“It’s not what you look at that matters, it’s what you see.”
Recently, many retirees have been surprised by a letter from Social Security showing their Medicare premiums climbing sharply. The jump often has nothing to do with a change in health or a new financial decision. Instead, it comes from a rule called IRMAA—Income-Related Monthly Adjustment Amount.
In plain English, if your income is above certain thresholds, Medicare tacks on a surcharge to your premiums. For many, it feels like an unexpected “stealth tax.”
Here’s what many people don’t realize: you can appeal IRMAA.
If your income has dropped due to retirement, work reduction, or another life change, Social Security may reconsider the surcharge. All it takes is filing the right form and providing proof. In many cases, premiums can be reduced by hundreds of dollars a month.
Here are a few key lessons if you ever face an IRMAA surcharge:
- Don’t panic—read the fine print. The letter you get will show the year’s tax return Social Security used. It is often from two years ago. If your income has changed since then, you may have a case.
- Know your “life-changing event” categories. Retirement, work stoppage, work reduction, loss of income-producing property, divorce, or death of a spouse are all reasons Social Security will consider.
- File Form SSA-44. That’s the official appeal form. Provide documentation—like your retirement letter, tax return, or proof of income reduction.
- Watch your income levers. Roth conversions, capital gains, or selling property can all push your income above IRMAA thresholds. Be mindful when you do these and how they may affect your IRMMA charges and other taxes. We watch this by looking at your tax return and modeling in each of these triggers.
- Plan ahead. Just like the river’s current is easier to navigate when you see the bends before you get there, knowing IRMAA thresholds and planning withdrawals around them can save you thousands of dollars over time.
Lesson: Just because Social Security sends you a bill doesn’t mean it’s final. With the right knowledge and a little planning, you may be able to steer your Medicare costs back into calmer waters.
In the media, Riverbend was mentioned here on the 529 plan options.
