The Best Way to Reduce Your Medicare Premiums After You Retire

Reduced work is also considered an eligible life-changing event, so you may be able to contest the surcharge if you decide to work part time and ease into retirement, says Diane Omdahl, president of 65 Incorporated and author of Medicare for You: A Smart Person’s Guide. Omdahl’s Mequon, Wisconsin-based consulting firm assists people with Medicare decisions and sign-up problems.

How to request a premium reduction

Having your premium reconsidered involves paperwork. To request the change, you’ll need to file a three-page Form SSA-44 and note the date of the life-changing event.

Include a copy of your recent tax return or estimate your annual income for now and send your return later. You’ll also need to provide evidence of the life-changing event, such as a letter from your former employer stating that you retired or reduced your work hours.

If you can’t get an employer letter, you can provide a signed statement, under penalty of perjury, that says you partially or fully stopped working or accepted a job with reduced compensation. Form SSA-44 has a list of eligible evidence and four pages of instructions.

You can’t turn in the paperwork online, but you can mail the forms or submit them in person at a Social Security office. Omdahl recommends using Federal Express or UPS for tracking purposes.

Casey Schwarz, senior counsel for education and policy at the Medicare Rights Center, recommends calling the Social Security Administration, 800-772-1213, or your local Social Security office to learn the best way to submit your forms. See the Social Security office locator for contact information.

The request can take a few weeks to process, says Sandy Leith, director of the Senior Health Insurance Program at the Illinois Department on Aging. Keep paying the extra premiums while you wait. If the change is approved and the surcharge is eliminated or reduced, you’ll receive a refund of your extra payments.

“Keep your documentation and notes,” says Omdahl, who accumulated a 2-inch-thick file of paperwork after her husband signed up for Medicare several years ago. Because he retired midyear, the couple needed to submit documents to get the IRMAA reduced twice — for the year he retired and then again the following year.

If you’re still unsure of the process:

• Contact your State Health Insurance Assistance Program.
• Refer to the Medicare Rights Center’s Medicare Interactive guide.
• Look over the Social Security Administration’s “Premiums: Rules for Higher-Income Beneficiaries,” which also includes information about the surcharge and instructions for reporting a life-changing event. 

 How to avoid a future Medicare surcharge

If your income was unusually high one year and then dropped for a reason that isn’t considered a life-changing event, you won’t qualify for decreased premiums and may have to pay the surcharge for a year. 

The surcharge is recalculated annually, so your premiums will go down if your income falls. If you earned a lot of money in 2021, perhaps from a big stock sale, a bonus at work or taxable home-sale profits, you may be subject to the high-income surcharge for 2023. Converting money from a traditional IRA to a Roth IRA can also bump up your income for the year. But your 2024 premiums will be reduced if your 2022 income is lower.

Some people who don’t know about the income-related premiums have to pay the surcharge after earning just a few thousand dollars over the cutoff, Omdahl says. But if you prepare, you might avoid it.

“I worked with a woman who was familiar with it, and she went $1,500 under the cutoff because she planned,” Omdahl says. The income levels may rise for inflation each year, but keeping your income below the current cutoffs can help.