IRMAA...Does the Money Grab Never End?

[1-31-18]

FWIW, the numbers shown are per person.



Without IRMAA, each person would pay $144.60 per month for Part B.

At the highest level, each would pay $491.60 per month. Similarly for the Part D numbers. So it would be $11,798.40 for both people for Part B.

So we will pay about $12K a year for at least two years. Zero benefit to us after paying hundreds of thousands of dollars in Medicare taxes. Pure wealth transfer.

Am wondering how many other charges not covered by Parts B and D, but heretofore covered by my group plans, that we will be paying.

Thanks for the data.

 

[jimbee]

So we will pay about $12K a year for at least two years. Zero benefit to us after paying hundreds of thousands of dollars in Medicare taxes. Pure wealth transfer.

Am wondering how many other charges not covered by Parts B and D, but heretofore covered by my group plans, that we will be paying.

Thanks for the data.

Medicare taxes only pay for part A, not parts B or D.

 

[braumeister]

Am wondering how many other charges not covered by Parts B and D, but heretofore covered by my group plans, that we will be paying.

Based on my experience, what's not covered won't amount to much. Assuming you have a Medicare supplement, that should cover most of what Medicare doesn't.

 

[meierlde]

So we will pay about $12K a year for at least two years. Zero benefit to us after paying hundreds of thousands of dollars in Medicare taxes. Pure wealth transfer.

Am wondering how many other charges not covered by Parts B and D, but heretofore covered by my group plans, that we will be paying.

Thanks for the data.

To explain a bit part A (hospital) is what is paid for by the medicare tax on income. Part B and D are paid for out of general revenue. Thus everyone who contributed to ss gets free part A (premium for part a for those who did not is about 500/ month, check the medicare site for details) The prior posts tell the percent of the part B and D premium one pays by income. Low income folks get a 75% subsidy decreasing to 15% above 700/500 k agi. So you never did pay towards part B and now if you have the income it was decided that rather than charge everone for 75% of part B and D costs higher income folks would pay a larger percentage.

 

[1-31-18]

FWIW, the numbers shown are per person.



Without IRMAA, each person would pay $144.60 per month for Part B.

At the highest level, each would pay $491.60 per month. Similarly for the Part D numbers. So it would be $11,798.40 for both people for Part B.

My ERISA partner just told me that CMS will adjust the premiums downward if I report to them, when the time comes, that my actual income is lower than it was two years earlier. The two-year look-back is only a proxy for current-year income. It’s not a hard and fast rule. Those of you who are similarly situated may wish to take note of this.

BTW, said partner, although age 71, is working in the office with me as usual tonight. FI but not RE. Like me, but older. An expert ERISA lawyer — he owns the pen that Gerald Ford used to sign the original ERISA legislation.

 

[CardsFan]

So we will pay about $12K a year for at least two years. Zero benefit to us after paying hundreds of thousands of dollars in Medicare taxes. Pure wealth transfer.

Am wondering how many other charges not covered by Parts B and D, but heretofore covered by my group plans, that we will be paying.

Thanks for the data.

I seriously doubt you have paid "hundreds of thousands of dollars in medicare taxes". But if you have, you probably have a net worth in excess of $10 million. Good for you. You won the game.

I am not a "tax the rich person". But in this case, it sounds like, for two whole years, you will be paying "full freight" for medicare.

 

[Time2]

+1

You may not find a lot of sympathy here about paying more for health insurance due to having a high income in retirement. Try to look at it a small cost of financial success.

Also, look at it as, At least the government lets me keep 76% of my money! Minus a few additional hits here and there.
EDIT: OH, I wrote 76% then found he earned $750k, so my maybe they let him keep 66 to 70%. It's always something!

 

[Time2]

Your part D (drug) plan seems high. I'm looking at the Humana/Walmart plan - $17/month or $204/year. 1/3 the price

I just got off the phone with an ins. rep, talking about part D.
Earlier I talk with a local agent about a plan G with BCBS. He told mt to look elsewhere for mt Plan D, because BCBS is to expensive. I think all he sells is
BCBS and that makes me think he's a pretty straight shooter if he tells me to look elsewhere.
Anyway, I'm In Fl. the cheapest I find is Silver Scripts Plus at $25.20 it has a $250 deductible that only applies to tier 3 drugs, no deductible on Tier 1 or 2. One of my drugs is a tier 3, but it only costs me $10, so it not worth paying a higher premium to get it covered.
This Medicare stuff has more variables than investing for retirement.
I'm pretty sure I'm going with Plan G.

