Is Medicare IRMAA a big deal?

[Car-Guy]

I wish I could pull off something like that! Not only did push up your IRMAA level but it also must have pushed you up to higher tax brackets. Did they offer to pay you in installments? Did they pay you with a stack of cash or by check? These days we try to bet small so I stay under $1200.

It wasn't all won at once but over a year "at the tables". Then it gets complicated.

 

[Chuckanut]

Honestly your what's the problem post doesn't land well. Hard savers can have a SS, a pension, required RMD and hit that number no problem....posters saying it seems as if its a penalty for working hard and saving aren't far off the mark.... you have paid a total of your part B of your working life, your part A impacted by IRMAA, your part D also impacted by IRMMA and don't forget your additional supplement. If your implying it cheap, no it's not cheap. I'm not to going to be flip about anyone paying hundreds of dollars more for the exact same coverage because they have money.

And here I thought they were only going to 'tax the rich'. I guess the middle class really is where the money is.

 

[jazz4cash]

IRMAA doesn't kick in until income is over $97K for a single and $194K for a couple. And we don't pay into Part B or Part D from our earnings during our working years, correct? So it doesn't matter what you put in for your Part A benefit. It is a premium, based on income. Also, health insurance premiums are not based on individual risk. Your premium doesn't go up if you get cancer or have a heart attack, thankfully.

If you make $40K in retirement, you pay 4.9% of your income for Part B. At higher income levels, you pay a lower percent, roughly 2.8-3.5%. The best deal is when you have very high income-it drops to under 2%. That is regressive. So on the basis of percent of income paid, in this thread, it seems those that pay the least in terms of percent of income and who have the most leftover, are complaining the most. Am I missing something?

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.

 

[audreyh1]

And here I thought they were only going to 'tax the rich'. I guess the middle class really is where the money is.

Well if it’s only 8% of Medicare recipients with retirement income high enough to incur IRMAA, can we really claim to be “middle-class” retirees?

 

[TheWizard]

Well if it’s only 8% of Medicare recipients with retirement income high enough to incur IRMAA, can we really claim to be “middle-class” retirees?

Indeed.
We IRMAA-paying retirees ARE the rich ones...

 

[RobbieB]

Yup, that's a fact!

It always amuses me to hear people whine about their taxes. It's just so unfair...

Be thankful you are among the half of Americans that pay taxes. Would you rather be a member of the other half that don't?

 

[ivinsfan]

Yup, that's a fact!

It always amuses me to hear people whine about their taxes. It's just so unfair...

Be thankful you are among the half of Americans that pay taxes. Would you rather be a member of the other half that don't?

This old song and dance again. Robbie old farts pay federal tax and state tax when applicable....this be thankful stuff has nothing to with the Medicare INSURANCE pricing....it's insurance that you have to get from the government

 

[RobbieB]

Yeah, and I think it's a killer deal. I was very happy to get on Medicare and start paying less. I didn't get any ACA subsidies either, my expenses went way down.

I guess you have to pay more?

 

[TheWizard]

This old song and dance again. Robbie old farts pay federal tax and state tax when applicable....this be thankful stuff has nothing to with the Medicare INSURANCE pricing....it's insurance that you have to get from the government

Actually, I think you can opt out of Medicare if you want, and get health insurance on the ACA market.
Not sure that would be much cheaper...

 

[audreyh1]

Yeah, and I think it's a killer deal. I was very happy to get on Medicare and start paying less. I didn't get any ACA subsidies either, my expenses went way down.

I guess you have to pay more?

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

 

[Chuckanut]

Well if it’s only 8% of Medicare recipients with retirement income high enough to incur IRMAA, can we really claim to be “middle-class” retirees?

Yes. In higher cost of living areas (like mine) 100K a year in income won't even let you buy your first starter house unless you have a whopper of a down payment (at lease 300K). The first IRMAA cutoff is at 97K. That sounds very middle class to me.

 

[audreyh1]

Actually, I think you can opt out of Medicare if you want, and get health insurance on the ACA market.
Not sure that would be much cheaper...

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

 

[Taco]

So on the basis of percent of income paid, it seems those that pay the least in terms of percent of income and who have the most leftover, are complaining the most. Am I missing something?

I’m too young to have thought very much about IRMAA, but I do get the point of the “complainers”.

For most things we purchase, the price doesn’t change based on one’s income.
If your income triples, that has no impact on the premium for your home or auto insurance. And, pre-Medicare, it has no impact on your health insurance premium.
But once on Medicare, the same product costs different prices based on one’s income. That’s just not typical. Folks aren’t used to that.

We have a progressive tax system where the more you make the more you pay, and people don’t complain much about that. But they don’t expect to pay more for home insurance, an oil change, etc. solely because their income goes up.

At the end of the day, it’s just another tax. Very awkwardly applied. And yeah, it’s a first world problem / nice problem to have - but I get why it irks some people.

