Annual Social Security adjustment

[explanade]

My mother received a notice from the SSA.

Her Social Security payments for next year is being cut back about $400 years or about 1/3 because last year's income tax return.

She is fortunate to have high income.

Seems a real steep cut.

Also notice her Medicare premiums are like $450. That's on top of about $270 for Medigap and now taking about $100 including a income tax adjustment for Part D.

Well don't ever say there's no income means testing for Social Security or to some extent, Medicare.

 

[Dtail]

I assume you mean that her net SS is being cut back solely due to the IRMAA rules for higher income beneficiaries vs. any cutbacks in her gross SS income.

 

[youbet]

Well don't ever say there's no income means testing for Social Security or to some extent, Medicare.

You seem to have this reversed. It's actually:

Well don't ever say there's no income means testing for Medicare or to some extent, Social Security.

Medicare premiums are very much means tested via IRMAA as you discovered with your DM's new premiums. SS, OTOH, only seems to be means tested by the amount which is subject to income tax and which occurs at fairly low levels of income.

 

[Gumby]

Isn't a cutback also mandated if you are taking social security prior to full retirement age and you have earned income above a certain level?

 

[youbet]

Isn't a cutback also mandated if you are taking social security prior to full retirement age and you have earned income above a certain level?

Yes. And that's an actual reduction in your SS payout as opposed to IRMAA which is an increase in your Medicare premium. It's not really "means testing" though since, if you live long enough, you eventually recover that money via higher ongoing payments.

 

[explanade]

Isn't a cutback also mandated if you are taking social security prior to full retirement age and you have earned income above a certain level?

I'm not sure when my parents took Social Security. It includes survivor benefits from the passing of my father.

But looking at the statement, I see two IRMAA adjustments for Part B and Pard D.

OK learn something new I guess.

So would the IRMAA adjustment be greater if you take Social Security at 62?

 

[Gumby]

So would the IRMAA adjustment be greater if you take Social Security at 62?

I don't think so. I think the IRMAA surcharge is solely based on your AGI two years ago (i.e 2018 AGI for 2020 surcharges), regardless of the source of that income. There is a separate actual reduction of SS if you are less than full retirement age, currently receiving SS and still working and earning money from a job. Once you hit full retirement age, you can work as much as you like.

See here: https://www.ssa.gov/planners/retire/whileworking.html
and here: https://medicare.com/about-medicare/what-are-medicare-part-d-irmaa-and-part-b-irmaa/

 

[youbet]

So would the IRMAA adjustment be greater if you take Social Security at 62?

Gumby is right on the money. Your Medicare premium (not your gross SS amount) is adjusted based on your two-year-prior MAGI. Your SS seems to be less (but isn't) because you chose to pay your Part B + IRMAA and your Part D IRMAA by having it withheld from your SS. Your could chose another method of payment and always receive the gross amount of your SS with no deductions. It's up to you.