MML# 075: You retired. Medicare didn't get the memo.

It's the middle of June, which puts me in the stretch of the year I quietly like best. The in-between season, after the big annual reviews are behind us, when I get to circle back with clients on the small things we flagged months ago and never quite closed out.

One of those small things keeps coming up with the folks who are close to retiring. So you should probably hear it too.

It has to do with Medicare. Specifically, a surcharge called IRMAA, and the fact that it can bill you today based on the income you earned back when you were still working full tilt.

A quick word on what IRMAA actually is

IRMAA stands for Income-Related Monthly Adjustment Amount. That's Medicare's polite way of saying you earned good money, so you'll pay more for the same coverage as everyone else.

For a lot of retiring lawyers, that surcharge is not small. And the way it gets calculated catches almost everyone off guard.

Medicare is looking at a two-year-old version of you

This is the part that trips up even the sharpest attorneys. Your Medicare premiums aren't based on what you make now. They're based on your tax return from two years ago.

So your 2026 premium is built on your 2024 income. For a lawyer who recently stepped away, 2024 might have been one of your biggest earning years ever.

Cross $218,000 in income for 2024 (married, filing jointly), and your Part B premium jumps from $202.90 a month to $284.10. That's roughly an extra $1,950 a year for a couple, just for stepping over that first line.

Think of a property tax bill built on an appraisal from two years ago, back when home values were peaking. Prices have cooled since. The assessment hasn't caught up, so you're paying on a number that no longer reflects what's true today.

There's a form for that

Now the good news, because there is some.

You don't have to sit and wait two years for the system to notice you retired. Retirement counts as what Medicare calls a life-changing event. You can file Form SSA-44, show them you stopped working and your income dropped, and they can lower or even erase the surcharge for the current year.

"I retired" absolutely counts.

One thing to keep straight. You can't appeal just because your income happens to be lower this year. You need the qualifying event, retirement, plus the income drop that came with it. Retired and went from $400,000 down to $100,000? That's a clean appeal. Still working, just had an unusually big year two years back? That one won't fly.

The quiet window before 65

There's a stretch in here that often gets overlooked, and it's worth knowing about. The years after you retire but before you turn 65.

You're no longer drawing a W-2 paycheck, and you're not yet on Medicare's radar. For a lot of folks, that's the best window there is for larger Roth conversions.

One caution. A big conversion can nudge you into a higher IRMAA bracket two years down the road, so the timing and the size both matter. This is exactly the kind of thing worth modeling out before you pull the trigger.

Before the bill shows up

So if you've recently retired, or you can see it from here, this is one of those in-between items worth circling back on before the premium notice lands in your mailbox. When it shows up, don't just pay it. Ask whether you've got a qualifying event sitting behind you.

I went deep on all of this back in February, a whole series on Medicare and IRMAA that pulls the brackets, the appeals, and the timing into one place. If you missed it and want the full guide, just reply "IRMAA" and I'll send it over.

As always, this is my understanding of how the rules work, not tax or legal advice, so check your own situation before you file anything.

That's it for this week. Thanks for reading, and I'll see you next week.

Cheers, David

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