Fighting IRMAA – HumbleDollar

Fighting IRMAA Richard Connor  |  Oct 18, 2021

I TURNED AGE 64 over the Labor Day weekend. One of my goals for my 65th orbit of the sun is to really dig into Medicare. Luckily, I have a few friends and relatives who have blazed the trail before me. I’ve also studied Medicare as part of some financial planning courses I took a few years ago. Still, one topic I’ve never researched in detail is Medicare’s income-related monthly adjustment amount, otherwise known as IRMAA.

Traditional Medicare is made up of Part A (hospitalization), Part B (doctor’s services, outpatient costs and medical equipment) and Part D (prescription drugs). Parts B and D have monthly premiums. For 2021, the Part B standard monthly premium is $148.50. Part B also has a $203 deductible. After you meet your deductible, Medicare typically covers 80% of your Part B costs. Meanwhile, the Part D standard monthly premium varies based on the plan you choose.

IRMAA is an amount you may pay in addition to your standard Part B and Part D premiums—if your income is above a certain level. The Social Security Administration has a series of income brackets that determine what that amount is. Most people will pay just the standard premium amount. But if your modified adjusted gross income is above the specified threshold, you may owe IRMAA. You can review 2021’s Part B monthly premiums by heading here.

The IRMAA increase for Part B starts at incomes above $88,000 for single filers and $176,000 for joint filers. The surcharge for Part B can take your 2021 premium from $148.50 to $207.90—and perhaps as high as $504.90. The increase is per person, so married couples are looking at double these amounts. Meanwhile, the IRMAA surcharge for Part D starts at $12.30 a month and increases to $77.10 at the top income bracket. The Part D surcharge uses the same income brackets as those used for Part B. You can review the Part D amounts here.

When you sign up for Medicare, you’re provided with an initial determination of your costs, including whether you’ll have to pay IRMAA. The premium surcharge is usually based on your income from two years earlier, so 2021’s surcharges are based on your 2019 modified adjusted gross income. If it’s determined your income is above the threshold, you’ll be sent a notice explaining IRMAA in detail.

Read the rest of the article and extensive comments at the link below:

Source: Fighting IRMAA – HumbleDollar

One comment

  1. Covered a lot of stuff. One obvious oversight was the treatment of HSA assets. First, using HSA assets instead of 401k assets does not add to income, for income tax or IRMAA income for surcharge purposes. Second, IRMAA surcharges are not tax deductible themselves, so paying IRMAA surcharges with HSA assets applies tax favored treatment (as if they were tax deductible and did not add to income).

    Long past time for higher income folks, and those who will have a higher income in retirement to reconsider HSA tax preferred savings options.

    Last, with Congress scrounging foe income, liwering the income thresholds for IRMAA looks like a winner to tax “rich” retirees with pensions and an inordinate amount of savings (more means testing)


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