What Can I Do To Keep From Paying Higher Medicare Premiums?

Jan 17 2017 - 7:30am

Hi Larry,
I will be taking an early retirement incentive package from my company in April 2017. I will continue my company's medical coverage through Cobra until I am eligible for Medicare at 65 in December 2018. I do not plan to file for Social Security until I am at least 66, so I will not automatically be enrolled with the premiums deducted from any SSA benefit. My concern is that I not only must file for plans B & D as soon as eligible in order to avoid paying a lifetime penalty of higher premiums, but also that my premium cost will be based on my 2016 working income. So even though my only 'income' will be drawn from retirement savings for all of 2018 when I file for Medicare, I will pay a higher premium because I had a high working income in 2016 (which certainly seems like double-dipping since I paid more medicare & SS taxes into the system with that income, and now I have to pay a higher fee to collect!) I have been unable to locate any information concerning whether or not I would be eligible for any adjustment (and how to file a claim) to the premiums for these Medicare plans based on my retirement rather than working income.
Thank you for any advice!


It sounds like your early retirement incentive payment would qualify as what Social Security refers to as a 'life-changing event' (https://www.ssa.gov/OP_Home/handbook/handbook.25/handbook-2507.html). If so, they can use a later tax year on which to base your Medicare premium rates.

When you apply for Medicare, you'll want to explain to Social Security the reason for your spike in income in 2016, and request that they use a subsequent year on which to base your Medicare premium rates. They will use a form SSA-44 (https://www.ssa.gov/forms/ssa-44.pdf) to determine if you meet the requirements. You may also need to submit copies of your 2016 & 2017 tax returns. Of course, all of that will only be necessary if your modified adjusted gross earnings in 2016 exceeds the levels that cause the higher Medicare premium rates to apply (https://www.ssa.gov/pubs/EN-05-10536.pdf).

Best, Jerry