Understanding Medicare Premium Surcharges (aka IRMAA)
HTML-код
- Опубликовано: 9 фев 2025
- Everything you need to know about income-based Medicare premium surcharges otherwise known as Income-Related Monthly Adjustment Amounts, or IRMAA.
Links in this video:
Retirement Planning Insights - www.tenonfinan...
Taxes in Retirement - / taxesinretirement
#Medicare #RetirementPlanning
DISCLAIMER: This video is only helpful hints and education. It is not specific tax, legal or investment advice. Before considering acting on anything you see in this video, first consult with your tax, legal or investment advisor. While the information expressed in this video is believed to be accurate, neither Andy Panko, CFP®, RICP®, EA nor Tenon Financial LLC make any guarantees to its accuracy.
Thanks for this informative video. It’s worth a mention that unlike the income tax brackets, going over a certain MAGI threshold (CLIFF!) by even $1 will put you into the next (higher) level. Something to definitely keep in mind when planning your tax/income strategy!
ive just started watching retirement planning youtubes. i very much appreciate you’re no-nonsense , non-bombastic approach to presenting the material. subscribed !
"non-bombastic"...that's one of the best compliments I've ever heard, thanks!
Good data and good presentation.
You explain this very well. Thank you.
The form to reduce the surcharge does work IF you have been laidoff
I would appreciate your opinion. I retired in 2022 and filed a SSA-44 appeal and received notice my premium will be reduced. I submitted $141,000 income for 2023. I now feel my income will be closer to $152,000. I am single, will I be charged more if I exceed the $141,000 estimated amount?
Depends. The 2023 income thresholds (to be used in determining 2025 IRMAA amounts) won't be known until late-2024. It depends where $141k and $152k lie within the thresholds. If they're in the same income threshold, then there shouldn't be an impact
Good Information Question would the COV19 CARES Act 401k Withdrawal qualifies for a reduction on the IRMAA Thanks
So how exactly does one limit ones income in 2022 to avoid a cliff for 2024 that does is not released until the end of 2023? Is it safe, and advisable, to just use the 2023 threshold? Surely the 2024 will the same or higher, right? Has the IRMAA brackets ever gone down?
Yes, that's kind of the best you can do; assume the income limit in future years will be the same as what it's been historically. In reality, it should go up a bit each year. But to be safe, assume it won't
@@RetirementPlanningEducation Thank you, that is very helpful.
Thanks for all the details, but would you happen to know when are the IRMAA figures recalculated? is it at the beginning of every calendar years, or is it on your birthday month?
If you’re first starting Medicare, it’s whenever you first sign up. Or, if you’re already on Medicare, it’s done at the end of each year, where they inform you what your IRMAA (if any) will be starting in January.
@@RetirementPlanningEducation I'm staring Medicare in Sept, but my 2020 was over the limit of 182,000 because of a 457 withdraw distribution, but the following year 2021 when below the limits, I'm guessing that I will paid IRMAA for the next 4 months and then they will take it away in January 2023, once they check my 2021 income! I'm I correct? Thank U for taking the time for a new subscriber!
@@fuzzresponder2225 yes, IRMAA gets reassessed every year based on your gross income from two years prior
@@RetirementPlanningEducation 👍
So if one retires in say March, had signed up for Medicare at that time, and immediately files form SSA-44 and is approved due to the retirement. Would the SSA-44 app be processed quickly enough that you would never pay the IRMAA surcharges, or is it possible you would pay the surcharges until the SSA-44 was approved? Further, what if one submits and is approved for SSA-44 adjustment to reduce or eliminate the surcharges, but then decided to do a large Roth conversion at the end of that first year of retirement? Would that "catch up" to you only after another year, so you would have almost 2 years of lower surcharges? Is it possible they would require "back payments" of surcharges that you possibly should have paid (depending on size of Roth conversion and other income), and/or charge some kind of underpayment penalty?
I don't know this for certain, but I think it may be possible to not have any IRMAA in the first scenario. For example, if you sign up for Medicare a few months before you actually start it, that may give enough time for them to notify you of your premiums (inclusive of IRMAA), you to get them the SSA-44 and them to review it and waive the IRMAA before your payments start. It can work in theory; assuming things move fast enough.
