Rate by which to increase IRMAA premiums?

[SecondCor521]

Hi all.

I've been working on my RMD projection spreadsheet.

One thing I attempt to do is project and include my IRMAA in my analysis.

I'm seeing some wonky results: my IRMAA surcharges exceed my federal income taxes in my early 80s. I've traced this back to my decision to use 7.7% as my annual inflation increase for IRMAA premium pricing. (I generally use CPI for everything else.)

Generally I use the following criteria for my inflation factors and other similar adjustments:

1. Data based.
2. From an authoritative or reliable source.
3. Based on a long history.
4. The average, midpoint, or most likely estimate.

Is 7.7% reasonable? What do you use?

(I did not document where I obtained the 7.7% figure, and I can't find a good source now.)

 

[oldtimer]

Maybe this article that the author updates periodically can give you some insight.
2022 2023 Medicare Part B IRMAA Premium Brackets

 

[MBSC]

(I did not document where I obtained the 7.7% figure, and I can't find a good source now.)

7.7% is Medicare spending growth.

National Health Expenditure Projections 2019-2028
Medicare spending growth is expected to slow slightly to an average of 7.7 percent over 2024-28 mostly as a result of slower average Medicare enrollment growth rate of 2.3 percent (compared to an average of 2.7 percent over 2021-2023).
https://www.cms.gov/files/document/nhe-projections-2019-2028-forecast-summary.pdf

From the SSA:

(5) Inflation adjustment.—

(A) In general.—Subject to subparagraph (C), in the case of any calendar year beginning after 2007 (other than 2018 and 2019), each dollar amount in paragraph (2) or (3) shall be increased by an amount equal to[215]—

(i) such dollar amount, multiplied by

(ii) the percentage (if any) by which the average of the Consumer Price Index for all urban consumers (United States city average) for the 12-month period ending with August of the preceding calendar year exceeds such average for the 12-month period ending with August 2006 (or, in the case of a calendar year beginning with 2020, August 2018).[216]

(B) Rounding.—If any dollar amount after being increased under subparagraph (A) or (C) is not a multiple of $1,000, such dollar amount shall be rounded to the nearest multiple of $1,000.[217]

(C)[218]Treatment of adjustments for certain higher income individuals.—

(i) In general.—Subparagraph (A) shall not apply with respect to each dollar amount in paragraph (3) of $500,000.

(ii)(ii) Adjustments beginning 2028.—In the case of any calendar year beginning after 2027, each dollar amount in paragraph (3) of $500,000 shall be increased by an amount equal to—

(I) such dollar amount, multiplied by

(II) the percentage (if any) by which the average of the Consumer Price Index for all urban consumers (United States city average) for the 12- month period ending with August of the preceding calendar year exceeds such average for the 12- month period ending with August 2026.

Source: https://www.ssa.gov/OP_Home/ssact/title18/1839.htm

 

[SecondCor521]

Thanks. I guess I'll leave it at 7.7% for now, although that's clearly unsustainable over the next 30 years.