Paying IRMAA

[marko]

Every year since I started Medicare. Didn't even know I was paying it until I learned about it in this forum.

 

[athena53]

Sell some stock at a loss... or find some other deduction.
Next year, leave a few thousand dollars short as a safety margin. We leave 5->10K as a margin.

Nope- deductions don't move the needle. It's based on Modified AGI (which includes interest income on tax-free bonds).

I've been paying since Day One. Too much non-taxable income that can't be "managed"- SS (I retired at 61 but DH was collecting SS and I had Survivor after he died before filing on my own) plus a couple of small pensions. And, as with many tax provisions, Singles get hit harder. The IRMAA thresholds are 1/2 that of Married.

And the inexplicably-named "hold-harmless" provision (it's a legal term that really means something else), which guarantees that your net SS won't decrease if your premium increase is greater than your COLA increase, doesn't apply the IRMAA taxpayers so your net can decrease.

The least they could do is give us a Priority Line at the doctors' offices.

 

[ERD50]

.... DH has been converting his IRA to Roth and thought he had it figured out correctly on his Excel spreadsheet. NOPE!! That $32 for 2023 filed tax will be costing us $2,100 for 2025 - ouch. ...

I really hate things like this that hit a gate/cliff. The marginal tax rate system makes more sense (assuming you are going to have progressive rates), where just the amount above a certain level is subject to the higher rate. IRMA should be the same.

 

[MichaelB]

iRMAA does have 5 tiers so it’s not exactly a cliff.

 

[TheWizard]

Nope- deductions don't move the needle. It's based on Modified AGI (which includes interest income on tax-free bonds)...

Actually, selling investments at a loss or a gain DOES impact your AGI and therefore your IRMAA.
But schedule A deductions do not...

 

[TheWizard]

If you are old enough too take RMDs using your traditional IRA for charitable bequests can reduce your adjusted gross income and help avoid IRMAA

QCDs, correct...

 

[athena53]

Actually, selling investments at a loss or a gain DOES impact your AGI and therefore your IRMAA.
But schedule A deductions do not...

Ah, you're right. Hadn't had enough morning coffee when I posted that.

And I have started using QCDs. Not 73 yet but will also consider charitable deductions that count towards my RMDs.

 

[RetiredHappy]

Actually, selling investments at a loss or a gain DOES impact your AGI and therefore your IRMAA.
But schedule A deductions do not...

Difficult to do so when there are no losses in the portfolio. Not complaining though.

 

[stepford]

My tax torpedo is going to be more of a tax depth charge. With 65% of my assets in t-IRAs no matter what kind of Roth conversions I do i'm in for a serious IRMAA (and income tax) hit when I turn 73.

Sure glad I'm delaying SS to 70. It should just about pay for the extra taxes/IRMAA.

 

[RetiredHappy]

Our "problem" has to do with the 14 years age gap. By the time we were retired, I was still in my early 50s and my husband started his SS a couple of years later at age 70, followed by his RMD at 70.5 yo. My brain also went into a seizure on realization that we were retired and turned my entire IRA into deferred fixed income annuities which would start paying when I turned 60. Between my qualified annuity payout, spouse SS + spouse RMD + my dividends/interest from my brokerage, we are pretty much toast when it comes to IRMAA. We never got a chance to do ROTH conversions. If/when my spouse passes away before I do, I will likely disclaim a third to half his IRA to reduce my RMD amount and to make IRMAA a little less painful. The disclaimed portion will go to my son and he makes very little, and even including his CA taxes, he should be paying less taxes than I would be paying. Man plans, God laughs. Who knows what will happen.

 

[Mountain Climber]

My tax torpedo is going to be more of a tax depth charge. With 65% of my assets in t-IRAs no matter what kind of Roth conversions I do i'm in for a serious IRMAA (and income tax) hit when I turn 73.

Sure glad I'm delaying SS to 70. It should just about pay for the extra taxes/IRMAA.

+1. In my case - as I'm sure in most of ours - it's because our t-IRAs and t-401ks have had many years of great returns. First world problems - and it sure beats the alternative!

 

[pacergal]

I just started Medicare this year. DH starts next year. So far we are not in IRMAA territory. My projections, however, show the survivor will probably always be in IRMAA territory when the first of us passes.

Survivor issues are the same for us.

 

[Out-to-Lunch]

Just found out we will be paying IRMAA in 2025 for having income of $32 over. DH has been converting his IRA to Roth and thought he had it figured out correctly on his Excel spreadsheet. NOPE!! That $32 for 2023 filed tax will be costing us $2,100 for 2025 - ouch. And, he thinks he's made have done the same accidentally for our 2024 tax return (not done yet), so..... yeah, I'm pissed. I told him to be extremely careful with his conversions so we don't get hit with IRMAA.

