IRMAA...Does the Money Grab Never End?

[braumeister]

is the penalty for just one year?

They recalculate it every year based on the most recent tax return they have. So you should get a letter late in the year telling you of any IRMAA penalty for the upcoming year based on the previous year's return.

 

[BeachOrCity]

They recalculate it every year based on the most recent tax return they have. So you should get a letter late in the year telling you of any IRMAA penalty for the upcoming year based on the previous year's return.

My husband does medicare counseling, and CMS does a good job of raising your premiums for IRMAA, but not so great lowering it back. Best to check each year yourself and make sure it is correct. If they don't lower it, they don't refund for the past is my understanding.

 

[pb4uski]

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.

The thing that is really odd is that if you quit working or reduce your hours then they will adjust your income for IRMAA but if your income is high because of a gain on sale of your house and you don't have any more houses to sell then they won't adjust for that. Or if your income i h because you did some big Roth conversions and no longer have any tIRAs to convert (or don't plan to convert).

I would like to see it done like Obamacare subsidies.... based it on most recently filed tax return available but allow adjustments for documented changes in income but then true it up at tax time.

 

[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?

We went to the social security office last week, and were informed that if we fill out an SSA44 Form, along with proof of the property sale, and a letter of explanation, we will NOT pay any IRMAA fees at all.


They even said we would get a rebate, if we pay a month or two, prior to the paper work being accepted..

 

[prototype]

Requesting a reccomendation:

They recalculate it every year based on the most recent tax return they have. So you should get a letter late in the year telling you of any IRMAA penalty for the upcoming year based on the previous year's return.

Just received my Medicare Premium from SSA and I have been IRMAA'ed. This was not on my radar screen two years ago when I paid cash for a home in 2018.

So my 2018 tax return caused a one-time MAGI spike to about 91K in 2018 due to the capitol gains from liquidating some assets. My 2017, 2019 (actuals),and 2020 (projected) were, and should continue be in the 75K to 80K range (until the RMD torpedo hits at 72).

1)Wait to see if my $57.80/mo IRMAA adjustment for medicare part B "poofs away" next year.
2) File a SFA-44 even though my case doesn't explicitly fall into any of the boxes that can be checked and see what if anything happens.
3) Call Social Security and plead my case (I assume the offices are closed).
4) Go into acceptance mode that I will be paying a $57.80/mo IRMAA penalty for the next 7 or so years even though my MAGI will (should?) remain below the ~$87K threshold.
5) Get a mail-order bride so I can file married.

TIA for any comments/suggestions.

 

[HadEnuff]

Am I reading the table correctly? As a "married filing jointly", my AGI would have to be above 218K to be impacted by IRMAA?

 

[Gumby]

No, the first IRMAA surcharge level is at $174,000 AGI. The surcharge steps up again at $218,000 AGI again at several higher levels. And it is based on your AGI from two years before.

https://www.medicare.gov/Pubs/pdf/11579-medicare-costs.pdf

 

[statsman]

4) Go into acceptance mode that I will be paying a $57.80/mo IRMAA penalty for the next 7 or so years even though my MAGI will (should?) remain below the ~$87K threshold.

Isn't the determination made for each Medicare year, meaning for next year's Medicare payment they will use the 2019 tax filing?

 

[braumeister]

No, the first IRMAA surcharge level is at $174,000 AGI. The surcharge steps up again at $218,000 AGI again at several higher levels. And it is based on your AGI from two years before.

https://www.medicare.gov/Pubs/pdf/11579-medicare-costs.pdf

You can easily tell whether you'll be hit by IRMAA-la-not-so-douce because you know what your prior tax returns had.

The good news is that when your AGI goes down, your surcharge will automatically be reduced or disappear as appropriate. No need to do anything for that to occur.

 

[prototype]

Isn't the determination made for each Medicare year, meaning for next year's Medicare payment they will use the 2019 tax filing?

I certainly hope so, but I haven't seen that in writing in the small percentage of the hundreds pages of SSA, Mediare, CMS... rules&regs that I looked at. I could have easily missed it somewhere in the fine print.

 

[audreyh1]

I certainly hope so, but I haven't seen that in writing in the small percentage of the hundreds pages of SSA, Mediare, CMS... rules&regs that I looked at. I could have easily missed it somewhere in the fine print.

Yes, it’s recalculated every year.

 

[Gumby]

I certainly hope so, but I haven't seen that in writing in the small percentage of the hundreds pages of SSA, Mediare, CMS... rules&regs that I looked at. I could have easily missed it somewhere in the fine print.

Yes, that's how it works. Look at the Medicare document here. https://www.medicare.gov/Pubs/pdf/11579-medicare-costs.pdf
Also, starting in 2020, the IRMAA surcharge threshold levels will be adjusted for inflation each year.

 

[pb4uski]

Just received my Medicare Premium from SSA and I have been IRMAA'ed. This was not on my radar screen two years ago when I paid cash for a home in 2018.

So my 2018 tax return caused a one-time MAGI spike to about 91K in 2018 due to the capitol gains from liquidating some assets. My 2017, 2019 (actuals),and 2020 (projected) were, and should continue be in the 75K to 80K range (until the RMD torpedo hits at 72).

1)Wait to see if my $57.80/mo IRMAA adjustment for medicare part B "poofs away" next year. ...