 

[pb4uski]

My ERISA partner just told me that CMS will adjust the premiums downward if I report to them, when the time comes, that my actual income is lower than it was two years earlier. The two-year look-back is only a proxy for current-year income. It’s not a hard and fast rule. Those of you who are similarly situated may wish to take note of this.

BTW, said partner, although age 71, is working in the office with me as usual tonight. FI but not RE. Like me, but older. An expert ERISA lawyer — he owns the pen that Gerald Ford used to sign the original ERISA legislation.

I thought so too, but as I read the below they will adjust your income for IRMAA only if the reduction is as a result of certain events... and the qualifying events are pretty narrow.... though you may fall under the second bullet.... "stopped working or reduced your work hours".

What if my income has gone down?
If your income has gone down due to any of the following
situations, and the change makes a difference in the
income level we consider, contact us to explain that you
have new information and may need a new decision
about your income-related monthly adjustment amount:

• You married, divorced, or became widowed;
• You or your spouse stopped working or reduced your
work hours;
• You or your spouse lost income-producing property
because of a disaster or other event beyond your control;
• You or your spouse experienced a scheduled
cessation, termination, or reorganization of an
employer’s pension plan; or
• You or your spouse received a settlement from
an employer or former employer because of the
employer’s closure, bankruptcy, or reorganization.
​

If any of the above applies to you, we need to see
documentation verifying the event and the reduction
in your income. The documentation you provide
should relate to the event and may include a death
certificate, a letter from your employer about your
retirement, or something similar. If you filed a federal
income tax return for the year in question, you need
to show us your signed copy of the return. Use
Form SSA-44 Medicare Income-Related Monthly
Adjustment Amount – Life-Changing Event to report
a major life-changing event. If your income has gone
down, you may also use Form SSA-44 to request a
reduction in your income-related monthly adjustment
amount. You can find Form SSA-44 online at
www.socialsecurity.gov/forms/ssa-44.pdf.

https://www.ssa.gov/pubs/EN-05-10536.pdf

 

[pb4uski]

If IRMAA is upsetting you, I can't wait until you find out about the tax torpedo.... though you are probably already in such a high income tax bracket that it may not be much of an issue for you.

 

[1-31-18]

I thought so too, but as I read the below they will adjust your income for IRMAA only if the reduction is as a result of certain events... and the qualifying events are pretty narrow.... though you may fall under the second bullet.... "stopped working or reduced your work hours".


https://www.ssa.gov/pubs/EN-05-10536.pdf

Right. Reduced hours. And, yes, my net worth is well into eight figures. Will retire from a global law firm to sit on corporate boards and teach in a major law school.

I notice all the sniping at my income and observe that the mods must think that’s just fine, as they are absent. But if I were to respond in kind, there would be sanctions. So, best to just lurk here without saying much, as I do. Thanks for the IRMAA data.

BTW, the 10-year return on bitcoin now exceeds nine million percent (9,000,000%). Yes, that includes the 85% 2017 drawdown. (It also includes the 2013 drawdown). Trading at about $8K right now. Definitely not dead yet. So the know-it-alls here (I’m not saying you) ... who knew so very well that BTC is a fraud, a scam, a fad ... could not have been more wrong. Best investment I ever made, and one that will never be sold.

 

[RobbieB]

Congratulations on your abundance!

 

[CardsFan]

And, yes, my net worth is well into eight figures. Will retire from a global law firm to sit on corporate boards and teach in a major law school.

And you are looking to SGOTI for tax advice?

Sounds strange.

 

[1-31-18]

And you are looking to SGOTI for tax advice?



Sounds strange.

Well, I don’t know what SGOTI is, but I’m not in the business of trying to satisfy you. And if you read the thread you will see that no advice was requested, except from my ERISA partner. Here, I only asked for data — and got it.

Kinda like, “I see you are wearing a watch. What time is it?” “9:18 pm, you say? Thank you very much.”

Thanks again for the accurate data. Too busy to chase it down myself. Clued me in on an issue to run down with an expert.

Cheers.

 

[1-31-18]

Congratulations on your abundance!

Enjoy reading how you blow that dough, my friend. Will be doing some of that myself after I fulfill my main commitments.

