7 Life Events That Can Lower Your Medicare Premiums

Retirees may find that healthcare costs consume a sizable portion of their income. According to Medicare.gov, enrollees aged 65 and up should expect to pay a monthly Part B premium of at least $165 in 2023. In addition, you’ll need to pay 20% of service costs and the $226 deductible yearly.

Although Medicare Part A may be free for many individuals, starting in 2023, you will also have a $1,600 deductible for any hospital stays.

The Part D monthly rates vary, but if you don’t enroll when you’re qualified, you risk paying a 12% annual penalty, even after you’ve chosen a plan.

Additionally, Medicare Part B rates may be substantially higher for those whose annual income exceeds the thresholds established by the government. In 2003, Medicare started charging a fee called the income-related monthly adjustment amount (IRMAA). Medicare adopted this approach to keep costs down. 

According to AARP, 7% of Medicare beneficiaries may be required to make these extra payments.

Techniques for Calculating the IRMAA

You’ll need to disclose your MAGI on your tax returns to determine your IRMAA. This is because Medicare premiums are determined not by your current income but by your MAGI from the previous two years, according to the Social Security Administration (SSA). AARP estimates that, depending on your income, you could pay an extra $66 to $396 per year for Medicare Part B and an additional $78 per month for Medicare Part D.

There are, however, seven situations where you can legally dispute the allegations. Appealing to higher premiums helps you better manage your funds if you are nearing retirement and expecting one of these situations.

The Loss of a Loved One

After losing a spouse, the couple’s joint income often drops drastically, making them candidates for premium reductions. A death certificate or other official document proving the decedent’s death is required, as is an updated income projection.


Many tax incentives have higher thresholds for married couples filing jointly. For example, suppose one spouse’s income exceeds the $97,000 cap, and that person demanded higher premiums in the prior year. In that case, a married couple whose combined annual income is less than or equal to $194,000 may no longer be subject to IRMAA.

Separation or Dissolution

Similar to how your premiums may go down when a divorce or annulment lowers your income. You’ll need to provide evidence of the adjustment and a rough estimate of your new revenue.

Whether or if One is Employed

Medicare premiums may be lowered if you’re no longer working as many hours or earning as much money as you were before retirement (or after age 65). You must provide proof, such as a pay stub, corporate minutes, a declaration from your employer, or other acceptable evidence. The following year’s tax returns should likewise reflect the adjustment.

Business sales

If you sell your firm and no longer have any income associated with it, you may not be subject to IRMAA. However, you can provide evidence of a business sale or transfer by presenting a transaction record, a declaration from the firm owner, or the corporate minutes.

Reduced Earnings Due to Circumstances Beyond Your Command

Suppose you are retired and rely on rental income from the property. In that case, you may not be liable for IRMAA penalties if such income is lost due to circumstances beyond your control. For instance, you should notify the Social Security Administration immediately if you lose income from rental properties, farmland, crops, animals, or company cars because of a fire, flood, or theft.

Loss of Specific Types of Pension Income

Suppose your pension income decreases or disappears after you retire. In that case, you may be exempt from paying the increased Medicare premiums that would otherwise apply. However, the loss of income must be the direct result of the failure or termination of the plan or the annuity’s natural expiration. 

Examine Your Annual Income and Medicare Expenses

Remember that the Social Security Administration will examine your tax returns yearly for evidence of IRMAA penalties. The amount you pay each year for Medicare is subject to change based on your income from sources like capital gains, the sale of property, and company profits or losses.

Before making any significant financial decision, it is wise to consult a financial counselor.

Contact Information:
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For over 30-years Joe Carreno of The Retirement Advantage has been a Federal Employee Retirement System specialist (FERS) as well as a Florida Retirement System specialist (FRS) independent advocate. An affiliate of PSRE (Public Sector Retirement Educators), a Federal Contractor & Registered Vendor to the Federal Government, also an affiliate of TSP Withdrawal Consultants. We will help you understand your FERS & FRS Benefits, TSP & Florida D.R.O.P. withdrawal options in detail while recognizing & maximizing all concurrent alternatives available. Our primary goal is to guide you into retirement with no regrets; safe, predictable, stable, for life. We look forward to visiting with you.

Not affiliated with the U.S. Federal Government, the State of Florida, or any government agency. The firm is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation. Although we make great efforts to ensure the accuracy of the information contained herein we cannot guarantee all information is correct. Any comments regarding guarantees, safe and secure investments & guaranteed income streams or similar refer only to fixed insurance and annuity products. Fixed insurance and annuity product guarantees are subject to the claims‐paying ability of the issuing company. Annuities are long-term products of the insurance industry designed for retirement income. They contain some limitations, including possible withdrawal charges and a market value adjustment that could affect contract values. Annuities are not FDIC insured.

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