And if you do start paying IRMAA before they can process the SSA-44, you'll get back the IRMAA you paid but weren't supposed to.
As for doing a large conversion (or having any other unforeseen increase income) later in the year, yes, I think they will make you pay the IRMAA in future years after they see that your income for the year was larger than you projected when you did the SSA-44.
Really appreciate your videos and how well you present the material. Question: If I retired mid 2021 and my MAGI will be over the IRMAA threshold in tax year 2021, I understand that for medicare premiums for 2023 I will be able to file SSA-44 and ask for reconsideration based on the lower 2022 income. Since I am already over the threshold in 2021 due to wages and capital gains/dividends on a taxable brokerage account, if I add a Roth Conversion before the end of 2021 will the reconsideration request still be acceptable?
Hello - Thank you for this very informative video. I just want to clarify - I know you said they can recalculate but I just wanted to make sure that we didn't just get one time to recalculate. I'm asking because I just retired and wanted to do Roth conversions for several years before I start drawing my pension and ss so my goal is to convert about 70k a year and I kinda need to stay on schedule. but I may have the opportunity to work part time also which would be great because it would help to pay taxes on these conversions, not to mention help out with my budget until I get my pension. So If I go over some years but then years later after I have finished the conversions, then when my income is below the 87k or whatever the current threshold is, they will later adjust where I wont have to pay a higher premuim right? and if we go up and down in income, there is no limit as to the amount of times we can get it adjusted right (can I file a reconsideration request for more than one year if income goes up and down)? thank you.
Hi. That's correct that it's adjusted every year. It's actually more accurate to think about it as getting calculated from scratch every year, as opposed to adjusted. Because it's not like they calculate it once and then it's always that until they change it. Instead, they calculate it every year regardless. So, as each year comes and goes, they look at your most recent tax return for the year and calculate the surcharge (if any) off of that. As such, when your income goes down because you stop conversions, your surrcharge (or lack of) will go down, too.
@@RetirementPlanningEducation - thank you !
Would a Hurricane Harvey 401k distribution using 3 year tax repayment qualify as a valid reason to remove Irmaa? Thank you for the video
That's a great question, and I'm honestly not sure. Typically, any taxable withdrawals from tax-deferred accounts increase MAGI. To my knowledge, there aren't exceptions for distributions taken as a result of natural disaster hardships. So I would assume that wouldn't qualify as one of the exceptions. But who knows; maybe one-off exceptions may be made in situations like that...I don't know.
@@RetirementPlanningEducation Thank you for the quick reply. I appreciate it and had already liked video and have now subscribed.
I don't think your MAGI calculation is correct. Don't you have to also add the untaxed portion of your Social Security, and untaxed foreign earned income?
The IRMAA thresholds will definitely be adjusted for inflation this year - the SSA will soon come out with the brackets for 2019 tax returns payable in the year 2021.
MAGI for IRMAA does not add in non-taxable Social Security. Other MAGIs do though. For example, MAGI for purposes of ACA premium tax credits adds back in non-taxable Social Security.
@@RetirementPlanningEducation - I was assuming that they followed the IRS definition given in Publication 590-A, based on 26 US 36B(d)(2)(A). However, I went back and read my IRMAA notice, and the SSA does it differently. No wonder everyone is confused - I have $5K more headroom than I thought. The definition is buried in Federal Regulation 418.1110, where they say:
6) Modified adjusted gross income is your adjusted gross income as defined by the Internal Revenue Code, plus the following forms of tax-exempt income:
(i) Tax-exempt interest income;
(ii) Income from United States savings bonds used to pay higher education tuition and fees;
(iii) Foreign earned income;
(iv) Income derived from sources within Guam, American Samoa, or the Northern Mariana Islands; and
(v) Income from sources within Puerto Rico.
So I was right about foreign earned income, but wrong about excluded SS.
They also state in 418.1105 that "Starting on January 1, 2020, the threshold amounts will resume adjustment for inflation as required by section 1839(i)(5) of the Act. In each year thereafter, CMS will set all modified adjusted gross income threshold amounts for the following year by increasing the preceding year's threshold amounts by any percentage increase in the Consumer Price Index rounded to the nearest $1,000."