Recent Federal Retirees: Lower Your Medicare Part B Premium With One Form

One of the best federal retirement benefits is the continued access to the Federal Employee Health Benefit (FEHB) program, which offers relatively low-cost health insurance plans. What makes the FEHB program even better is its integration with Medicare.

Adding Medicare Part B on top of your FEHB plan is an optional step, and comes at an additional cost, but provides “double coverage” meaning almost no healthcare expenses are owed out of pocket.

However, unlike FEHB, Medicare Part B premiums are not static – they vary depending on your income.

And how do they determine your income? They base it on your tax return from two years ago. Well, for a recent retiree, whose income just dropped significantly, that calculation could cause a real problem.

When federal employees retire, the obvious change they experience, beyond finding a newfound purpose, is a shift in income.

Retired feds typically rely on three primary sources of income in retirement:

• FERS or CSRS pension
• Withdrawals from the Thrift Savings Plan (TSP)
• Social Security benefits

While these sources offer a stable foundation for financial security, they don’t typically add up to the amount of your salary just before you retired.

What many don’t realize is that Medicare Part B premiums are based on your Modified Adjusted Gross Income (MAGI) from two years ago. This means that if you retired in 2023, your 2025 premiums are still being calculated based on your income back in 2023, when you were likely to still be working full-time and earning a much higher income. So, what’s included in the estimate for Medicare premiums and how do you change it?

Understanding how Medicare premiums are calculated

Unfortunately, electing to retire does not automatically trigger notifications to all necessary government entities about changes in income or adjustments in Medicare obligations. Though it may be a simple process, it’s one that is manual. This is where Form SSA-44 comes in. If your income has dropped due to a life-changing event such as retirement, you may be eligible to appeal and request a reduction in your Medicare Part B premiums.

It’s important to understand how Medicare determines your Part B premiums. The Centers for Medicare & Medicaid Services (CMS) declared the standard monthly premium for Part B in 2025 is $185.00, but higher-income individuals can pay significantly more due to Income-Related Monthly Adjustment Amounts (IRMAA).

Your IRMAA is determined by your MAGI, which includes:

• Wages
• Self-employment income
• Interest
• Dividends
• Required Minimum Distributions (RMDs)
• TSP withdrawals
• Other pensions

The following table provides the MAGI thresholds used for IRMAA calculations:

For federal retirees, even if you no longer earn a paycheck, your FERS or CSRS pension and TSP withdrawals can still push your MAGI into a higher bracket. That’s why many recent retirees are surprised to find themselves paying elevated Medicare premiums even though their current income has dropped substantially. This is why it’s crucial to create a checklist with a financial professional to ensure you’re managing the impact of life events, especially the status change of electing retirement.

What is the SSA-44 form?

The SSA-44: “Medicare Income-Related Monthly Adjustment Amount – Life-Changing Event” form is the tool you can use to notify the Social Security Administration (SSA) that your income has dropped due to a qualifying life-changing event.

This form allows you to request a reduction in your Part B (and Part D, if applicable) premiums if you’ve experienced one of the following events:

• Retirement or reduction in work hours
• Marriage or divorce
• Death of a spouse
• Loss of income-producing property
• Loss of pension income
• Employer settlement payment

How TSP and Pensions Factor In

As a federal retiree, your income may still appear relatively high on paper. Here’s why:

1. FERS or CSRS Pension: This annuity provides consistent monthly income and is taxable.
2. TSP Distributions: Once you begin drawing from your TSP, those withdrawals are also treated as taxable income and counted in your MAGI. RMDs (required beginning at age 73) are included.
3. Social Security: Once you begin receiving Social Security, those benefits are partially taxable and included in your MAGI depending on total income.

Remember, the SSA is looking at your tax return from two years prior, when you likely had full-time income on top of your pension and possibly hadn’t started TSP withdrawals or Social Security yet. So, if your MAGI has dropped significantly since then, you have a valid case to file an appeal.

Once your SSA-44 form is submitted and approved, the Social Security Administration will adjust your Medicare Part B (and Part D) premiums based on your current income rather than outdated earnings from when you were working full time. This can result in significant savings, especially if your income has dropped by tens of thousands of dollars post-retirement.

Key tips for federal retirees

When creating a plan for retirement, be sure to review your checklist with a financial professional. Here are some quick tips:

• Plan: If you know your income will drop dramatically in retirement, gather your documentation early so you’re ready to submit the SSA-44 as soon as you receive notice of increased Medicare premiums.
• Watch your TSP withdrawals: Be strategic about distributions, especially around the IRMAA thresholds. Lump-sum withdrawals can push you into a higher bracket.
• Reassess annually: Your IRMAA is recalculated each year based on your most recently available tax return. Continue to monitor whether an appeal is warranted.

Retiring from the federal government is a significant life transition, and it affects your status with the Social Security Administration. If your income has dropped substantially and your Medicare Part B premiums don’t reflect that change, the SSA-44 form gives you a legal path to reducing your premiums based on your current financial situation.

By taking a proactive approach, federal retirees can ensure their healthcare costs remain manageable and aligned with their true income in retirement.

Neil Cain and Austin Costello are certified financial planners with Capital Financial Planners. If you have questions about how retirement impacts your Medicare payments, register for a complimentary checkup. For topics covered in even greater depth, see our YouTube page.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.