Is Medicare IRMAA a big deal?

[Sunset]

I have a question if anyone is still reading this thread.

I retired at the end of 2021. I was then offered a job which I took- but didn’t like so only worked February through April.
I turn 65 this coming September so the IRMAA will be based on my 2021 income. I know I can appeal this but then in 2024 they will use my 2022 income which will be higher due to that short term employment. Can I file an appeal for both years?
If I have to choose just one year I will wait and file for 2024 since 2023 is only 4 months worth.

I'm just thinking here:
Since they are 2 separate jobs, why couldn't you appeal both as ending of employment each time. After all if you get a new job in 4 years and quit it, couldn't you appeal again ?

 

[marko]

Never underestimate the government's ability to separate you from your money! There's some very clever people who figure this stuff out 18 ways to Sunday.

In my case, for the first time in a decade, it looks like I will drop a notch on the IRMAA hit parade.

 

[Irishgirlyc58]

I'm just thinking here:
Since they are 2 separate jobs, why couldn't you appeal both as ending of employment each time. After all if you get a new job in 4 years and quit it, couldn't you appeal again ?

That’s my thinking too but it makes sense so I was concerned that it wouldn’t be allowed. [emoji23]

 

[Car-Guy]

When do we get notified and how do they notify us that IRMMA is happening to us ?

IIRC, when you get your annual SS benefits statement for next year, (Usually in December) they'll formally tell you then.


EDIT, I just looked at my tax files, they also sent me a letter in November telling me that I'm being going to be hit next year, why and for how much. Reminds me of when I was a young man. I never wanted to see a letter from the government that started out with "Greetings"

And the hits, just keep on coming.

 

[RobbieB]

Last year I was paying IRMAA (the first tier only), and as irrational as it may seem to some of you, I *hated* paying it. Logical or not, it felt like I was being robbed every month.

This year, no IRMAA!!! And, like most of us I also get the big COL increase in my SS. So, it's a "double wowie"! It's like Mardi Gras 3x over. Pardon me while I celebrate!

I've been "robbed" ever since I signed up. No big deal. I'm used to it -

 

[RobbieB]

IIRC, when you get your annual SS statement for next year, they'll formally tell you then.

Yeah, just like every year since year one.

 

[copyright1997reloaded]

Well, Medicare is income based (means based) so that higher income folks pay more.
If you don't like that, then give away more of your income producing assets.

I'm fine with being higher income and kinda wish my income was twice as much.
Just for kicks, of course...

I'm thinking about doing this exact thing. I'm not going to do a DAF (already have one), but am thinking of gifting a bunch of assets to my child and filing a gift tax return.

The disadvantage is the assets will no longer be in my name, but can be used to help buy the first house, etc. Then I will have much less interest income (which is expanding a lot given the rise in rates and because I took a bunch of long term capital gains early in 2022 and are sitting in T-Bills) and I will have less LT Capital Gains to "worry" about (NIIT issues). The child will not be a dependent but is/will be for a while in a much lower tax bracket (i.e. max out the 0% LT CG bracket) and I would help them to a) have enough income to be ACA eligible b)don't go past the ACA income limit and c) make use of that interest/dividend income in lwei of or in addition to gifting money.

This is all money that I would hope to eventually get to my offspring anyway, so why not push it up if it reduces how much is lost to the government anyway.

 

[CRLLS]

I understand what IRMMA is. I don't understand the reasoning behind it. Just because a person or couple makes a bit more than the guy next door doesn't make sense that he should pay more because of it. What other item, besides federal medical insurance plans, has the purchase price based on what your income is? Imagine if the federal government decided to tax cars annually but only for those with a certain income. And more if you made more. If state government agencies did the same thing. Real estate taxes would be higher just because. Or the cost of gasoline at the pump could be taxed higher. The sales tax could be higher. Would any that all seem "fair"? I say not. Why then Medicare?

I have done Roth conversions over the last few years on money I earned years ago. At that time, I agreed to be taxed later. I wasn't told that I would also be paying more than the guy next door for health care. Possibly he may have his SS cut because of it too, if some have their way. Again, not "fair" by any definition I have known.

 

[RobbieB]

People that make more have always paid more. Half the people in the country don't pay federal tax.

What don't you understand?

 

[CRLLS]

Well, tax more to those who make more. Oh wait, we already have that. Tax is tax. Price for services or goods is different. At least that's how I see it.

 

[RobbieB]

Well, that's what IRMMA is, a tax for Medicare that only wealthy people pay.

 

[Gumby]

A lesson that has guided me through much of my life:

"For unto whomsoever much is given, of him shall be much required: and to whom men have committed much, of him they will ask the more." Luke 12:48b (KJV)

 

[CRLLS]

I truly understand what IRMMA is. Why not just raise the income tax just a bit higher to cover the loss of IRMMA and keep it simple instead of making wealth taxes piecemeal? And why not tax everything else similarly? Progressively tax heating energy, tax vehicle fuel amd about everything else.

 

[sheehs1]

I have a question if anyone is still reading this thread.

I retired at the end of 2021. I was then offered a job which I took- but didn’t like so only worked February through April.
I turn 65 this coming September so the IRMAA will be based on my 2021 income. I know I can appeal this but then in 2024 they will use my 2022 income which will be higher due to that short term employment. Can I file an appeal for both years?
If I have to choose just one year I will wait and file for 2024 since 2023 is only 4 months worth.

