Is Medicare IRMAA a big deal?

[NW-Bound]

The only piece I strongly object to is the cliff nature of the surcharge. A tier1 surcharge would cost us $1631/yr if we go $1 over the threshold. WHAT!!? I never heard of this surcharge and here I am doing Roth conversions. The lookback nature to determine the surcharge seems sneaky.

+1000

Yes, these stepping increases suck! An extra $1 in income costs you $1631.

Such silly things, same as steps in ACA subsidy cut off.

Who came up with that? Can we find them out to tar and feather them?

 

[Irishgirlyc58]

No that's not correct....
Medicare Part B revenue comes from both general revenues and premiums paid by Medicare beneficiaries (the money goes into the Supplemental Medical Insurance (SMI) Trust Fund and is then used to cover Medicare expenses).

Source:https://www.medicareresources.org/faqs/how-is-medicare-funded/

I am only "whining" about the cliff nature of the premium. If we make $1 over the threshold as a married couple we are~$1600 worse off than another couple making $1 less......and the measurement is a 2 yr look back. The cliff makes it most unfair if you are just over the threshold therefore the wealthiest beneficiaries at the top of the tier are "subsidized" by the folks that are barely over.

How could it be "too difficult" to administer a premium ramp instead of the cliff arrangement when the entire income tax is based on a series of ramps.

It absolutely isn’t too difficult to administer a premium ramp.
I worked in social services and we implemented a State Automated Welfare System in the early 90’s. This system made complex calculations for many different programs with different and often times conflicting regulations.
The systems have improved over the years.
Premiums without the cliffs shouldn’t be that difficult.

 

[NW-Bound]

Premiums without the cliffs shouldn’t be that difficult.

No, it's not difficult. Hence, I thought the cliffs might be done deliberately.

Time for tar and feather.

 

[EastWest Gal]

It doesn’t seem like much of a cliff, more like a stepladder. With the ACA cliff, that was a different story. One dollar over and you were looking at paying $20K more per year if you were in your 50s or early 60s. In early 2021 we went from paying 25% of our income for HI to about 5% when Congress passed legislation temporarily removing that cliff until 2026.

 

[athena53]

I noted that my one person household wasn’t included at all.

I hear you. For us, those thresholds are half the values for 2-person households.

Because, you know, being single our housing, utilities, property taxes are half those of two-person households.

 

[sheehs1]

DH also dropped way down even with IRMAA plus no more huge annual deductible.

Same. Not having that huge $5k or $6k deductible is great. While on the ACA plan, I only went to the doctor if I had to. Most other visits were covered preventive.

 

[MichaelB]

ACA subsidies are not available post 65 Medicare eligibility. It’s going to be really pricey,

This morning I checked Florida BCBS pricing, just out of curiosity. The plan most resembling Medicare coverage has a monthly premium of $2770.

Compare this with Medicare B plus Medicare D, both at the 2rd highest tier, or joint income up to but less than $700k. Medicare B is $527, Medicare D is $70. Medicare part A total costs are approx. the same as Part B, so even including a similar amount for Part A, the total premium would be $527 x 2 + $70, total $1124. Add another $220 for a Plan G supplement, and the total monthly premium cost is $1344, compared with the $2770 for a private policy.

Note, the private policy still has $1000 deductible, while Medicare B is $226. Also, the private plan has no underwriting, so the premium will increase with age, while the Medicare B and D plans do not, so the difference will increase with time.

DW and I are also subject to IRMAA but our total cost now is still less than the monthly premium we paid the last year we had an ACA policy.

It seems to me that ACA and Medicare discussions share a common theme, which is most people are not aware just how costly our health care is, most of that high cost is hidden from us, we become aware suddenly when our share of the cost increases, and finally, very few people directly pay the total cost of their health care (or health care insurance) in the US.

 

[athena53]

It seems to me that ACA and Medicare discussions share a common theme, which is most people are not aware just how costly our health care is, most of that high cost is hidden from us, we become aware suddenly when our share of the cost increases, and finally, very few people directly pay the total cost of their health care (or health care insurance) in the US.

Totally agreed on this. Many of us were fortunate enough to be sheltered from the full cost of health insurance because our employers paid some part of the premiums. I paid full freight for ACA because there was no way I qualified for subsidies, so I knew what it cost in real life.

I see a lot of posts on FB whining that Medicare should include dental, vision and hearing aid coverage. All 3 areas are full of hucksters and snake oil salesman (along with reputable providers). I don't think they'll want to pay the extra cost for that.

 

[ShokWaveRider]

It seems to me that ACA and Medicare discussions share a common theme, which is most people are not aware just how costly our health care is, most of that high cost is hidden from us, we become aware suddenly when our share of the cost increases, and finally, very few people directly pay the total cost of their health care (or health care insurance) in the US.

It really needs reform, too many middlemen taking a cut, and HC should really be not for profit. But it is Capitalism, feeds on middlemen and excessive profiteering. We could have an affordable system for all, but no one can agree on what that would be. So, we are stuck paying the price.

Medical tourism, especially to Mexico is thriving as a result, and their medical staff by all/most accounts is as good or better than the USA and affordable.

 

[Chuckanut]

I noted that my one person household wasn’t included at all.

That is true. For some reason single seniors are often tactfully ignored in these articles.

 

[MRG]

It really needs reform, too many middlemen taking a cut, and HC should really be not for profit. But it is Capitalism, feeds on middlemen and excessive profiteering. We could have an affordable system for all, but no one can agree on what that would be. So, we are stuck paying the price.

Medical tourism, especially to Mexico is thriving as a result, and their medical staff by all/most accounts is as good or better than the USA and affordable.

+1
The Megacorp I worked for had divisions that outsourced insurance company work. They made many millions every year by maintaining systems for the industry. Insurance companies love fixed costs even when they pay large premiums for them.

 

[jazz4cash]

As one of the "whiners" (wrt the cliff nature of the premium), I will admit that many of us were probably spoiled by old school workplace healthcare plans that were heavily subsidized by employers. Burden of cost for these plans has shifted heavily in favor of employers over the last 2 decades and retiree plans disappeared in many cases. Back in the day many of us never realized how lucky we were.

I am used to contributing more than others that are not as well off and I'm OK with that. This premium feels like if you are at the bottom of the tier you are subsidizing the beneficiaries at the top of the tier.

 

[Midpack]

It really needs reform, too many middlemen taking a cut, and HC should really be not for profit. But it is Capitalism, feeds on middlemen and excessive profiteering. We could have an affordable system for all, but no one can agree on what that would be. So, we are stuck paying the price.

Medical tourism, especially to Mexico is thriving as a result, and their medical staff by all/most accounts is as good or better than the USA and affordable.

Absolutely, but I think you're mistaken on why - or at least the core issue. Every other developed country in the world has significantly lower cost and care effective health care, so it's not as if there are no models - including a few that migrated from completely private HC systems (e.g. Switzerland).

But nothing whatsoever will happen until the link between special interests-lobbying & campaign finance is broken. Don't hold your breath, neither party will act - they can't get (re)elected without the money they get from special interests. Same thing that prevents our representatives from acting on many popular common sense reforms. Special interests exist for no other reason than to influence or thwart legislation.

Most Americans are completely clueless as to how much health care actually costs in the USA, even though they could know with a 10 second internet search. There have been many reports comparing the USA vs other developed countries going back more than 20 years...

 

[Alan]

Thanks for the interesting discussion.