Medicare premium question

[Joylush]

Can someone explain to me in a simple way how a one time capital gain will affect Medicare premiums and for how long?

If your income has been very low and will always be low but you have one year where you sell a rental property I understand it will increase your Medicare premium. But for how long does this increase last?

[Golden sunsets]

One year.

[braumeister]

You can look up IRMAA, which is the Medicare income-based surcharge. They will automatically apply it based on your last year's tax return income, but it will also automatically come off the next year, providing your income has dropped back down.

It's very straightforward and although you should plan for it, there is nothing mysterious about it.

[Joylush]

Quote:

Originally Posted by braumeister You can look up IRMAA, which is the Medicare income-based surcharge. They will automatically apply it based on your last year's tax return income, but it will also automatically come off the next year, providing your income has dropped back down. It's very straightforward and although you should plan for it, there is nothing mysterious about it.

Is it something that adjusts automatically or you have to report to them to get it reduced again?

It’s either sell before Medicare eligible and lose the ACA subsidy for a year or pay the extra Medicare premium for a year. Just planning for the consequences of either. Only other option is to sell and owner finance but not sure we like that idea. Planning for the extra premium seems the way to go.

[braumeister]

No, you don't have to do a thing. They will send you a letter in the mail very late in the year letting you know how much of an increase in your Medicare premium you'll have to pay in the coming year.

Your tax return from two years before is what triggers it and it automatically goes up or down as appropriate.

This explains it fairly well:
https://www.medicareresources.org/me...-amount-irmaa/

[TN Jim]

If a one time event it is possible to appeal the surcharge for a reduced amount.

[RetiredHappy]

Quote:

Originally Posted by TN Jim If a one time event it is possible to appeal the surcharge for a reduced amount.

The only time you can appeal is when you retire with drop of income. You cannot appeal based on blips on investment returns. The rules are spelt out very clearly on the SS website.

[Car-Guy]

IIRC, if you only go above the threshold for one year, it will only impact you for one year (but 2 years later)... Example, if you ONLY go over the IRMAA threshold this tax year (2021) then it will hit your Medicare premiums for "all" of 2023. In 2024 you go back to the the base rates. You don't need to do anything other than report your taxes as usual (e.g. 1040 etc) each year. FYI, no need to look for anything on the 1040 form about the IRMAA penalty/tax... It ain't there.

Basically, the IRS, SS and Medicare work together... Isn't that nice of them... And who said US government agencies don't cooperate with each other.

BTW, you can appeal the penalty/tax. See this link to see if you might qualify.
https://www.hhs.gov/about/agencies/o...als/index.html

[Dash man]

Quote:

Originally Posted by RetiredHappy The only time you can appeal is when you retire with drop of income. You cannot appeal based on blips on investment returns. The rules are spelt out very clearly on the SS website.

You can always appeal. They may just deny it. There’s no harm in trying.

[RetiredHappy]

Quote:

Originally Posted by Dash man You can always appeal. They may just deny it. There’s no harm in trying.

I won't bother to waste my time. YMMV

[Dash man]

Quote:

Originally Posted by RetiredHappy I won't bother to waste my time. YMMV

Ahh…sorry. I didn’t realize you only saw things in black or white.
Suppose someone retired five years ago, and exercised their last set of stock options or some restricted shares of stock vested. This caused their income to jump a level or two for IRMAA. They file an appeal saying this was a one time bump in income resulting from their last employment even though it’s years later. This can go either way depending on the individual that reviews the appeal.

[RobbieB]

So they will pay the extra for a year and then be done.