-specific records, such as a marriage certificate, death certificate, divorce decree or pension administrator's notice.
• An annual income worksheet supported by available W-2s, 1099s, pension statements and investment records.

6. Request the right review and watch the deadline

Start with Social Security, not your Medicare Advantage insurer or prescription drug plan. Use the contact information on your notice or independently visit SSA.gov. Explain whether you are reporting a qualifying life-changing event, disputing tax information or challenging another part of the determination. These situations can require different procedures, even though people often call all of them an appeal.

For a qualifying event, ask for a new IRMAA determination using SSA-44. You generally do not have to file a formal appeal to have that event considered. If you disagree with the original decision, a reconsideration request is generally due within 60 days after you receive the notice. Social Security usually presumes receipt five days after the notice date unless you show otherwise. Follow the notice's instructions and do not let an informal inquiry consume an appeal deadline.

If you filed an amended return, ask what proof Social Security needs that the IRS received it; a newly prepared copy alone may not resolve the issue. If the agency used an older return because newer information was unavailable, ask about submitting the correct year's return. Record submission dates, keep confirmations and request a written decision explaining the outcome.

7. Check the result and plan for the next lookback

Continue paying required premiums while the request is pending unless the agency directs otherwise. A pending review does not itself suspend your obligations. If Social Security lowers the adjustment, read the new notice for the effective months, revised amounts and handling of any overpayment. Check subsequent benefit statements or Medicare bills, since processing and withholding changes may not appear immediately.

For couples, verify each spouse's determination rather than assuming one request automatically updates both accounts. Also check both Part B and Part D adjustments where applicable. A lower income figure may reduce a surcharge without eliminating it, because IRMAA uses income brackets. Moving down one bracket is different from returning to the standard premium.

Finally, consider the lookback when planning future withdrawals or asset sales. Income received in 2026 would ordinarily affect 2028 premiums, under thresholds and premiums set for that future year. Do not use today's cutoffs as a guarantee. Before a large Roth conversion, gain realization or retirement distribution, weigh taxes and potential Medicare costs together. The goal is an accurate income calculation and a sensible retirement plan, not avoiding a surcharge at any cost.