If at the time you decided to sell those assets to raise cash to pay for the home you had known that the "tax" on those gains would be $694 more would it have changed your decision?

 

[Big_Hitter]

I just sent in a letter disputing our IRMAA charge. I gave them a YTD paycheck stub and a note from my office regarding my retirment in January. I'll keep you all posted but hopefully this will work. Since we can't meet FTF with SSA they told me to mail it in.

 

[pb4uski]

I just sent in a letter disputing our IRMAA charge. I gave them a YTD paycheck stub and a note from my office regarding my retirment in January. I'll keep you all posted but hopefully this will work. Since we can't meet FTF with SSA they told me to mail it in.

If you retired or reduced your hours then you should get some relief.

You would think that a one-time increase like prototype's that you could demonstrate a pattern for 2017, 2018 and 2019 and that 2018 was an anomaly would be considered as well, but from what I've read they don't usually adjust in such situations but it doesn't hurt to appeal.

 

[Bigbass]

If it really bugs you you can just not buy Part D or switch to a Medicare Advantage plan that includes drug coverage.

https://www.mymedicarematters.org/2015/09/should-you-enroll-in-part-d-a-guide/

My husband has Kaiser Advantage. In addition the $202.40 for Part A/B, he is being billed $12.20 for part D also. I called the SS office asking why they are billing IRMAA part D when my husband did not sign up for part D. They told me that has nothing to do with it, it's strictly based on your income. So I pay this bill every month with a credit card to make myself feel a little better by getting 1.5% back.

 

[youbet]

My husband has Kaiser Advantage. In addition the $202.40 for Part A/B, he is being billed $12.20 for part D also. I called the SS office asking why they are billing IRMAA part D when my husband did not sign up for part D. They told me that has nothing to do with it, it's strictly based on your income. So I pay this bill every month with a credit card to make myself feel a little better by getting 1.5% back.

Yep, my DW has that too. No Part D, but pays Part D IRMAA. It's the way it works.......

 

[Big_Hitter]

If you retired or reduced your hours then you should get some relief.

.

I called the local office and spoke with them last week. They seemed very reasonable and said I had the correct documentation.

DW is on medicare, I'm still on COBRA. We should have very little taxable income for the next several years. Heck I wonder if we will get EIC?

 

[statsman]

If you retired or reduced your hours then you should get some relief.

You would think that a one-time increase like prototype's that you could demonstrate a pattern for 2017, 2018 and 2019 and that 2018 was an anomaly would be considered as well, but from what I've read they don't usually adjust in such situations but it doesn't hurt to appeal.

I was hoping that would be the case for us. But the timing of our retirement appears to be off. My DW was the last to retire in the summer of 2017, and shortly after I started my pension and a few months later DW started her SS, all in 2017.

Our income level for 2017 was well within the bottom tier, as was 2019 and will be for several more years. 2018 had the house sale with a large, taxable capital gain (HCOL in Silicon Valley). The 2018 taxable income outside of the house sale was well within the bottom tier. The problem is we didn't technically retire in 2018. If we had, we might have had a chance, but even then, there is no guarantee.

DW wanted to appeal after our 2019 taxes had been filed to show proof of a lower income level. We're trying to decide if it is worth the time to call Medicare. We can't submit form SSA-44 because none of the options apply to us.

 

[prototype]

If at the time you decided to sell those assets to raise cash to pay for the home you had known that the "tax" on those gains would be $694 more would it have changed your decision?

Yes, I would have taken a less out of total index stock fund. That's where almost the extra taxable income (LTG) came from, about 30K if I remember correctly. The other funds I "hit" were total municipal bond and international stock. Those were pretty much break even (one slight loss, one light gain). Whatever it all was, it put me at 91K for 2018, so just a few $K over the ~87K limit.



So looking back I should have used a combination of using a little more cash and a little more of my municipal fund. Hmmm...maybe if I had changed my cost basis on the total stock fund withdrawal to something besides FIFO would have helped.

 

[audreyh1]

Yes, but those funds you took out dropped in value considerably, I would expect.

 

[RobbieB]

I just started Medicare and IRMAA'd right out the gate. Makes me very happy!

 

[pb4uski]

My husband has Kaiser Advantage. In addition the $202.40 for Part A/B, he is being billed $12.20 for part D also. I called the SS office asking why they are billing IRMAA part D when my husband did not sign up for part D. They told me that has nothing to do with it, it's strictly based on your income. So I pay this bill every month with a credit card to make myself feel a little better by getting 1.5% back.

Yep, my DW has that too. No Part D, but pays Part D IRMAA. It's the way it works.......

Learn something new every day.

 

[pb4uski]

....Hmmm...maybe if I had changed my cost basis on the total stock fund withdrawal to something besides FIFO would have helped.

Yup.... you could have cherrypicked the less appreciated lots to sell.

Now you know... and that lesson only cost you $694.

 

[youbet]

IRMAA is just one of several thresholds that if exceeded result in penalties. Wasn't there a thread a while back where we attempted to list all of them? You know, IRRMA, ACA, Fed and state tax brackets, LTGC tax rates (20% vs 15%), etc.

It would be a treat if one of our knowledgeable folks would list these again! Or point to a link where they can be found.