Do you have any earned income at all? You could make a contribution to a tIRA to reduce your AGI.

 

[joesxm3]

I have not yet paid but will be in either v the second or third tier in two years. With a lot of rapidly appreciated items I decided that the extra IRMAA payment was less than the loss from not timing the market

 

[Chuckanut]

I really hate things like this that hit a gate/cliff. The marginal tax rate system makes more sense (assuming you are going to have progressive rates), where just the amount above a certain level is subject to the higher rate. IRMA should be the same.

+1. That would take a lot of the sting out of IRMAA. At the least it would be more ‘fair’ than the current step-over-the-cliff system.

 

[Chuckanut]

I have not yet paid but will be in either v the second or third tier in two years. With a lot of rapidly appreciated items I decided that the extra IRMAA payment was less than the loss from not timing the market

What’s that saying, “never let the tax tail wag the dog”.

 

[CRLLS]

I'm not certain I understand the question.

"For folks subject to IRMAA at this time, have you actually paid the penalties/taxes (any tier)"​

Either you are, or you aren't. If you are subject to IRMAA, you pay. My understanding is that there is no not-pay.

Just a few days ago, I did a rough estimate of our 2024 taxes. If my estimates are correct and IRMAA limits move up 2.5% per year, I expect we will be paying the first tier in year 2026. We will be very close to the 2nd tier.

 

[Car-Guy]

I'm not certain I understand the question.

"For folks subject to IRMAA at this time, have you actually paid the penalties/taxes (any tier)"​

Either you are, or you aren't. If you are subject to IRMAA, you pay. My understanding is that there is no not-pay.

I guess I could have said for those of you "over 65" or "on Medicare" or something else. Or maybe they requested and were granted an exception/exemption. (Hell I don't know what else) Oh well, at least the 75+ folks that have voted so far understood it well enough. Good enough for me.

 

[sturge]

I just turned 65 and got "the letter" welcoming me to Medicare and that our 2023 return put us in Tier 2. I retired Dec 2022 and we decided to pay off remaining mortgage in early 2023, then there was a chunk of daughters school loan we paid off as well. After doing some research, I found that neither are considered 'dispute' worthy because the funds came out of TIRA and considered income. So both my wife and I will be paying double for this year at least (she is 2 years older than me).

 

[joesxm3]

What’s that saying, “never let the tax tail wag the dog”.

Two years ago I held off taking profits until January to avoid the ACA c!as back. My portfolio tanked nearly $100,000 trying to save a few thousand ACA.

 

[copyright1997reloaded]

Sell some stock at a loss... or find some other deduction.
Next year, leave a few thousand dollars short as a safety margin. We leave 5->10K as a margin.

And if unable to do that (bring 24 income down a bit), may as well convert more (get close but not over the next level).

 

[copyright1997reloaded]

I just turned 65 and got "the letter" welcoming me to Medicare and that our 2023 return put us in Tier 2. I retired Dec 2022 and we decided to pay off remaining mortgage in early 2023, then there was a chunk of daughters school loan we paid off as well. After doing some research, I found that neither are considered 'dispute' worthy because the funds came out of TIRA and considered income. So both my wife and I will be paying double for this year at least (she is 2 years older than me).

Retirement is a qualified reason for an exception. '

 

[rkser]

I have been paying Tier 2 IRMAA since on Medicare 3 yrs back, now I notice both of us will be in Tier 3 in yr 2026 because of a recent batch of Roth Conversion by mistake.

Is there a way to reduce the AGI by donating appreciated Stocks to Donor Advised Fund from taxable ?

Oh well....

 

[Gumby]

I have been paying Tier 2 IRMAA since on Medicare 3 yrs back, now I notice both of us will be in Tier 3 in yr 2026 because of a recent batch of Roth Conversion by mistake.

Is there a way to reduce the AGI by donating appreciated Stocks to Donor Advised Fund from taxable ?

Oh well....

I don't think so, because that is a below the line deduction to get to taxable income, and IRMAA is tied to AGI.

 

[ERD50]

iRMAA does have 5 tiers so it’s not exactly a cliff.

True. Or you could say that there are 5 cliffs?

I guess anytime a $1 increase in income creates more than $1 in taxes/fees, it just doesn't sit well. And since there is already the example of Fed tax brackets, Congress should have done better.