top of page
RCS-v2.png

Your Medicare IRMAA Guide For Retirement and More

  • Writer: Joshua Rigden
    Joshua Rigden
  • Dec 3
  • 5 min read

Updated: Dec 3

Retiring is supposed to be the time you stop worrying about income, but for many higher earners, Medicare throws a curveball called: IRMAA.


What is IRMAA?

IRMAA stands for Income-Related Monthly Adjustment Amount. It is a surcharge added to your Medicare Part B (medical) and Part D (drug) premiums.


Medicare is not one-price-fits-all. While most people pay the "standard" premium (approx. $185/month in 2025), high earners pay the standard premium plus the IRMAA surcharge. This can increase your monthly bill by hundreds of dollars.


The "Two-Year Lookback" Rule

The most confusing part of IRMAA is the timing. Social Security determines your premiums for the current year based on your tax returns from two years ago. The Social Security Administration (SSA) determines if you owe an Income-Related Monthly Adjustment Amount (IRMAA), while the Centers for Medicare & Medicaid Services (CMS) sets the actual premium amounts and income brackets.


  • 2025 Premiums are based on your 2023 Tax Return.


  • 2026 Premiums are based on your 2024 Tax Return.


The Retirement Problem: When you retire in 2025, your income drops. However, Social Security is still looking at your high income from 2023 (when you were working full-time) and billing you the surcharge. You are essentially being billed for a salary you no longer have.


To fix this, you must file a Request for a New Determination (Form SSA-44) based on a "Life-Changing Event."


The Official List of "Life-Changing Events"

You cannot appeal IRMAA simply because you "don't want to pay it" or because you made a one-time profit (like selling a second home) that you regret. You must have experienced one of the 8 specific events recognized by the SSA.


If your income drop is not tied to one of these eight codes, your request will likely be denied.


  1. Work Stoppage: You retired or permanently stopped working. (This is the most common code).


  2. Work Reduction: You didn't retire fully, but you cut back your hours significantly (e.g., going part-time).


  3. Marriage: Entering a marriage changed your tax filing status or joint income.


  4. Divorce or Annulment: Ending a marriage changed your household income.


  5. Death of a Spouse: Your household income dropped because a spouse passed away.


  6. Loss of Pension Income: A pension plan was terminated or ceased payments (not just a decrease in market performance).


  7. Loss of Income-Producing Property: This is strict. It does not mean selling a rental house or a stock market loss. It refers to property lost due to disaster, calamity, or theft (e.g., a rental home burned down in a wildfire or was destroyed in a hurricane).


  8. Employer Settlement Payment: You received a settlement specifically because an employer went bankrupt or closed.


The Action Plan: Checklist for New Retirees

If you have retired (Event #1) and received an IRMAA notice, follow this step-by-step process.


Phase 1: The Initial Request (Form SSA-44)

Do this immediately upon retiring or receiving the IRMAA notice.


1. Gather Your Evidence

  • Letter from Employer: A signed letter on company letterhead stating:

    • Your name.

    • The specific date you retired.

    • A statement that you have "permanently stopped working."

  • Proof of New Income:

    • If you already filed taxes for the retirement year: A copy of that filed Federal Tax Return (1040).

    • If you haven't filed yet: A prepared estimate of your Adjusted Gross Income (AGI) + Tax-Exempt Interest for the coming year.


  • Form SSA-44: Download Form SSA-44.


2. Complete Form SSA-44

  • Step 1: Check the box for "Work Stoppage." Enter your retirement date.


  • Step 2: Enter the tax year your income dropped (usually the retirement year). Enter your Estimated AGI for that year.

    • Critical: This estimate must be lower than the IRMAA threshold, or you will still be charged.

  • Step 4: Sign and date the form.


3. Submit the Package

  • Go In-Person: Visit your local Social Security office.

  • Get a Receipt: Ask the clerk to date-stamp a copy of your front page so you have proof of submission.


Phase 2: The Formal Appeal (Form SSA-561)

Do this ONLY if your SSA-44 was denied and you know the denial was a mistake.


1. Verify the Deadline

  • 60-Day Rule: You must file this appeal within 60 days of the date on the denial letter.


2. Prepare the Appeal

  • Form SSA-561: Download Form SSA-561 (Request for Reconsideration).

  • Section "Issue Being Appealed": Write "Incorrect determination of IRMAA adjustment after Life-Changing Event."

  • Section "Reason for Appeal": Write: "I provided evidence of Work Stoppage on [Date]. My income has permanently dropped to [Amount], which is below the threshold. The denial ignores my proof of retirement."


3. Add the "Letter of Explanation"

  • Draft a simple cover letter (see Next Step below) to sit on top of your evidence.

  • Attach a copy of the original SSA-44 you sent.

  • Attach the Employer Letter again.


4. Submit Again

  • Certified Mail: If you cannot go in person, send this packet via USPS Certified Mail with Return Receipt Requested.


Frequently Asked Questions


Q: I sold a second home and made a huge profit, causing IRMAA. Can I appeal? A: Generally, No. A "Capital Gain" is not a life-changing event code. Unless that home was "Income-Producing Property" that was lost in a disaster (fire/flood), a standard sale is considered voluntary income, and you must pay the surcharge for one year.


Q: When will the surcharge go away?

A: If you cannot appeal, the surcharge naturally falls off after one year. Since the lookback is 2 years, a high income in 2023 affects 2025 premiums. By 2026, they will look at your 2024 income. If your income was lower in 2024, the surcharge disappears automatically.


Q: Do I have to pay the bill while I wait for the appeal?

A: Yes. Always pay the bill. If your appeal wins, Social Security will issue a refund for the extra amount you paid. If you simply stop paying, you risk losing your Medicare coverage.



 

Rigden Capital Strategies was born out of a simple but powerful idea: financial advice should be personal, transparent, and built around your goals—not generic solutions or product-driven sales. Fueled by decades of experience and a desire to see clients truly succeed, we’ve created a process rooted in value, integrity, and progress.


As a fee-only fiduciary, we offer dynamic, stress-tested wealth plans tailored to your life. Our expertise spans investment management, retirement and tax planning, and estate guidance blending active and passive strategies to help your portfolio through any market. We believe in real relationships, clear strategies, and long-term results.


Your goals, our strategies. Together, let’s make your goals happen.


Disclosure: This content is for informational and educational purposes only and should not be interpreted as financial, legal, or tax advice. While we strive for accuracy, we do not guarantee the completeness or reliability of the information provided. Investment decisions should be based on individual circumstances, and we recommend consulting a qualified professional before implementing any financial, legal, or tax strategies. Past performance is not indicative of future results, and all investments carry risks, including potential loss of principal. No investment strategy can guarantee success or protect against loss in all market conditions. Investors should carefully consider their risk tolerance, investment objectives, and financial circumstances before making investment decisions.

bottom of page