You can file an appeal any year and are not limited to just one time or one year. Unless you have one of the qualifying events listed on the appeal form (SSA-44) they will likely not approve the appeal. I tried.
Last year I knew I was going to have a reduction of income that would drop me one IRMA bracket. I appealed and had all the pertinent documentation. They denied the appeal stating it was not due to one of the qualifying events. I was paying level 4 IRMA charges. I had to wait a year for that drop to level 3 IRMA charges to happen. (this year in 2023). They are fairly strict about taking the income reported on your MAGI line from 2 years prior.
I expect to go back up to level 4 IRMA charges in 2024 from my 2022 tax filing.

As others have said, it is still cheaper for me than my premiums were for the Bronze level Anthem Affordable Care Act plan I had prior to Medicare. That's the way I have to look at IRMA's.

Lastly, you should still try to appeal.

 

[Calico]

I understand what IRMMA is. I don't understand the reasoning behind it. Just because a person or couple makes a bit more than the guy next door doesn't make sense that he should pay more because of it. What other item, besides federal medical insurance plans, has the purchase price based on what your income is? Imagine if the federal government decided to tax cars annually but only for those with a certain income. And more if you made more. If state government agencies did the same thing. Real estate taxes would be higher just because. Or the cost of gasoline at the pump could be taxed higher. The sales tax could be higher. Would any that all seem "fair"? I say not. Why then Medicare?

I have done Roth conversions over the last few years on money I earned years ago. At that time, I agreed to be taxed later. I wasn't told that I would also be paying more than the guy next door for health care. Possibly he may have his SS cut because of it too, if some have their way. Again, not "fair" by any definition I have known.

I gave up thinking life would be "fair" when I was about eight years old.

It's the only thing my father ever taught his kids, but I'm glad I learned that lesson early.

 

[Winemaker]

IRS knows exactly what it's doing. MY late DM passed and as executor, I filed a return in her name. Come June 15th, I get a letter saying the estate owes $15. In late December, I get a letter that they owe the estate $750, due in 4-6 weeks. I'm at week #8, I still have no check.

 

[marko]

I'm thinking about doing this exact thing. I'm not going to do a DAF (already have one), but am thinking of gifting a bunch of assets to my child and filing a gift tax return.

The disadvantage is the assets will no longer be in my name, but can be used to help buy the first house, etc. Then I will have much less interest income (which is expanding a lot given the rise in rates and because I took a bunch of long term capital gains early in 2022 and are sitting in T-Bills) and I will have less LT Capital Gains to "worry" about (NIIT issues). The child will not be a dependent but is/will be for a while in a much lower tax bracket (i.e. max out the 0% LT CG bracket) and I would help them to a) have enough income to be ACA eligible b)don't go past the ACA income limit and c) make use of that interest/dividend income in lwei of or in addition to gifting money.

This is all money that I would hope to eventually get to my offspring anyway, so why not push it up if it reduces how much is lost to the government anyway.

Kinda drastic just to avoid IRMMA, IMO.

 

[Irishgirlyc58]

IRS knows exactly what it's doing. MY late DM passed and as executor, I filed a return in her name. Come June 15th, I get a letter saying the estate owes $15. In late December, I get a letter that they owe the estate $750, due in 4-6 weeks. I'm at week #8, I still have no check.

I was a bit concerned about you when I read your first sentence. [emoji38]

 

[Midpack]

I truly understand what IRMMA is. Why not just raise the income tax just a bit higher to cover the loss of IRMMA and keep it simple instead of making wealth taxes piecemeal? And why not tax everything else similarly? Progressively tax heating energy, tax vehicle fuel amd about everything else.

I don’t disagree, but “they” do it to spread around the taxes and fees hoping payers won’t notice so each fee seems reasonable if you don’t add them all together. The SS tax torpedo is another example. Same as it ever was…

 

[RetMD21]

Well, it's true that YOU can afford it. But why not let the rest of us speak for ourselves based on our own particular situations?

The mods took away my ability to silence people. Please explain how you can't afford it.

 

[ShokWaveRider]

Why worry about things you cannot control? You cannot control what you cannot control .... unless one sacrifices and earns less, I am sure that simply ain't gonna happen.

 

[marko]

Why worry about things you cannot control? You cannot control what you cannot control .... unless one sacrifices and earns less, I am sure that simply ain't gonna happen.

+1
Oh, gee, I'm a rich guy and they want me to pay more in taxes! What else is new?

I don't like it either but what can you do.

But yet, they cap the SS payroll tax. Go figure.

 

[MichaelB]

Perhaps everyone should pay the full cost of Medicare B, which would lead to a premium of over $600 per month per person, and another $150 or so per month for Plan D. Once everyone is being charged the same, some type of assistance could be arranged for recipients that can’t afford the full price.

 

[Gumby]

Perhaps everyone should pay the full cost of Medicare B, which would lead to a premium of over $600 per month per person, and another $150 or so per month for Plan D. Once everyone is being charged the same, some type of assistance could be arranged for recipients that can’t afford the full price.

Good idea. Perhaps the subsidies could be tiered at certain income levels. As your reported income drops below certain thresholds, you would get a larger subsidy. Sort of like the ACA subsidy.

 

[jimbee]

Thank you MichaelB.