These 7 life events can lower your health insurance premiums


Vadym Pastukh /

Health care costs can be a large portion of a retiree’s living expenses. Whether you are 65 or older and eligible for Medicare, you can expect to spend at least $165 per month on Medicare Part B in 2023, according to This comes with an annual deductible of $226, plus a coinsurance payment of 20% for most services.

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Medicare Part A may be free for many people, but you’ll also face a $1,600 deductible in 2023 for any hospital stay.

Monthly premiums for Part D vary, but if you don’t enroll when you’re eligible, you could pay a penalty of 12% per year, even after signing up for a plan.

Also, if you exceed certain income levels, you could pay even higher premiums for Medicare Part B. The charge is called IRMAA, or income-related monthly adjustment amount, and it’s part of Medicare (to stabilize costs) since 2003.

The Centers for Medicare and Medicaid Services report that 7% of Medicare beneficiaries could pay these additional costs, according to AARP.

How IRMAA is calculated

The IRMAA is calculated based on your modified adjusted gross income (MAGI), which is shown on your tax returns. But the Social Security Administration (SSA), which calculates Medicare premiums, looks at your MAGI from the previous two years — rather than your current income — to determine your premiums. Depending on your income, according to AARP, you could be subject to additional charges ranging from $66 to $396 for Part B and additional charges of up to $78 per month for Part D coverage.

However, you can appeal the charges based on seven life events. Attractive higher premiums could make it easier to manage your budget in retirement, especially if you’re facing one of these life events.

Death of a spouse

If your spouse is deceased and your joint income has been significantly reduced by their death, you may be eligible for lower premiums. You will need to provide proof of death, usually a death certificate, and your estimated new income.


As with many tax credits, income thresholds are doubled for married couples filing jointly. If you exceeded the $97,000 income threshold and had to pay higher premiums last year – but as a married couple your income is less than or equal to $194,000 – you may not be be more subject to the IRMAA.

Divorce or annulment

Likewise, if your income has been reduced due to divorce or annulment, you may no longer have to pay higher premiums. Again, you will need proof of the change and an estimate of your new earnings.

Employment status

If you were previously working part-time in retirement (or still working full-time after age 65) and your work hours or earnings have been reduced, you may no longer have to pay health insurance premiums. higher disease. You will need to show documents, such as pay stubs, company minutes, an employer statement, or other evidence. Of course, the change should also be reflected on the following year’s tax returns.

Likewise, if you have quit your job or fully retired, you can justify the change.

Sale of business

If you were a business owner and you sold your business, resulting in a loss of income from that business, you cannot be subject to the IRMAA. You can show a record of your business transfer or sale, a statement of you as the business owner, or business minutes as proof of the sale or transfer.

Loss of income from assets beyond your control

For those who rely on rental income from property as a source of retirement income, you may not be subject to IRMAA charges if you lose that income, only if the loss is beyond your control. For example, if you have rental homes, farmland, crops, livestock, or vehicles used in a business and they are lost or damaged due to natural disaster, arson, or a theft, you will want to notify the SSA of the loss of income. right away.

Loss of certain types of pension income

If you rely on retirement income during your retirement and that income ceases or is reduced, you may not have to pay higher health insurance premiums. However, the loss of income must be due to the natural expiration of the annuity (such as a 20-year annuity that started 20 years ago) or the failure or termination of the plan.

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Review your health insurance income and costs each year

It is important to note that the SSA reviews your tax returns each year to determine the IRMAA fee. If you lose or gain income based on capital gains, benefit from a sale of property, or post business gains or losses, your health insurance costs could change significantly from year to year. .

It’s wise to speak with a financial advisor before taking any major financial steps in retirement that could affect your health insurance costs, income, and ultimately your quality of life in retirement.

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This article originally appeared on Retirement Savings: These 7 Life Events Can Lower Your Health Insurance Premiums


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