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How do I reduce my Medicare premiums?

How Do I Reduce My Medicare Premiums if My Income Changes?

By: Josh Duncan

Have questions about Medicare premiums?

How is your Medicare B premium set? And how can you lower your Medicare premium if your income declines in retirement? Today the Fearless Advisor explains all!

(The video is 5 minutes. Full transcript is below.)


Full Transcript of video

Hey friends, the Fearless Advisor here. Today I am going to discuss adjusting your Medicare premiums after a decline in your income.

Medicare is a program that helps with medical expenses for Americans over the age of sixty-five. The program is very specific on when you must enroll or be subject to a delayed enrollment penalty, which lasts a lifetime! These requirements can really get our emotions stirred and cause us to make decisions quickly and possibly pay some higher premiums at the beginning of our Medicare journey.

Your Medicare Part B premiums are based on your income from 2 years back.

What I am referring to is how Medicare Part B premiums are determined. Part B is often referred to as “Medical Insurance.” (Please bear with me as there are going to be some acronyms used by the Social Security Administration.) These premiums are determined by your modified adjusted gross income or MAGI from two years ago. Your modified adjusted gross income is determined from data on your tax return. In this case, MAGI is your adjusted gross income plus your tax-exempt interest.

These premiums are determined by your
modified adjusted gross income (or MAGI)
from two years ago.

Higher MAGI? Your monthly Medicare costs could be higher—up to $365 more per month per couple!

When your MAGI from two years ago is higher than a base amount, you will receive an income related monthly adjustment amount or IRMAA added to your Medicare Part B premiums. For 2021 the standard Part B premium is $148.50 per month. If you filed your taxes as single in 2019 and with a MAGI above $88,000 you would pay and extra $59.40 per month. The same amount is added for joint tax filers with a MAGI over $176,000. This is a tiered scale that you can find at The maximum IRMAA is $356.50 per month.

Good news! Yes, you can request a reduction in Medicare Part B Premiums.

Now that you are aware that the cost of Part B premiums can increase with your income, lets discuss when you may need to ask for a reduction in your premiums. The time is when you have a life-changing event, and your income is reduced. This commonly happens when someone retires at age sixty-five or later. If your income while working was much higher than your income in retirement will be, you could be paying more for Part B coverage for two years, until your tax returns catches up to your retirement income.

You may need to ask for a reduction in your premiums . . . when
you have a life-changing event, and your income
is reduced . . . [as] commonly happens
when someone retires at age sixty-five or later.

For example, if you file single and retire from working at age sixty-five, and your MAGI from 2019 was $90,000, you will be paying the additional $59.40 per month for the next two years. Assuming your MAGI in retirement will be less than $88,000, you can eliminate the additional premium. That is over $1,400 in savings.

Return Form SSA-44 to your local Social Security Office

Here is how to reduce your Part B premiums: complete form SSA-44, which can be found on the Social Security Administrations website, Just search for “SSA-44.” On this form, you will identify your life-changing event, your MAGI information from two years ago (see your last tax return), what you expect your income to be after the life-changing event, and, most importantly, documentation supporting your claim.

The only way I can figure out how to get the completed form and documentation to the Social Security Administration is by taking it to a local office. The form does reference that any documentation provided will be returned to you. However, a mailing address on the form is not provided. In my opinion, it is probably worth your time to schedule an appointment at your local office for the premium reduction.

Give yourself time to learn about Medicare’s rules and procedures—and make a plan.

Medicare and Social Security are beneficial programs while also complex. Be sure to allow yourself enough time to learn about their rules and procedures. Hasty decisions can have a life-long monetary impact that is not in your best interest. If you need additional assistance to walk through this process, reach out to a professional. This could be your financial advisor, accountant, or attorney.

F5 Financial is here to answer your questions.

If you need assistance or have questions in this area, the team here at F5 Financial would be happy to listen and support your family. Feel free to reach out to us at F5 Financial. Thanks for joining us!


Photo credit: F5 Financial

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