Every December, a wave of newly retired Californians opens a letter from the Social Security Administration and discovers that their Medicare premium for the coming year is several hundred dollars a month higher than they expected. The letter is usually correct, and it is usually based on income they no longer have. This post explains why that happens, which income decisions feed into it, and the one well-defined situation in which you can ask Social Security to look at your current income instead.
What IRMAA is
IRMAA stands for Income-Related Monthly Adjustment Amount. It is a surcharge added to the standard Medicare Part B premium, with a smaller companion surcharge on Part D drug coverage, for people whose income exceeds certain thresholds. It is assessed per person, so a married couple can each owe it.
The income measure is modified adjusted gross income, or MAGI, which for this purpose means your adjusted gross income plus any tax-exempt interest. Municipal bond income counts. There is no phase-in: one dollar over a threshold moves the entire year into the next tier.
For 2026, premiums were set using 2024 returns. The 2027 thresholds and premiums have not been published yet; Medicare typically releases them in late October or November, and 2027 premiums will be based on 2025 returns. The 2026 tiers below show the shape of the schedule.
| 2024 MAGI, single | 2024 MAGI, married filing jointly | 2026 Part B premium (per person) | 2026 Part D surcharge |
|---|---|---|---|
| Up to $109,000 | Up to $218,000 | $202.90 | None |
| $109,001 – $137,000 | $218,001 – $274,000 | $284.10 | $14.50 |
| $137,001 – $171,000 | $274,001 – $342,000 | $405.80 | $37.50 |
| $171,001 – $205,000 | $342,001 – $410,000 | $527.50 | $60.40 |
| $205,001 – under $500,000 | $410,001 – under $750,000 | $649.20 | $83.30 |
| $500,000 or more | $750,000 or more | $689.90 | $91.00 |
The two-year lookback
The mechanism that catches people is timing. Social Security receives your tax return data from the IRS with a lag, so the premium for any given year is set from the return filed two years earlier. Your 2027 premium reflects your 2025 income. If 2025 was your last full year of work, your first full year of retirement will be priced as though you were still earning a salary.
The determination arrives in the same late-November or December notice that announces the annual cost-of-living adjustment. For many people it is the first time they have heard of IRMAA.
How income decisions flow through
Because MAGI is the whole measure, every income event in a year lands in the same bucket. A Roth conversion, the sale of a rental property or a business, a large capital gain from rebalancing, the first required minimum distribution, and a lump-sum pension payout all count in the year they occur and appear in premiums two years later.
This matters for planning because these decisions are often made with only the income tax bracket in view. The true cost of a conversion or a gain in a Medicare year includes the IRMAA tier it may trigger, for both spouses, for a full year, two years out. That cost is not always a reason to avoid the decision, but it should be part of the arithmetic rather than a surprise.
Public-sector retirees should note that CalPERS and CalSTRS pensions count fully in MAGI, as do most private pensions. Social Security benefits count to the extent they are taxable. California does not add a state layer here; IRMAA is entirely federal.
When Social Security will use a more recent year
Social Security recognizes that a two-year-old return can misrepresent current circumstances, and it provides a formal process for asking it to use a more recent year instead. The request is made on Form SSA-44, titled “Medicare Income-Related Monthly Adjustment Amount – Life-Changing Event.”
The form is limited to eight specific events: marriage, divorce or annulment, death of a spouse, work stoppage, work reduction, loss of income-producing property (for example through disaster, theft, or foreclosure), loss of pension income, and an employer settlement payment. There is no catch-all category.
That list is worth reading closely for what it leaves out. A Roth conversion, a capital gain, a business sale by itself, or the start of required distributions are not life-changing events in Social Security’s framework. They are voluntary or scheduled income, and the surcharge they generate is treated as part of their cost. The form does not provide relief from them.
Retirement, however, is squarely on the list. “Work stoppage” is the event the form was designed around, and it is the most common reason the form is filed.
What a retirement request looks like
Consider a hypothetical couple in which one spouse retires on June 30, 2026, after a final full working year in 2025 with joint MAGI of $300,000. In December 2026 they receive a 2027 determination placing them in the third tier at current figures, roughly $405.80 for Part B and a $37.50 Part D surcharge, each. Their realistic 2027 income, from a pension, Social Security, and portfolio income, is about $150,000, well under the first threshold.
Each spouse files their own SSA-44. The spouse who did not retire can file too, because the test is household income and the event is the household’s. The form asks for the type of event and its date, then asks which tax year Social Security should use in place of the lookback year. The rules allow either the year of the event or the year after it. In this example the couple would choose 2027, because 2026 still contains six months of salary.
They enter an estimated 2027 MAGI with a short breakdown of where it comes from, and sign under penalty of perjury. For work stoppage, acceptable evidence includes a letter from the employer confirming the retirement date, a final pay stub, corporate minutes or a transfer record for business owners, or the signed attestation on the form itself. A brief employer letter makes the file clean.
The form can be uploaded through a my Social Security account, faxed or mailed to a local office, or brought to an in-person appointment. Appointments are often resolved the same day; mailed filings generally take several weeks to a few months. The same couple could also file for 2026 if the half-year income reduction drops them a tier for that year.
What to expect
For a bona fide retirement with a documented income drop that crosses a tier boundary, approval is routine. This is the situation the form exists for, and Social Security offices process these requests constantly. Requests are typically denied for one of a few reasons: the estimated income still lands in the same tier, the underlying event is really a conversion or gain described as something else, the wrong year was selected, or the estimate is unsupported. A denial can be taken to formal reconsideration.
When a request is approved, Social Security issues a new determination that sets the premium to the tier matching the estimate, retroactive to January of the year in question or to the month the surcharge began, whichever is later. Months already overpaid come back as a credit against the Social Security benefit for people whose premiums are deducted, or as a refund for those billed directly. The Part D surcharge adjusts automatically. Social Security then continues to use the more recent year until the normal lookback catches up, which for the couple above means 2028 (normally priced from the half-salary year of 2026) may warrant a second filing or confirmation.
The estimate is checked later
One caveat belongs in every discussion of this process. The income estimate on the form is just that, and Social Security verifies it when the actual return for that year arrives from the IRS. If actual MAGI comes in higher than estimated and lands in a higher tier, Social Security reissues the surcharge retroactively and bills the difference.
The common way this goes wrong is a retiree who files a successful request, then executes a large Roth conversion in the same year. Either the conversion goes into the estimate and may cancel the relief, or it shows up as a retroactive bill two years later. Sequencing conversions relative to the years covered by a request, or accepting the IRMAA cost as part of the conversion math, is the real planning decision underneath this form.
Before you file
The form is simple and the outcome for retirement is predictable, but the surrounding decisions are not. If you have retired recently, or plan to within the next year, bring your IRMAA notice and your expected income for the coming year to your next planning meeting. Reviewing the estimate against planned conversions, property sales, and distributions before filing is what makes the result stick.
This article is for general educational purposes and reflects rules and figures published as of October 2026. It is not individualized tax, legal, or financial advice. Medicare premiums and thresholds change annually; confirm current figures at medicare.gov and ssa.gov. Tangent Retirement Inc. is a registered investment adviser; registration does not imply a certain level of skill or training.
