• Steve Coker, CFP

Lowering your Medicare Premiums Due to a Life-Changing Event

Updated: Apr 8

Many retirees are surprised to learn that Medicare premiums are variable, increasing considerably for higher income individuals. The standard Medicare Part B premium is $170.10 per month beginning in 2022, but that rate rises to $238.10 per month for joint filers with income above $182,000 and keeps rising to a potential $578.30 per month for those above $750,000 (see table below). What makes this rule particularly frustrating is that Medicare uses income from 2 years prior when calculating the premium. As a result, recent retirees may be living on a much lower income in retirement and paying Medicare premiums based on their higher work income from 2 years ago. If you have had a life-changing event that reduced your income, you may apply for Medicare rate reduction using form SSA-44. Here are the basics.

Life changing events that qualify for a potential Medicare adjustment include marriage, divorce, death of a spouse, work stoppage, work reduction, loss of income producing property, loss of pension income, and employer settlement payment. If you are paying higher Medicare premiums and experience a significant reduction in income as a result of one of these events, it may be worthwhile to apply for a Medicare rate reduction using form SSA-44.

For example, a Medicare eligible working couple who make $300,000 a year combined but retire with an annual income of $200,000 would pay Medicare premiums of $442.30 per month (for each of them) for the first 2 years of retirement since the Medicare rate is based on the $300,000 income from their working years. Filing an SSA-44 to demonstrate a life changing event could reduce the Medicare premium to $238.10 per month, a savings of $204.20 per month for one or $408.40 for the married couple.

Filing the form SSA-44 is straightforward. You can find the form on the Social Security website here: https://www.ssa.gov/forms/ssa-44-ext.pdf. Note that you will need to provide evidence of the life changing event, such as a final paystub or statement from your employer. You can file through the mail, but I recommend taking the completed form and supporting documentation to the Social Security office.

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