 

[audreyh1]

I’m too young to have thought very much about IRMAA, but I do get the point of the “complainers”.

For most things we purchase, the price doesn’t change based on one’s income.
If your income triples, that has no impact on the premium for your home or auto insurance. And, pre-Medicare, it has no impact on your health insurance premium.
But once on Medicare, the same product costs different prices based on one’s income. That’s just not typical. Folks aren’t used to that.

We have a progressive tax system where the more you make the more you pay, and people don’t complain much about that. But they don’t expect to pay more for home insurance, an oil change, etc. solely because their income goes up.

At the end of the day, it’s just another tax. Very awkwardly applied. And yeah, it’s a first world problem / nice problem to have - but I get why it irks some people.

I think it’s already been explained that Medicare Part B is heavily subsidized by taxpayers. And they now start removing some of that subsidy for the highest income folks.

 

[TheWizard]

My SSA-1099 form actually arrived today!
Dividing by 12, I paid $494/month for Medicare parts B and D last year.
That's fine, no complaints...

 

[livingalmostlarge]

Yes. In higher cost of living areas (like mine) 100K a year in income won't even let you buy your first starter house unless you have a whopper of a down payment (at lease 300K). The first IRMAA cutoff is at 97K. That sounds very middle class to me.

If you make over $100k in HCOLA you are still in the 8% of people paying IRMAA. So yeah you are in the top 8% of retired households. Where do you think you land? Middle class?

Not sorry for pointing out the obvious. That anyone hit by IRMAA has a LARGE retirement income. It's larger than most WORKING PEOPLE. MFJ $194k retirement income is top 10% of WORKING people's income. So you are in top 8% of retirees and 10% of people working.

Hmm...anyway you cut that's rich. That's nowhere close to middle class. Anyone paying IRMAA should be happy they are living off $200k a year, when I know many families not living on that much but rather half that!

My entire family live in hawaii and don't pay IRMAA and live well in retirement. So I'm a bit biased in yeah you are rich. Considering I have family members living off only SS and that's less than $12k/year. Complaining seems a bit much.

 

[marko]

And here I thought they were only going to 'tax the rich'. I guess the middle class really is where the money is.

The [-]Middle Class[/-] Rich is often broadly defined depending on how much money is needed.

 

[TheWizard]

The Middle Class is often broadly defined depending on how much money is needed.

This doesn't help clarify things AT ALL...

 

[marko]

This doesn't help clarify things AT ALL...

I need to stop posting after my third Cognac of the night. I'm bad enough sober.

 

[audreyh1]

I need to stop posting after my third Cognac of the night. I'm bad enough sober.

Third Cognac! You must be rich!

 

[marko]

Third Cognac! You must be rich!

It's broadly defined.

 

[ivinsfan]

If you make over $100k in HCOLA you are still in the 8% of people paying IRMAA. So yeah you are in the top 8% of retired households. Where do you think you land? Middle class?

Not sorry for pointing out the obvious. That anyone hit by IRMAA has a LARGE retirement income. It's larger than most WORKING PEOPLE. MFJ $194k retirement income is top 10% of WORKING people's income. So you are in top 8% of retirees and 10% of people working.

Hmm...anyway you cut that's rich. That's nowhere close to middle class. Anyone paying IRMAA should be happy they are living off $200k a year, when I know many families not living on that much but rather half that!

My entire family live in hawaii and don't pay IRMAA and live well in retirement. So I'm a bit biased in yeah you are rich. Considering I have family members living off only SS and that's less than $12k/year. Complaining seems a bit much.

Once again this complaining you talk about is in your head. Putting words in caps and bringing up your family doesn't change a thing. Your family made choices and other people made other choices ..yes 90k in income is absolutely in a middle class bracket. The discussion is it's a stealth tax with huge bracket issues on something as basic as health insurance .....

 

[Chuckanut]

Here's one site with it's estimation of middle class income by state.

https://www.gobankingrates.com/money/economy/what-is-middle-class-in-us/

A few quotes'

What is considered middle class? It might take more money than you think to reach this income tier. The Pew Research Center defines middle class, or middle-income households, as those with incomes that are two-thirds to double the U.S. median household income.

Ohio

• 2-person family middle-class income range: $42,765 to $127,658
• 3-person family middle-class income range: $50,684 to $151,296
• 4-person family middle-class income range: $61,094 to $182,370

Hawaii

• 2-person family middle-class income range: $53,522 to $159,766
• 3-person family middle-class income range: $64,447 to $192,378
• 4-person family middle-class income range: $72,694 to $216,99

Like I've said before, one might consider IRMAA a 'success tax'.

 

[audreyh1]

Note that both your 2 person family examples still come in well below the $194K threshold for the first tier IRMAA.

 

[Irishgirlyc58]

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