Medicare and IRMAA

[Scuba]

I see a lot of posts about minimizing income for a few years before starting Medicare to reduce IRMAA impact. Isn’t IRMAA recalculated annually? If so, does it make more sense to smooth income out rather than artificially lowering it just to have it increase substantially in later years?

I’m sure I’m missing something as we are still several years away from Medicare, but would like to plan appropriately for the future.

 

[RunningBum]

If IRMAA is unavoidable, it makes sense to control income to try to hit the top of an IRMAA bracket but not go over. So maybe you go to the top of a higher IRMAA bracket one year, and set aside the extra money, so the next year you stay in a lower IRMAA bracket. If you smoothed income out you might be in the middle of that higher IRMAA bracket every year.

IRMAA doesn't worry me as much as the ACA cliff had. Edging over the ACA cliff almost always hit you harder than going into the next IRMAA bracket.

 

[TheWizard]

Levelizing income makes a lot of sense, yes.
I'm in the middle of the IRMAA tiers and always will be under current law.
And I'm okay with that, being a higher income retiree...

 

[aleabo]

is IRMAA based on your gross salary or adjusted (after 401K, HSA etc.)?
If I'm married filing jointly - it takes in account family income?

 

[RetiredHappy]

IRMAA is based on Modified Adjusted Gross Income (MAGI) for MFJ income, recalculated every year, based on IRS returns from 2 years prior.

 

[Scuba]

IRMAA is based on Modified Adjusted Gross Income (MAGI) for MFJ income, recalculated every year, based on IRS returns from 2 years prior.

Thanks. This is the information I wanted to confirm. So since it’s recalculated every year, I think the leveling strategy probably works better over time than trying to minimize income in the earlier years.

 

[whatnot]

Scuba, great question! I was confused with IRMAA income timing also. I like RunningBum’s method of controlling income to avoid higher IRMAA in certain years if possible.

My DH will be 65 in 2022, so our MAGI from 2020 will be used to determine IRMAA. Is this correct? I will need to pay attention to our MAGI on a go forward basis. Timely topic!