 

[statsman]

I thought so too, but as I read the below they will adjust your income for IRMAA only if the reduction is as a result of certain events... and the qualifying events are pretty narrow.... though you may fall under the second bullet.... "stopped working or reduced your work hours".

https://www.ssa.gov/pubs/EN-05-10536.pdf

I have a suspicion that second bullet wouldn't apply to my DW and I. My DW was last to retire in June 2017. If it weren't for the sale of our house in October 2018, we would have been well under $174K MAGI in 2018, as was the case for 2017 and 2019, and will be the case for the foreseeable future.

While the move and downsizing we did as a result of the house sale would be considered a retirement move by many, I'm going to guess Medicare won't think so.

 

[audreyh1]

Right. Reduced hours. And, yes, my net worth is well into eight figures. Will retire from a global law firm to sit on corporate boards and teach in a major law school.

I notice all the sniping at my income and observe that the mods must think that’s just fine, as they are absent. But if I were to respond in kind, there would be sanctions. So, best to just lurk here without saying much, as I do. Thanks for the IRMAA data.

I don't think it's sniping. I think it's having fun with you based on friendly envy, and not in a malicious way.

 

[gerntz]

Gotta love rich people whining about taxes.

If they didn't, they'd be higher yet.

 

[38Chevy454]

SGOTI = some guy on the internet

 

[Slow But Steady]

My wife and I are relatively new to Medicare. In 2018, we made $418 over one of the IRMAA thresholds. As a result, we will pay about $2400 more in Medicare premiums during 2020.

I view it as just the breaks of the game, and it won't bankrupt us. But I kept a close eye on that MAGI number as 2019 was winding down, and didn't do as much Roth conversion as I could have.

 

[pb4uski]

.... I notice all the sniping at my income and observe that the mods must think that’s just fine, as they are absent. But if I were to respond in kind, there would be sanctions. So, best to just lurk here without saying much, as I do. Thanks for the IRMAA data. ....

To be clear my friend, the sniping isn't at your income.... it is more at your indignation of the tax impacts of that high income.... and it is mostly in good fun... stick around... we're a pretty friendly bunch most of the time. Enjoy!

 

[BeachOrCity]

Thanks for the data. For a couple, is that 1x $491.60 per month, or 2X? Suspect it’s 2X, or basically $12K per year, in which case Medicare presents no savings whatsoever to me and DW.
We sure as hell get taxed for it, though. Wealth transfer, pure and simple.

And the $76.40 surcharge — 1x, or 2X?

If anyone has a feel for what the basic Part D coverage charge would be, to which the surcharge is added, that would be helpful, too. I understand that there are many competing plans, so it might be hard to generalize. Just looking for a general idea.

More annoying than the steep progression in these costs is the complete surprise. I will pay steep premiums next year and the year after based on what I earned last year and the year before. And I was supposed to know this? Glad I found out at this forum, so I can budget for it.

If your paying the $76 surcharge it means you make atleast 500 or 750k per year magi. I don’t think you really need to “budget” for it.

Even with the surcharges for high income, Medicare premiums are less than the policy would cost on the free market by a commercial profit oriented business (if they would even insure a person of a certain age to begin with). So I don’t think there is any “wealth transfer”.

 

[bmcgonig]

Well, I don’t know what SGOTI is, but I’m not in the business of trying to satisfy you. And if you read the thread you will see that no advice was requested, except from my ERISA partner. Here, I only asked for data — and got it.

Kinda like, “I see you are wearing a watch. What time is it?” “9:18 pm, you say? Thank you very much.”

Thanks again for the accurate data. Too busy to chase it down myself. Clued me in on an issue to run down with an expert.

Cheers.

With respect, I think you ought to lighten up and quit worrying about the little s$$t. Just write the check and go enjoy your retirement. It's a miniscule amount with respect to your assets. It's upsetting you way more that its relative importance [emoji3526]. Spend more time at 30000 feet rather than at the micro level.

 

[MichaelB]

I notice all the sniping at my income and observe that the mods must think that’s just fine, as they are absent. But if I were to respond in kind, there would be sanctions. So, best to just lurk here without saying much, as I do. Thanks for the IRMAA data.

If you feel a specific post has violated community rules or is excessively rude you can report it by clicking on the post report icon in that post window.

 

[Livefree]

We sold a paid off rental property in 2018 when I was 63. I'm prepared to pay the extra as I know that's the year they use to calculate your income, but is the penalty for just one year? Will I be able to show that our income has dropped to lower levels again?